China's willingness to use its military might to increasingly assert its territorial claims in the East and South China seas is set to drive defence spending higher in East Asia for years to come.
The rising tensions "have seen a long overdue process of military modernisation move up the political agenda in a number of countries", said Mr Craig Caffrey, principal analyst at London-based think-tank IHS Jane's. "The Philippines, Indonesia, Japan and Vietnam are all following China's lead, and we see no sign of this trend coming to an end."
In one of its most aggressive moves so far, China recently deployed anti-aircraft missiles on Woody Island, part of the Paracel island chain in the northern half of the South China Sea, which is claimed also by Vietnam and Taiwan.
Japan and China's much smaller neighbours in South-east Asia responded by ramping up military spending to shore up their defences.
Vietnam, which has had more skirmishes with China than any other claimant in the South China Sea, is now the world's eighth-largest arms importer, accounting for 3 per cent of purchases between 2011 and last year, up from being 43rd in the previous five-year period, showed a report by the Stockholm International Peace Research Institute yesterday.
Japan, which is locked in a dispute with China over the Senkaku Islands in the East China Sea, is replacing its entire submarine fleet and has announced plans for higher military spending until 2020. Its military spending in the year beginning April this year is set to rise 1.5 per cent to US$41.8 billion (S$58.6 billion), the fourth straight increase since Prime Minister Shinzo Abe took office in December 2012.
China insists that it owns nearly all of the 3.5 million sq km South China Sea, a claim contested by Vietnam, Taiwan, the Philippines, Malaysia and Brunei.
Hanoi spent US$4.3 billion on defence in 2014, up by 113 per cent from 2013. It is spending that money on six Kilo-class attack submarines, 36 Sukhoi Su-30MK2 jet fighters, six stealth naval frigates, six fast attack craft and, most recently, an advanced Israeli air defence system.
Taiwan, which China has threatened to invade if it ever declares independence, recently concluded a US$1.83 billion arms sales package with the United States, including two frigates.
The Philippines is spending whatever it can spare to build a more credible navy and air force. It has earmarked 39 billion pesos (S$1.2 billion) to get two stealth, missile-guided frigates, two anti-submarine attack helicopters and three gunboats.
The threat from North Korea's missile and nuclear programmes is also a major worry for Japan and South Korea. Seoul raised its defence budget by 4 per cent this financial year to US$32 billion.
China's military spending, though, is greater and set to grow. It spent US$191 billion last year, as much as the total defence budgets of all 24 countries in East and South-east Asia, said IHS Jane's.
IHS said China will ramp up its spending to US$225 billion by 2020, nearly half of the projected US$533 billion for all of the Asia-Pacific.