In 2030, the United States will continue to have the world’s strongest military, but China’s forces are growing rapidly. Meanwhile, Western Europe’s military spending is also increasing. This can be read about in the 2023 edition of FOI’s report, Defence Economic Outlook (DEO).

The first DEO, issued in 2016, primarily measured military spending. The 2023 edition of the DEO, the fourth study in the series, has evolved in sophistication, so that an assessment of the military strength of great powers is carried out not only on the basis of financial resources, but on the quantity and quality of weaponry. Trends up to 2030 are also assessed. The Swedish Ministry of Defence commissioned the study, while its data is mainly from SIPRI, IISS and the IMF.*

The report focuses on five major powers/regions. Its introduction highlights a number of distinct trends, such as:

• The United States has a significant military advantage, and will continue maintain it after 2030.
• China has quadrupled its military spending since 2000, and by 2030 will likely continue to narrow the gap with the United States.
• Russia has invested considerable resources on defence, but has incurred heavy losses in its invasion of Ukraine. Russia must replace these losses while still under sanctions.
• India has significantly increased its military spending and now has the world’s fourth largest.
• Western Europe is increasing its military spending and will have increased its military strength by 2030.

Increased defence spending

The DEO shows that in 2022 around 2,449 billion US dollars (USD) went to military spending worldwide. Despite the ongoing war in Europe, the DEO shows that the rivalry between the United States and China dominates the global balance of power. Looking at 2022 military spending, in billions of USD, clarifies this picture:

• USA: 877.
• China: 292.
• Russia: 86.
• India: 81.
• E4 (UK, France, Germany, Italy): 211.

The report also describes the emergence of a more multipolar world. The United States and other NATO countries accounted for two-thirds of the world’s military spending in 2000, but only around half in 2022.

“This is not so much because Western countries have reduced their spending, but because other countries, mainly China, have increased theirs. But the US still spends three times more than China on defence,” says defence economist Per Olsson, who is behind the report.

When it comes to economic strength, Western countries are still leading. But the report predicts that sometime around 2030 China will have the world’s largest economy.

“I could be wrong about the exact shift, as we see that China’s growth is slowing down. But the message of the report is that the world economy will be dominated by two rivals of nearly equal size,” says Per Olsson.

Better, but fewer and more expensive weapons

The DEO’s weapons count shows that the global trend is towards fewer but more expensive and better arms. The equipment of all the great powers have increased in quality at the expense of quantity.

“However, there are some exceptions, most notably the Chinese navy. It has become both better and bigger, and now has more ships than the US Navy. At the same time, US ships are on average three times larger than Chinese ones. India has also increased the size of its fleet,” Per Olsson points out.

Trends and focus

The DEO also offers several other observations:

• The United States and Western Europe, which for many years have engaged in international efforts where heavy equipment was given lower priority, are now swinging back. The United States is aiming to be able to meet primarily China, but also Russia, with advanced missiles and unmanned weapons systems.
• Russia’s conventional strength has decreased significantly, but this does not necessarily make the country any less dangerous. Russia appears willing to absorb heavy military losses and still has the world’s largest nuclear arsenal.
• Western European countries are rearming in the same way as Sweden, as a reaction to Russia’s invasion of Ukraine. Also, NATO’s strongest member by far, the United States, is continuing to invest in defence.

“But we have to realise that the US will prioritise its rivalry with China,” says Per Olsson.

* SIPRI = Stockholm International Peace Research Institute
IISS = International Institute for Strategic Studies
IMF = International Monetary Fund