China Pays For Peace

China's growing defense budget has many neighbors worried that this economic hyperpower has global military ambitions too. But when Beijing recently announced that its military budget will rise by a relatively modest 7.5 percent in 2010 (last year registered a 14.9 percent hike), pundits debated what the slowing rate of increase means for China's role in the world.

But for the moment, at least, Beijing seems more concerned with turning its guns inward. According to the Hong Kong newspaper Ming Pao, China's domestic-security budget this year will hit $75.3 billion, slightly less than the military budget but growing at a faster rate of 8.9 percent annually. The paper estimates that China employs 21 million people in public security, dwarfing the approximately 3 million members who make the People's Liberation Army the world's largest military force. This focus on internal peace and quiet isn't happening just in places like Xinjiang, which doubled its security budget this year after the region was rocked by deadly ethnic riots in 2009. Even relatively calm provinces like Yunnan are doubling their per capita security spending. The numbers are a potent reminder that it is not the stability of the exchange rate that will determine China's future—stability within its own borders is what matters most.