Future PLAN orbat discussion

AndrewS

Brigadier
Registered Member
that's hilarious sentence, LOL!

anyway, Andy I think up this page made a point which I had expected to be posted earlier, that is if Chinese surface combatants cost a half of a cost of equivalent US surface combatants, the PLAN could double the number

what's your take?

If the equivalent Chinese surface combatants are half the cost, then ship/shipyard maintenance/repairs also follow the same cost profile. Construction, maintenance and overhauls are very similar in nature.
These elements dominate the Total Lifecycle Cost, and therefore the cost structure of the Chinese Navy.
It means PPP is the correct measure the ability of the Chinese economy to produce naval warships.

(I'm aware of your Yesterday at 9:36 AM

comparison, but interested still)
 

AndrewS

Brigadier
Registered Member
Andy how much is
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in RMB according to you?

(I'm asking because the LCS lemons -- displacing like two times more -- have 'similar' capabilities)

I quickly add I inquire about the hull+outfit cost, not total operating+sustainment cost

I've only seen a second hand figure of $107M for a Type-56 Corvette, but this is a plausible.
If you compare the Type-56 Corvette to the LCS, it's ridiculous how the LCS is 8x more expensive.

Remember that (total operating + sustainment cost) is HIGHLY correlated with the initial production cost.
It is the same shipyards and the same equipment has to be replaced/maintained.
 

AndrewS

Brigadier
Registered Member
Any future parity (broadly construed) between PLA and US military forces is far enough in the future (and difficult enough for most to contemplate) that I think looking even further ahead or to more maximalist scenarios is unproductive. That's a discussion that can wait another ten years.

I actually would disagree.

It's productive in preventing US hardliners from effectively advocating a military containment strategy against China.

Because it won't work and a Chinese Navy maximalist scenario is the end-result of such an arms race.

But yes, going into too much detail isn't worth the time because it is too far away.
 
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AndrewS

Brigadier
Registered Member
Going to put in my two cents here.

That kind of price difference is more than just PPP. There are other deep underlying structural factors in play here, factors that don't favor the US either.

The first is that the US shipbuilding industry has shrunk massively from its World War 2 years. You can write an entire book on this, cite pages of links but for the sake of brevity I'm not going to do that. Let's just say that when it comes to the shipbuilding industry, the US has been reduced to a dwarf. The remaining US large shipbuilders rely two things, Jones Act ships and ships for the US Navy. Shipbuilders like Austal USA, Fincantieri Marinette Marine, Bath Iron Works and Huntington Ingalls require US Navy contracts to survive. This means the cost of the shipyard's survival is tacked to the cost of each ship. This isn't the case with China when mega SOE shipyards have a huge civilian production. These shipyards do not need to tact the entire cost of survival to each warship they make, they make plenty enough ships to distribute their direct operating costs. Note that two of these shipyards are already foreign owned --- Austal USA is a subsidiary of Austal from Australia, and Marinette Marine is owned by Italian shipbuilder Fincantieri. These are the two shipyards that make the two LCS classes.

The second is that when you have a shrinking shipbuilding industry, so are the technical schools that are needed to train the welders and technicians needed. The US shipbuilding industry faces this ever shrinking pool of shipbuilding workers, and wages are going to get higher. The reason why US unemployment is low is actually due to a shrinking labor base. HII recently is looking for at least 3,400 workers to hire. If this keeps on, there will be manpower shortages with the US shipbuilding industry.

Lets add in contrast to the shrinking US shipbuilding industry, the Chinese shipbuilding industry is the world's number one in volume, is oversized and for years, is facing a glut. Your skilled labor base is much larger, your transportation infrastructure means you can bullet train lower wage workers in from surrounding areas outside of the city, increasing the size of the labor poll available for the shipyard. Not only wages are low, you can have construction being done 24/7. You also don't have unions.

The third is that as US companies have their usual high corporate margins and stockholders to satisfy. In China, the military industrial complex are SOEs. In China, the state owns the MIC, and not the other way around as Eisenhower once warned. That's another incentive for the SOE to keep their prices low and with lower profit margins. I heard before that Chinese shipyards prefer doing foreign contracts because they can tact a larger profit margin on those ships.

With the Chinese MIC being SOEs, every point of purchase of components from engines to weapons systems are also from SOEs.

The fourth is politics. In the US even these ship contracts have to be passed by Congress. Every politician wants the best for their states and constituents over the other. One result is that contracts are handed out in a year to year basis. This puts long term uncertainty for the shipyards which results to #1, where they have to tack their survival costs for every contract. If you are ordering one or two ships in a two or three year contract, the cost per ship will be much higher than say ordering a batch of 10 ships for 10 years production run. The Zumwalts costs like that because only three ships are made. If they decided to make 20, the costs will drop to the floor for each ship. The LCS classes are also into these single to two year contracts, with approvals done on a ship to ship basis, though the main point of doing this is keeping the shipyards contracted till hopefully, you get multi year, multi block contracts for the FFG(X). In China, you can see ships running in large production blocks, corvettes at over 60, a single frigate class up to 30 ships. If you consider the 052C/D a single class with two variants, the total class may well exceed 30 ships.

