Future PLAN orbat discussion


Iron Man

Major
Registered Member
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.
Again, what Tam is arguing is that ships are cheaper to produce in China. But this is already a known, a given, and not being argued by anyone here. This OTOH does absolutely nothing to confirm your claim that PPP is a more valid measure for China's ability to build a large/modern navy than the MER (market exchange rate). These are NOT synonymous concepts.

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)
This list is as comically surreal now as the first time it was posted. Do you even know what a Zumwalt looks like??? And you want to compare that kind of ship to a 055. ROFLMAO

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.

We are gentlemen, at the frontier of regarding military spending methodologies, which is what makes this discussion so interesting for me.
No offense, but you are an amateur quoting amateurs, including the last guy Lofgren who got a college degree in economics and now thinks he can refute the 22 PhDs who work at SIPRI along with their team of assistant researchers (
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) and who make it their life's work to make military expenditure estimates. Unfortunately for you, it's not just SIPRI that intentionally uses the MER over PPP, but RAND, Jane's, CIA, and DIA all use nominal GDP estimates when it comes to China. I'm sure that between them they have several dozen PhDs they can throw around. Whereas YOUR corner has... a few journalists (with near-certain motivations to sensationalize so they can get more views), an Australian economist who's job ISN'T to make military expenditure estimates, and a college grad economist wannabe. I will argue with them if you will argue with SIPRI, RAND, Jane's, and the US government. Deal? :)

Let me post SIPRI's FULL official statement with respect to PPP vs MER (market exchange rate) in terms of (e.g.) estimating China's military budget so that everybody can read it:
12. What exchange rates do you use to convert military expenditure to US dollars? Do you provide figures based on Purchasing Power Parity (PPP) exchange rates?
SIPRI uses market exchange rates, or where applicable fixed official exchange rates, to convert local currency military expenditure data into US dollars (whether current or constant prices). Market exchange rates are determined by the supply and demand of currencies used in international transactions. However, the prices of many goods and services on domestic markets are determined in partial or complete isolation from the rest of the world. Therefore, the MERs do not always accurately reflect differences in price levels between countries. Fixed, official exchange rates may be even less reflective of the actual purchasing power of a currency within the country that uses it.

An alternative is to use purchasing power parity (PPP) conversion factors (or PPP exchange rates). The PPP dollar rate of a country's currency is defined by the World Bank as 'the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as a U.S. dollar would buy in the United States'. The only PPP rates available for all countries are GDP- based basket of goods and services that are major components of the gross domestic product. Such GDP-based PPP rates are designed to control for differences in price levels and thus to provide a measure of the real purchasing power of the GDP of each country.

Using GDP-based PPP rates instead of MERs for currency conversion results in much higher output and expenditure figures for many developing and transition countries since they have relatively low prices for non-traded goods and services—thus giving the currency higher purchasing power. A unit of local currency therefore has greater purchasing power within a developing country (which is better reflected by using PPP rates) than it has internationally (which is what is reflected by using MERs). For those such developing and transition countries for whom data was available for 2014, the median increase in military expenditure figures from using PPP rates instead of MERs was by a factor of 2.13. Three-quarters of these countries would see their relative figures increase by at least 79 per cent. However, for most of the 'developed' countries in Western Europe, Canada, Australia, New Zealand and Japan, the use of PPP rates on GDP and military expenditure figures leads to a fall in these totals relative to the USA, by a median amount of 9 per cent. For countries in Central Europe and East Asia that have more recently entered the ranks of rich nations, the picture is somewhere in between. However, the reliability of such PPP rates is lower than for MERs, since PPP rates are statistical estimates, calculated on the basis of collected price data for a basket of goods and services for benchmark years. Between benchmark years, the PPP rates are extrapolated forward using ratios of prices indexes, either GDP deflators or consumer price indexes. Like all statistical estimates they are subject to a margin of error.

Furthermore, GDP-based PPP rates are of limited relevance for the conversion of military expenditure data into US dollars. Such PPP rates are designed to reflect the purchasing power for goods and services that are representative of spending patterns in each country, that is, primarily for civilian goods and services. Military expenditure is used to purchase a number of goods and services that are not typical of national consumption patterns. For example, the price of conscripts can be assumed to be lower than the price of a typical basket of goods and services, while the prices of advanced weapon systems and of their maintenance and repair services can be assumed to be much higher. The extent to which this data reflects the amount of military goods and services that the military budget can buy is not known. Due to these uncertainties, SIPRI uses market exchange rates to convert military expenditure data into US dollars, despite their limitations.

