China defence spending gets mild boost amid economic caution

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China defence spending gets mild boost amid economic caution
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Economy19 hours ago (Mar 05, 2021 07:21PM ET)

China defence spending gets mild boost amid economic caution
© Reuters. National People’s Congress (NPC) in Beijing

By Yew Lun Tian

BEIJING (Reuters) – China’s 2021 defence spending will rise 6.8% from 2020, up slightly from last year’s increase and broadly tracking the government’s modest growth forecast, as the world’s second-largest economy emerges from the repercussions of the coronavirus pandemic.

Premier Li Keqiang pledged that efforts to strengthen the People’s Liberation Army, which is developing an array of weapons from stealthy fighters to aircraft carriers, would continue apace in the face of what China views as multiple security threats.

The spending figure, set at 1.35 trillion yuan ($208.47 billion) in the national budget released on Friday, is closely watched as a barometer of how aggressively the country will beef up its military.

Last year China said the defence budget would rise just 6.6%, its slowest rate in three decades, as the economy wilted during the pandemic. This will be the sixth year in a row for a single-digit increase.

Li, in his state-of-the-nation address to the largely rubber-stamp legislature, said this year the government would strengthen the armed forces “through reform, science and technology and the training of capable personnel”.

“We will boost military training and preparedness across the board, make overall plans for responding to security risks in all areas and for all situations, and enhance the military’s strategic capacity to protect the sovereignty, security and development interests of our country,” Li said in a government translation of his remarks.

“We will improve the layout of the defence-related science, technology and industry, and enhance the defence mobilisation system,” he added, without giving details.

Li set an annual economic growth target of more than 6%, significantly below the consensus of analysts, who expect growth could be more than 8% this year. China last year reduced the target after covid-19 damaged its economy.

Yang Yujun, a former senior Chinese officer now at Communication University of China, said it was a natural rate of increase given the many problems facing the economy post-pandemic.

“China is facing a relatively complicated international and regional security situation, and the tasks of advancing the military’s modernisation, reform and building are also very arduous. It is very necessary to ensure sufficient defence expenditures,” he added.

China is nervous about challenges on several fronts, ranging from Taiwan to U.S. missions in the disputed South China Sea near Chinese-occupied islands, a border dispute with India and pro-democracy protests in Hong Kong.

The budget gives only a raw figure for military expenditure, with no breakdown. Many diplomats and foreign experts believe Beijing under-reports the real number.

In Washington, Pentagon spokesman John Kirby (NYSE:) declined to speculate about whether China was under-reporting its defence budget.

“I’m in no position to judge right here today what we believe about the veracity of the figure that they’re putting out there,” Kirby told a news briefing.

China’s reported defence budget in 2021 is about a quarter of U.S. defence spending, which amounted to $714 billion in fiscal year 2020 and is expected to increase to $733 billion in the 2021 fiscal year.

China has long argued that it needs to close the gap with the United States. China, for example, has two aircraft carriers, compared with 11 in active service for the United States.

China routinely says that spending for defensive purposes is a comparatively low percentage of its GDP and that critics want to demonize it as a threat to world peace.

Military spending accounts for around 1.3% of China’s total GDP, far lower than the United States, Hu Xijin, editor-in-chief of the state-backed Global Times, tweeted.

“You will believe China is a peace-loving country as long as you are not biased,” he said.

($1 = 6.4758 renminbi)

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