COVID-19 Impacts 2021 Defence Budgets in Asia

Northeast Asia spending on defence . . .

Most Northeast Asian nations have recently announced boosts to their 2021 military budgets. China released its new defence budget in May, announcing a 6.6 per cent increase. While this may sound considerable, it is the lowest increase in decades. More recently, Japan (3.3%), South Korea (5.5%), and Taiwan (10%) all submitted budget proposals to their legislatures seeking to raise defence spending for the coming year. Besides the risk posed by North Korea, both Japan and Taiwan highlighted China's militarization as the reason to increase their defence spending. South Korea also stressed the need to upgrade its defence capacities. Spending on defence and military technologies could also provide much-needed domestic economic boosts, especially for South Korea, which has a robust domestic defence industry.

Southeast Asia focusing on COVID . . .

Contrary to budget increases in Northeast Asia, most Southeast Asian countries have announced cuts in their defence budgets and cancelled or postponed the acquisition of new military equipment for 2021. They have prioritized the funding of COVID-19 and economic recovery-related initiatives. For example, Indonesia, the Philippines, and Malaysia reallocated some funding from their defence budgets to fight the virus and its repercussions. Amid the pandemic, cutting defence budgets was an easy choice for countries in Southeast Asia. Still, doing so will affect how they will manage regional security challenges such as the contested South China Sea.

Long-lasting impact across the region . . .

The recent announcement by Japan, South Korea, and Taiwan will assuredly please the U.S., as Washington has urged its Northeast Asian allies to spend more on defence. Like the global economy, military spending will feel the pandemic's impact for years to come. As both the U.S. and China compete for influence, COVID-19's impact on defence spending will likely affect how countries collaborate and compete for security in the region.



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