PLAN Sovremenny DDG Refit/Modernization

I'm using GDP at purchasing power parity terms for these calculations. That is what I mean by actual economic output (of goods and services).

In military spending terms, we can already see that many Chinese items are less than half the price of their overpriced US equivalents, which makes PPP a sufficiently good proxy.

In 10-15 years, I would expect the gap between nominal and PPP GDP figures in China to have disappeared as the currency appreciates.

The shift towards services, consumption and R&D spending should easily drive 5% GDP growth per year, but I think it will actually be higher

AndrewS said:

I'm using GDP at purchasing power parity terms for these calculations. That is what I mean by actual economic output (of goods and services).

In military spending terms, we can already see that many Chinese items are less than half the price of their overpriced US equivalents, which makes PPP a sufficiently good proxy.

In 10-15 years, I would expect the gap between nominal and PPP GDP figures in China to have disappeared as the currency appreciates.

The shift towards services, consumption and R&D spending should easily drive 5% GDP growth per year, but I think it will actually be higher

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Name one thing you can buy in PPP dollars. The Chinese military purchases the same commodities (steel, aluminum, etc.) at the same market rates as any other country. It is the labor that is less than other countries, and we all know the cost of labor has been rapidly increasing in China in the last several years. You can't simply take China's PPP-equivalent GDP and similarly increase China's military budget, as its tech-heavy spending will be much closer to the nominal numbers than in the rest of the Chinese economy. While its ~$150 billion budget is certainly worth more than its nominal value, how much more is anyone's guess. Regardless, you will not get to anywhere near US military spending in the next 10 to 15 years.

Iron Man said:

Rail guns are first and foremost shore bombardment weapons. Also, the Zumwalt class, the only ship which could realistically carry a rail gun in the short to medium term, carries those big 155m AGS cannons primarily for the purpose of shore bombardment, just as the Zumwalt itself was designed primarily for littoral operations, including shore bombardment.

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Actually, the manufacture is aggressively marketing smaller versions for anti-air function. They indicate they have a version ready to go on the Burke Flight IIAs and especially the Burke IIs.

I think adding the same to the Zumwalt is extremely doable.

Iron Man said:

The rail gun's antiship, antiair, and antimissile functions are theoretical and secondary to their primary purpose of destroying land targets quickly, accurately, cheaply, and at long range.

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See my above. If they can put one ona BUrke, then they would be another very effective layer of close in defense. I believe in that case, adding them to the Bukres and the Zumwalts becomes very doable.

We shall have to see.

The larger one is already being planned for the Zumwalt for shore bombardment function with precision guidance. They are talking about the 3rd unit potentially coming out of the yard with one of the AGS having been replaced by a 155mm rail gun.

@Ironman

Here's an example of how PPP matters in Chinese military procurement which is almost all domestic in nature.

Exchange rate costings for large DDGs

Type-52D = approx $700million?
Type-55 = approx $900million?

Arleigh Burke = $1800million

Therefore for the cost of a single Arleigh Burke in the USA, China could buy 2 Type-55s.

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The same applied whether I looked at the Yuan SSK, J-11 heavyweight fighter and the Type-54 Frigate as well - as these items had some relatively firm cost numbers.

I suspect that this also applies to procurement, R&D, labour, and operating expenses - which is why I'm comfortable using the official PPP rate to calculate spending on actual military capabilities in China.

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The other example to use is Japan. For the past 5+ years, Japan's GDP has been stable at approx 500 trillion YEN and the defense budget at approx 5 trillion Yen. Yet the exchange rate has fluctuated over a range of over 50%, which means its GDP was anywhere between $4trillion and $6.4trillion. The same fluctuation applies to military spending.

In Japan's case, Japan is a large military arms importer so the exchange rate does matter.

But remember in China's case, China produces the vast majority of military armaments domestically, so the exchange rate doesn't matter.

Also, if China's currency was to fluctuate as much as that of Japan, China's GDP in exchange rate terms would jump from $12 trillion to $19 trillion USD.

That $19 trillion USD is not far off the PPP fair value figure of $21trillion USD for China's GDP.

Jeff Head said:

Actually, the manufacture is aggressively marketing smaller versions for anti-air function. They indicate they have a version ready to go on the Burke Flight IIAs and especially the Burke IIs.

I think adding the same to the Zumwalt is extremely doable.

See my above. If they can put one ona BUrke, then they would be another very effective layer of close in defense. I believe in that case, adding them to the Bukres and the Zumwalts becomes very doable.

We shall have to see.

The larger one is already being planned for the Zumwalt for shore bombardment function with precision guidance. They are talking about the 3rd unit potentially coming out of the yard with one of the AGS having been replaced by a 155mm rail gun.

Click to expand...

Are you talking about the HVP that General Atomics is working on? This is a joint projectile that can be fired from Burkes' 5" guns without modification and gives railgun-like capabilities, but there is nothing else that is currently "ready to go", certainly not a railgun.