It's high time for you to stop with this useless masturbatory exercise as if you somehow actually possessed the tools to pontificate on this subject.
 
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Dante80

Junior Member
Registered Member
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.

Seriously now, there is no security, strategic or geopolitic reason or logic for most of the scenarios that you are giving friend. In what possible environment would China need to field 10+ strike carrier groups, or a fleet of ten dozen destroyers?
 

Iron Man

Major
Registered Member
BTW here's a bonus round:

13. Do you produce forecasts of military expenditure?
No. We do not consider attempts to forecast military spending to be reliable or useful, as they are subject to much uncertainty relating to economic, political and security developments.

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AndrewS

Colonel
Registered Member
Seriously now, there is no security, strategic or geopolitic reason or logic for most of the scenarios that you are giving friend. In what possible environment would China need to field 10+ strike carrier groups, or a fleet of ten dozen destroyers?

In a Taiwan scenario, a large enough Chinese fleet would deter the US from trying to intervene.

Enough said.
 

Biscuits

Junior Member
Registered Member
Imho it is wrong to base any force estimation on the USN to begin with!

PLAN and USN have completely different ways of operation and organization statements. China doesn’t need to invade other countries or threaten others into giving them preferential treatment, the economy is strong enough to stand by itself as long as the region is peaceful.

Comparing them is apples and oranges. It would be better to look at a navy with similar mission statements as PLAN such as JMSDF. Like PLAN, both forces primarily focus on homeland defense, and both countries are ideologically bound not to invade anyone (Japan moreso).

China could very well catch up to US or exceed in terms of numbers, but the force distribution would not be the same. Having 12 nuclear carriers is very unlikely, but it is possible that the number of ASW carriers will be larger than the USN.

The number of ABM/ASAT destroyers would also increase for increased defense.

I’ll make a very rough 2030 guess of 5 aircraft carriers, 12 helicopter carriers, 30 fleet destroyers, 30 small destroyers, 60 frigates, 70 SSK and 20 SSN. Based on the building patterns right now + assuming a defensive force distribution.
 

AndrewS

Colonel
Registered Member
@Iron Man

Now you're attacking the person, not the methodology and framework he outlined below

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---
Yes, SIPRI may have 22 PhDs on the payroll.
But as they publicly acknowledge, they simply didn't try to estimate how much cheaper military personnel and equipment is in China.
And we know this is much cheaper in China.

I would also say that RAND, Janes, CIA, DIA all use the Market Exchange Rate because they couldn't get an alternative.
But they all publicly acknowledge the Market Exchange rate is really flawed.

CSIS (where a lot of interesting Navy think-tank work goes) only just started a new project to try and collect China's military costs
That should result in military PPP exchange rates once they finish.

And based on the papers/treatises that I referenced previously, we can expect the military PPP rate to be MORE favourable to the Chinese Navy than using the consumer PPP rate.

Given all this, I think we shall have to agree to disagree, and just have to wait for some definitive numbers to come out.

But I am certain that using the consumer PPP exchange rate is valid for use regarding the Chinese Navy.
 

AndrewS

Colonel
Registered Member
Just a short backtrack to economies of scale.

The GAO have helpfully collated the R&D and Procurement costs of major Navy acquisition programmes.

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If I look at the 2017 report, it is:

R&D Total: $61B
Procurement Total: $241B

Given fixed R&D costs - a doubling of procurement would result in a cost increase of 78% - assuming each unit costs the same.

But twice as many units are being purchased, so we can actually expect additional cost savings.
 
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In a Taiwan scenario, a large enough Chinese fleet would deter the US from trying to intervene.

Enough said.
I think even "200 destroyers" PLAN you claimed Oct 13, 2019
wouldn't dissuade the USN from going into a battle, likely in the Philippine Sea, whose outcome would then decide the campaign
(in my armchair, I envision
four carriers with dozen escorts
on
four carriers with dozen escorts,
and I add if an equal tonnage were sunk, it'd mean a Chinese victory)
 
Just a short backtrack to economies of scale.

The GAO have helpfully collated the R&D and Procurement costs of major Navy acquisition programmes.

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If I look at the 2017 report, it is:

R&D Total: $61B
Procurement Total: $241B

Given fixed R&D costs - a doubling of procurement would result in a cost increase of 78% - assuming each unit costs the same.

But twice as many units are being purchased, so we can actually expect additional cost savings.
Andy what do you mean here (no sarcasm)?

OK I'm tired at this Thursday hour, but curious (LOL as always)
 

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