The growth of defence spending in Asia, of which China accounts for 43% of the total, slowed last year from 3.4% in 2020 and 5.3% in 2019, but showed “the resilience of defence spending to wider economic pressures,” the report by the UK think tank said.

Total expenditures in the region came to US$488 billion in 2021, more than double the 2008 figure of US$226 billion.

The decline in global military spending, which totalled US$1.92 trillion in 2021, was led by a 6% decline in the US, which accounts for nearly 40% of the global total and was still 3.5 times higher than second-place China.

The retrenchment by the world’s largest defence spender, in turn, was driven by the Biden administration’s review of US deployments, particularly the withdrawal of US forces from Afghanistan in August.

Military spending in Europe rose 4.8% in 2021. In that region, in addition to growing concerns over the possibility of a Russian invasion of Ukraine, China’s growing global presence played a role.

Britain, which sent the aircraft carrier Queen Elizabeth to the Indian Ocean and the South China Sea in 2021 to keep China in check, overtook India as the world’s third-largest military spender last year.

In nominal terms, China’s defence spending in 2021 expanded nearly 10%, reaching US$207 billion, and the country is forecast to have at least 1,000 nuclear warheads by 2030, according to a US analysis.

But IISS believes China’s defence outlays will not approach those of the US – US$754 billion in 2021 – for some time. “Our budget projections indicate that, if current trends continue, China’s official budget could reach just under $270 billion by 2030,” it said.

However, the report also added that, given the lower production costs in the country, the China’s 2021 defence budget would have been worth closer to US$332 billion at purchasing power parity.