AndrewS said:

@Ironman

Here's an example of how PPP matters in Chinese military procurement which is almost all domestic in nature.

Exchange rate costings for large DDGs

Type-52D = approx $700million?
Type-55 = approx $900million?

Arleigh Burke = $1800million

Therefore for the cost of a single Arleigh Burke in the USA, China could buy 2 Type-55s.

Click to expand...

You're just throwing out a couple totally random numbers and then proceed to create this logically tenuous argument why "PPP matters". Where did you get "$700 million" for the 052D from? How do you know it's not $600 million? How do you know it's not $1.2 billion? And did you pick "$900 million" for the 055 because it happens to be half of $1.8 billion? Or did you actually do an extensive cost breakdown and analysis for the 055 using demonstrable manufacturing and labor prices?

Iron Man said:

Are you talking about the HVP that General Atomics is working on? This is a joint projectile that can be fired from Burkes' 5" guns without modification and gives railgun-like capabilities, but there is nothing else that is currently "ready to go", certainly not a railgun.

Click to expand...

General Atomics has been working on getting a rail gun on the Burkes and other vessels (Zumwalt) for some time.

In 2011 they launched non-aerodynamic slugs in testing. Then in 2013 they launched many aerodynamic projectiles downrange...and indicated specifically that they and the Navy were working together to get it on the Burkes.

They have continued since, specifically working on the ril gun and the Burke.

Watch the following video from 2013:


Another from 2014 abut the upcom,ing tests on the ESP.:

Iron Man said:

Name one thing you can buy in PPP dollars. The Chinese military purchases the same commodities (steel, aluminum, etc.) at the same market rates as any other country. It is the labor that is less than other countries, and we all know the cost of labor has been rapidly increasing in China in the last several years. You can't simply take China's PPP-equivalent GDP and similarly increase China's military budget, as its tech-heavy spending will be much closer to the nominal numbers than in the rest of the Chinese economy. While its ~$150 billion budget is certainly worth more than its nominal value, how much more is anyone's guess. Regardless, you will not get to anywhere near US military spending in the next 10 to 15 years.

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Wages, salary and cost of living are big one. Average Chinese soldier wages is about 15% of the US. You could get nice meal in China for 10 Yuan ... or roughly US$1.5, also clothes, etc. But some are cheaper in the US like petrol and land

Iron Man said:

You're just throwing out a couple totally random numbers and then proceed to create this logically tenuous argument why "PPP matters". Where did you get "$700 million" for the 052D from? How do you know it's not $600 million? How do you know it's not $1.2 billion? And did you pick "$900 million" for the 055 because it happens to be half of $1.8 billion? Or did you actually do an extensive cost breakdown and analysis for the 055 using demonstrable manufacturing and labor prices?

Click to expand...

Actually AndrewS has made excellent points. When it comes to defense spending, GDP at PPP makes more sense than nominal GDP for China, because China is largely self-sufficient in defense equipment with its large indigenous defense industry.

The cost numbers that AndrewS threw out are also consistent with the what people inside or outside China generally believe or estimate. For example, Pop3 mentioned several times that PLAN's procurement cost for major platforms are much lower than corresponding western equipment; he also specifically said the cost of Liaoning is incredibly low, although he refused to reveal the exact figure. There have been a lot discussions on among Chinese defense forums on the cost of the various naval platforms. The consensus appears to converge on ~2 billion yuan for 054A, ~4 billion yuan for 052D, and ~5 billion yuan for 055. Gabe Collins, a US China military analyst, has done a good analysis of the cost of 054A. His conclusion is that . This figure is largely consistent with the consensus of the Chinese boards.

So China's defense spending doesn't have to match the US's at the nominal exchange rate level to catch up with the US at real purchasing level. China's defense spending still has a large room to increase; its defense spending as percentage of GDP is pretty low (1.3% - 2%), well below most major powers except Japan and is even lower than the NATO's suggested threshold for its member countries (2%). Without doing the comparison using currency exchange rate, one can look at the annual production rates of major weapon platforms of roughly equivalent caliber to arrive at the real purchasing power of the defense spending. China is currently producing the 052D (055) at 2~3 per year, 054A at 2~3 per years, AC approximately 1 per ~3-4 years, submarines at 1 or 2 per year, and modern fighter aircraft at ~100 per year. These are current or near future estimates. Based on these numbers, you can arrive at some estimates of China's defense spending relative to the US's at purchasing power parity. Granted, there are still gaps in quality/capability of the respective platforms, but these gaps are expected to be narrowed significantly in the short to medium term.

it's been commonly stated on this board that we do expect Chinese shipbuilding costs to be lower than that of Western countries and Russia. Now, it's now all a matter of labour cost, but also just the benefit of having a very cost effective domestic shipbuilding industry. Now, I have seen any credible sources on how much 055 or even 052D cost. And frankly...

it doesn't matter what the exact numbers are. So this argument over labour cost is completely off topic and anything further will be deleted.