Published by Global Banking and Finance Review
Posted on August 29, 2025
By Yimou Lee and Ben Blanchard
TAIPEI (Reuters) -China spent $21 billion on military exercises in the Taiwan Strait, the East and South China Sea and the Western Pacific last year, nearly 40% higher than 2023, according to Taiwan government estimates based on its tracking of aircraft and ships and working out the cost of fuel and other expenses.
The internal research by Taiwan's armed forces, reviewed by Reuters and corroborated by four Taiwan officials, offers rare detail of where China's defence spending is probably going as Beijing expands its military footprint and scope of its drills, alarming regional capitals and Washington.
China budgeted 1.67 trillion yuan ($233.47 billion) in defence spending for last year, but diplomats widely believe that number is under-reported. China does not give any breakdown on how the money is spent.
The officials, who were briefed on the research, declined to be identified because of the sensitivity of the matter.
Neither China's defence ministry nor its Taiwan Affairs Office responded to requests for comment. China, which views Taiwan as its own territory over the objections of Taipei's government, has repeatedly said its military spending is transparent and presents no threat.
Reuters could not independently confirm the accuracy of the Taiwanese estimate. Experts said the report's methodology was feasible and could provide valuable information, although they cautioned that it necessarily included some guesswork.
Taiwan's military compiled its estimates in a report this month based on Taiwanese surveillance and intelligence on Chinese military activity in the Bohai Sea off northeast China, the East China Sea, the Taiwan Strait, the South China Sea, and the Western Pacific.
The reports tallied China's naval and air missions there in 2024, then estimated how much fuel and other consumables would cost for each hour of activity. The total was around 152 billion yuan ($21.25 billion), including maintenance, repairs and salaries, the report and the officials briefed on the research said.
That estimated spending represented about 9% of China's reported 2024 military spending, up from 7% in 2023 based on the same estimates, according to Reuters calculations based on the research.
"China's ongoing military expansion and grey-zone provocations are severely undermining peace and stability in the Indo-Pacific region," Taiwan's defence ministry said in a statement to Reuters, which did not address the report's spending and other estimates.
In 2024, Chinese aircraft, including J-10 fighter jets, H-6 bombers, and drones, made nearly 12,000 flights in the region, amounting to about 37,000 hours in the air, the report shows. Those both represent roughly a 30% increase from the year before, the officials said.
The Chinese navy made more than 86,000 sailings, including of aircraft carriers and destroyers, amounting to a total time at sea of more than 2 million hours, about a 20% increase from a year ago for both metrics, the report said.
Roughly 34% of the Chinese naval journeys were made in the highly contested South China Sea, about 28% were in the East China Sea bordering Japan and South Korea, and nearly 14% were in the sensitive Taiwan Strait, the report shows.
"They are trying to normalise their military power projection and intimidation around the first island chain," said one of the officials briefed on the research.
The First Island Chain is an area that runs from Japan through Taiwan, the Philippines and on to Borneo, enclosing China's coastal seas as well as the disputed South China Sea.
China's navy has also been operating even further from the country's shores, including participating in anti-piracy patrols off Somalia, while the United States has reported an uptick in Chinese naval movements around Alaska and the northern Pacific.
The research is designed to help Taiwanese policymakers understand how China allocates military resources across regions, as well as to gauge Beijing's pace of military expansion, the officials briefed on the reports said.
The 152 billion yuan figure amounts to about a quarter of Taiwan's 2024 defence budget.
($1 = 7.1529 Chinese yuan renminbi)
($1 = 7.1529 Chinese yuan renminbi)
(Reporting By Yimou Lee and Ben Blanchard; Editing by Raju Gopalakrishnan)
