What resources are being dedicated to support Indian and Chinese military modernization programs? Official defense budgets do not provide a complete answer in either case. Neither China nor India is unique in that regard. The official defense budgets published by most states fail to capture the full range of spending on national defense. Yet in China and India, varying degrees of nontransparency persist at the same time that the economies and defense budgets of both countries are growing rapidly.

In the Chinese case, the combination of significant defense spending increases and persistent nontransparency in accounting and reporting has drawn intense scrutiny. According to the 2009 Pentagon report, The Military Power of the People’s Republic of China, “China continues to promulgate incomplete defense expenditure figures and engage in actions that appear inconsistent with its declaratory policies. The limited transparency in China’s military and security affairs poses risks to stability by creating uncertainty and increasing the potential for misunderstanding and miscalculation.”