Biggest arms, aerospace event begins in Asia

Asia launched its biggest exhibition of aircraft and military hardware on Tuesday as a new report said China’s defence expenditures would exceed the combined spending of all other major countries in the region within three years.

Aircraft and weapons manufacturers, military officers, arms dealers and airline executives rubbed shoulders as the 2012 Singapore Airshow kicked off in a vast hangar near the city-state’s Changi airport.

Deals worth about $10 billion were announced at the last show in 2010 and the number could well be higher this year as Asian nations ramp up defence spending.

IHS Jane’s said in a report that while all major Asian nations are forecast to increase spending on defence, China’s military budget will soar to $238.20 billion by 2015 from $119.80 billion last year, growing about 18.75 percent per annum.

That number will exceed spending by all other nations in the region combined, but compares with a base US defence budget of $525.40 billion for 2013.

In Asia, Japan and India follow China in defence spending, but both may be constrained in coming years while China is likely to steam ahead, underpinned by strong economic growth, analysts said.

“Japan’s government debt and the investment needed after Fukushima will impact defence spend. We will increasingly see budget channeled towards key programmes and equipment,” said Rajiv Biswas, chief economist in the Asia-Pacific for IHS Global Insight.

“India’s government debt and fiscal deficit is very high as a share of GDP, and the rupee depreciated significantly in 2011, all of which will limit India’s defence ambitions.”

Nevertheless, Japan’s defence budget is forecast to rise to $66.60 billion by 2015 from $60.30 billion last year. India’s military expenditure is likely to be $44.90 billion in 2015 from $35.40 billion in 2011.

“China’s rise is not the only motivator,” said Paul Burton at IHS Jane’s. “There are a number of lingering security issues, driven by competition for untapped natural resources, that are prompting many states to increase their defence to GDP ratio.”