China’s defence spending will remain stable

Significance Defence spending will account for 1.2% of GDP in 2024, having remained stable at around this figure for at least the past two decades. Nevertheless, outside estimates of China’s spending vary, and conflict risks linked to territorial disputes persist. Impacts Given China’s integral status to global trade, any military conflict involving the country would have major global repercussions. Disruption to trade in the Taiwan Strait, a major global shipping lane, would severely disrupt supply chains and fuel inflation. Other potential hotspots for military activity relating to China are the South China Sea, the China-India border and North Korea. Companies will engage in scenario planning for their operations in the region, in case of military action.