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US isn't the only superpower wrestling with rising defense budgets

Just like the United States, the world's two communist giants - the Soviet Union and the People's Republic of China - are facing economic challenges that are likely to affect their military modernization efforts for years to come.

Moscow has flattened its pace of defense increases in the past few years, and Soviet President Yuri Andropov now is overseeing a Kremlin debate between those who would continue emphasizing military spending and those who want to slow military growth in order to bolster the economy.

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In China, the issue already has been settled in favor of concentrating on economic problems and foregoing a short-term push for military advances. Without a definite threat from without, that decision is unlikely to be reversed anytime soon.

This information, which comes from a new Defense Intelligence Agency (DIA) report, is particularly timely in light of recent developments in US relations with these countries: Washington's approval of a long-term grain deal with the USSR, a possible loosening of restrictions on the sale of gas and oil equipment to Moscow, a new agreement on textile exports with Peking, and US Defense Secretary Caspar W. Weinberger's fall trip to discuss military cooperation with (and possible arms sales to) the People's Republic.

As advocates and critics point out, such moves by the US have obvious impact on Soviet and Chinese defense capabilities as well as economic development.

How can the US be critical of Soviet military activity, asks New York Sen. Daniel -Patrick Moynihan (D), when it is ''going to feed the Russian Army?''

Within the US intelligence community, there has been recent debate over trends in Soviet military spending. It is now generally agreed, however, that the pace of increase has slackened from about 4 percent a year (measured in US dollars, not counting inflation) to about 2 percent annually.

This reflects declining economic growth, with defense budgets taking ever-larger bites out of a pie that has been growing more slowly. Post-Brezhnev Soviet leadership, according to DIA analysts, now face policy options that ''will be affected by a combination of challenges and difficulties at home and abroad, unprecedented since World War II. . . .''

Among these problems: slower growth in capital formation, a declining labor pool due to falling birthrates, increasing difficulty in obtaining natural resources, and a rail system (the major means of transportation) that has reached capacity. At the same time, there have been increasing demands for consumer products.

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Within the Soviet leadership, the DIA reports, ''The investment priority issue divides those who favor continued high growth in defense expenditures and those who appear to consider slower military growth as desirable.'' So far, according to the Pentagon's analysis, Mr. Andropov ''appears to be straddling the fence.''

US analysts don't expect a marked shift in Moscow's spending priorities anytime soon. More likely, it is felt, such changes would come during the next Soviet Five Year Plan (1986-90).

As with the Reagan administration's plans for the next few years, economic realities probably will lead to less military growth than those in charge would like.

In Peking, this direction in national priorities already has been decided.

''For the Chinese, their decision will be to presently forgo short-term modernization of all but the most important sectors of the military for long-run civil and military growth,'' reports the DIA. ''Rapid modernization of China's large defense force would require sacrifices that neither the government nor the people are apparently willing to make. . . .''

This makes Mr. Weinberger's trip next month particularly important to Chinese leaders, with economic considerations important for both sides.

Aerospace industry leaders told Congress this week that the US ''needs an aggressive US national trade policy to combat the advantage its European competitors enjoy. . . .'' Rather than seeking American-made arms, however, China is more interested in acquiring US technology that could be applied to defense modernization.

As for the USSR, overall economic growth will have to precede any future expansion in defense production, US analysts contend. In this regard, American help with food and fuel supplies through grain and energy equipment sales could have indirect but ultimately beneficial effects on Soviet defense capabilities.

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