I'm pretty sure at some point, early in the production, a 052C would have cost like hell for the Chinese when they only built two. AESA radars are particularly costly, but once more of 052C are made, and transitions to the 052D which even more is made, the AESA radar costs would drop thanks to mass production of its component elements. The price of a 055 would hit the ceiling if only one, two or three are made, but for its prices to be low, it would have to be guaranteed a large batch in multiyear contracts. Regardless whether there are two shipyards making it, the component sources are the same for both. The AESA radars might potentially be the largest cost component of these ships, but having them produced in an unprecedented scale should take their prices from the ceiling to the floor.

Compare that to the Zumwalts where its largest AESA had to be expunged from the ship, because of cost. The SPY-4 AESA is the role equivalent to the Type 346A, intended to be the main S-band search radar of the ship. This leaves the Ford class to be the only users of this radar, which raises its cost higher. The only way I can see out of this, is when they mass produce the SPY-6 for the AB Flight III and its small sibling EASR for the FFG(X), the Ford class needs to be revised to use SPY-6 in future ships, and the unmade third Zumwalt also has to change to radar. The Zumwalt currently only has the SPY-3 as its sole and main radar, but its an X-band, its main role was to be an FCR but now has to do search radar functions as well, and its not optimized for that. Ford class also uses SPY-3, X-band radars on a carrier is not only for defensive purposes but for tracking and landing planes. But the SPY-3 is not being adopted on the AB Flight III nor the FFG(X), and with such low numbers, this radar set is going to be sky high (both ships decided to use SPQ-9B, a dual backed PESA by the way that's already in service and proven). The higher the price for an item, the more Congress gets sticker shock, the more contracts are cut, the more production is lessened, and the prices go even higher. Its an upward spiral.

Consider let's say, the new X-band radar on top of the 055. That's going to be expensive on top of the 346B radars. But if you have 055s being built like 20, the prices would drop. If these radars are also used on other ships, from the carrier 003 and onwards, to the 054B or the 052E, the prices would drop even further. You don't need the equivalent of full sized radars on the smaller ships. AESAs can scale down to smaller sizes, even down to rotary single or double faced ones. But its their building blocks, namely the elements and T/R modules that are being mass produced, and the more is made, the more the prices go lower, making them cheaper to apply on lower ships, which further lowers the prices of these components in a downward price spiral. There also other indirect factors along the production chain, and things like China having cornered the world's production of Gallium and rare earths also helps.

Yes, all this plays into how PPP is a valid measure for China's ability to build a large/modern navy at a low cost.

Just to add:
1. Remember the LCS was supposed to be downselected to a single shipyard with greater economies of scale. Instead, Congress forced the US Navy to keep both shipyards running at only half capacity.
2. There are already 31 Type-052C/D destroyers that we have physical evidence of seeing.
 

Iron Man

Major
Registered Member
Yes, all this plays into how PPP is a valid measure for China's ability to build a large/modern navy at a low cost.

Just to add:
1. Remember the LCS was supposed to be downselected to a single shipyard with greater economies of scale. Instead, Congress forced the US Navy to keep both shipyards running at only half capacity.
2. There are already 31 Type-052C/D destroyers that we have physical evidence of seeing.
Exactly ZERO percent of what Tam posted has any relevance to whether PPP is a valid measure for China's ability to build a large/modern navy at a low cost. You sound so desperate for confirmation at this point that you have completely lost your reasoning skills here.

The whole purpose of this thread requires 3 elements:

1. A view on the size of the Chinese economy now and in the future.
2. A view of the desired Chinese Navy end-size . For simplicity, let's call it scenarios where the Chinese Navy is 50%,100%,150%,200% of a US Navy. Of course, even the Chinese Navy don't know what this will be in 30 years time.
3. A view on the cost of equivalent Chinese naval warships, to ascertain affordability. Eg. Whether PPP is the correct measure to use.

@Iron Man
If you don't believe that we can even try to estimate the 3rd factor, then you actually don't have anything to contribute.
Well since your "contribution" consists of nonsensical speculation based on the most ridiculous fanboish reasoning I have read on this forum in months, I don't consider my lack of speculation a negative in comparison.
 

AndrewS

Brigadier
Registered Member
Exactly ZERO percent of what Tam posted has any relevance to whether PPP is a valid measure for China's ability to build a large/modern navy at a low cost. You sound so desperate for confirmation at this point that you have completely lost your reasoning skills here.


Well since your "contribution" consists of nonsensical speculation based on the most ridiculous fanboish reasoning I have read on this forum in months, I don't consider my lack of speculation a negative in comparison.

No, Tam has posted a number of reasons as to why China's naval warships cost less.
They are all logical, even if they cannot be exactly quantified.

