China sets defence spending rise at three-decade low

Chinese Premier Li Keqiang delivers a speech at the opening session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China May 22, 2020. REUTERS/Carlos Garcia Rawlins

BEIJING (Reuters) – China’s defence spending this year will rise at the slowest rate in three decades but will still increase by an impressive 6.6% from 2019, as the country grapples with what it sees as growing security threats and a wilting economy.

The figure, set at 1.268 trillion yuan ($178.16 billion) in the national budget released on Friday, is closely watched as a barometer of how aggressively the country will beef up its military.

China’s economy shrank 6.8% in the first quarter of 2020 compared with a year earlier, as the coronavirus spread from the central city of Wuhan, where it emerged late last year.

China omitted a 2020 economic growth target for the first time and pledged government support for the economy in Premier Li Keqiang’s work report on Friday, launching the country’s annual parliament meeting.

Still, Li pledged that the armed forces, the world’s largest, should not be worse off.

“We will deepen reforms in national defence and the military, increase our logistic and equipment support capacity, and promote innovative development of defence-related science and technology,” he told about 3,000 delegates at the largely rubber-stamp legislature.

“We will improve the system of national defence mobilisation and ensure that the unity between the military and the government and between the military and the people remains rock solid,” he added.

Despite the coronavirus outbreak, the armed forces of China and the United States have remained active in the disputed South China Sea and around Chinese-claimed Taiwan.

Bates Gill, Professor of Asia-Pacific Security Studies at Macquarie University in Australia, said the growth of the defence budget strikes a balance, and reflects the tighter budgetary climate and the need to address other economic priorities.

“That said, 6.6% growth is not insignificant and is perhaps multiples higher than expected GDP growth for the coming year,” he said.

China’s military faces a challenge in the recruitment, training and retention of better-educated and technologically savvy soldiers to operate in a more complex and high-tech future, Gill added.

The coronavirus has worsened already-poor ties between Beijing and Washington.

The Ministry of State Security warned in a recent internal report that China faced a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into armed confrontation.

China routinely says that spending is for defensive purposes, that it is a comparatively low percentage of its GDP, and that critics just want to keep the country down.

China gives only a raw figure for military expenditure, with no breakdown. It is widely believed by diplomats and foreign experts that the country under-reports the real number.

China’s reported defence budget in 2020 is about a quarter of the U.S. defence budget last year, which stood at $686 billion.

China has long argued that it needs much more investment to close the gap with the United States. China, for example, has only two aircraft carriers, compared with 12 for the United States.

Experts point out that increasing defence spending could give the economy a much-needed shot in the arm, with manufacturing struggling and domestic consumption slack over worries about job security.

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