But what we can quantify is the large difference in procurement costs between

Type-55 Cruiser versus Zumwalt Cruiser (5x more expensive)
Type-55 Cruiser versus Arleigh Burke Destroyer (2x more expensive)
Type-52D Destroyer versus Arleigh Burke Destroyer (4x more expensive)
Type-54A Frigate versus LCS Corvette (4x more expensive)
Type-56 Corvette versus LCS Corvette (8x more expensive)

And procurement costs are correlated with ship/shipyard repairs/maintenance/overhaul costs.
And these costs do comprise the vast majority of Total Lifecycle Cost.

Using PPP exchange rates implies China can buy 2 warships for every US equivalent.
Yet we see a cost difference in real life, where China can typically buy 4 ships for the cost of a rough US equivalent.

So even if Chinese ships were to DOUBLE in cost to reflect any number of factors, that still means PPP accurately measures the capacity of the Chinese economy to build ships.

And remember that Chinese ships can be sized SMALLER because they operate in the Western Pacific and can resupply from nearby bases.
In comparison, US ships have to be carry more fuel and munitions to operate in the same area.

But leaving this aside, given that you accept China's GDP will be twice as large as the US at some point in the future, it also means that China will be a lot richer and hi-tech than today. Economic theory suggests that China's currency will strengthen to the PPP rate, so eventually there is no difference between the PPP exchange rate and the nominal exchange rate.

Again, it just means PPP is a better way to measure the capacity to build and operate a Navy.

---

And there are people that have looked at this question, and agree that for Chinese military spending, PPP is a better measure than the exchange rate. If you disagree, you're going to have to argue with them.

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I've found this treatise below, which outlines how consumer PPP correlates with industrial PPP, both in the USA and China.
And that using the consumer PPP exchange rate potentially UNDERSTATES how much the Chinese military gets for its money.

But it turns out that in the US, consumer prices have tended to
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with producer input prices. The
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. The two are interdependent, a competitive price paid for consumer products reflects efficient rents paid to productive inputs.
...
In the case of China and the US, the PPP is preferable to the MER. There are three major reasons. First, the Market Exchange Rate only reflects the relative prices of goods and services traded internationally. Second, China manipulates its currency and distorts the signal of underlying price levels. And third, the PPP for consumer prices is a fair approximation of the price-level that producers face in each country, and to the extent that they might diverge, it would have the effect of making China’s military spending look even larger.

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We are gentlemen, at the frontier of regarding military spending methodologies, which is what makes this discussion so interesting for me.
 
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Also, in 10 yrs, China will have become the largest economy in nominal terms: this is going to happen between 2026 and 2030. In 15yrs time China could have substantially higher nominal GDP. Forecasts out towards 2050, 30yrs from now generally have Chinese nominal GDP between at roughly double that of the US GDP, before the size of the two economies begin to converge again. So when talking about the future, all this PPP vs nominal measurements will eventually be moot.
 

AndrewS

Brigadier
Registered Member
Also, in 10 yrs, China will have become the largest economy in nominal terms: this is going to happen between 2026 and 2030. In 15yrs time China could have substantially higher nominal GDP. Forecasts out towards 2050, 30yrs from now generally have Chinese nominal GDP between at roughly double that of the US GDP, before the size of the two economies begin to converge again. So when talking about the future, all this PPP vs nominal measurements will eventually be moot.

Agreed

Here is how I see the different (but simplified) scenarios in the future, but feel free to disagree.

Scenario 1. Chinese Navy = Half a US Navy
Basically the only scenario I see this happening is if there is a serious economic crisis in China where naval construction comes to a crash stop next year and slows to a trickle. The Chinese Navy is already almost at this force level, but has a Chinese GDP is 30% larger in PPP terms today.
(5% chance of happening)

Scenario 2. Chinese Navy = Equivalent of a US Navy
China faces a benign security environment, so only feels the need for parity.
(25% chance of happening)

Scenario 3. Chinese Navy = 1.5x the US Navy
China faces a more challenging security environment, so plans for US+Allies.
This should be achievable with military spending of 2-2.5% of GDP
(50% chance of happening)

Scenario 4. Chinese Navy = 2x the US Navy
Cold war type scenario where Chinese Navy feels it needs overmatch.
(20% chance of happening)

Before Trump, I would have leaned towards Scenario 2 as the most likely, but not now.
 
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your
Scenario 3. Chinese Navy = 1.5x the US Navy
China faces a more challenging security environment, so plans for US+Allies.
This should be achievable with military spending of 2-2.5% of GDP
(50% chance of happening)
would likely require the PLAN to double its personnel; or it wouldn't?

wiki says Size‎: ‎255,000 personnel (2012)
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while the USN is about 330k off top of my head
 

AndrewS

Brigadier
Registered Member
your
would likely require the PLAN to double its personnel; or it wouldn't?

wiki says Size‎: ‎255,000 personnel (2012)
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while the USN is about 330k off top of my head

It probably would require the PLAN to double its personnel.

But we're looking at a 20+ year timescale to do this, so it's manageable.

Consider how the Chinese Marine Corps recently doubled in size to 20K personnel.
And that the long-term plan to expand 5 times more, to reach 100K
 
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