China hikes defence budget by 10.1 pc

Beijing, March 5

Unfazed by its slowing economy, China today hiked the defence budget by 10.1 per cent this year to USD 144.2 billion aimed at modernising the world’s largest military, almost USD 104 billion more than India’s defence expenditure of USD 40 billion.

The increase of the defence spending was announced by Premier Li Keqiang in his work report submitted to the China’s legislature the National People’s Congress (NPC) which began its 10-day annual session here today.

The hike - a double-digit annual increase for the fifth year in a row - marks an increase of about USD 12 billion over last year’s budget of USD 132 billion, making China the second largest military spender after the US whose national defence budget accounted to about USD 600.4 billion in 2013.

Chinese official media, however, said the hike is the lowest in five years as the second largest economy confronts mounting pressure in the face of an economic slowdown.

Chinese economy grew last year at 7.4 per cent missing the lowest in 24 years missing the official target of 7.5 per cent.

Li in his work report fixed the GDP target for this year at seven per cent.

According to a budget report released shortly before the NPC, the government plans to raise defence budget to 886.9 billion yuan (about USD 144.2 billion).

Nonetheless, the 10.1-per cent rise represented the lowest expansion in China since 2010.

The figure has thereon been riding on a multi-year run of double-digit increases, expanding 12.2 per cent last year.

Today’s budget report did not explain the rationale behind this year’s abated growth, but said national defence development would be coordinated with the economic growth.

The report played down brewing new concerns that the world’s economic powerhouse is losing steam stressing that China is now in a “new normal” state, where a balance ought to be stricken between growth and structural optimisation.

It said China will comprehensively strengthen modern logistics, step up national defence research and development of new- and high-technology weapons and equipment, and develop defense-related science and technology industries.

“Building a solid national defence and strong armed forces is fundamental to safeguarding China’s sovereignty, security, and developmental interests,” the report said.

China’s military spending has long been a source of concern to India and other countries in the region.

China’s defence budgets grew at 12.7 per cent in 2011, 11.2 per cent in 2012, and 10.7 per cent in 2013.

Chinese officials say that it would be better to assess defence spending as a percentage of GDP, and on that score, China’s allocation last year is 2.0 per cent compared to the 3.8 per cent of the US, Russia’s 4.1 per cent and India’s 2.5 per cent.

Although the rise in the defence budget in the past years has surpassed GDP growth, China’s military expenditure in 2014 accounted for less than 1.5 per cent of GDP, well below the world’s average of 2.6 percent.

Per capita military spending is even less, representing only about 4.5 per cent of the US, 11 per cent of Britain and 20 per cent of Japan, the Xinhua said.

With 2.3 million personnel on rolls, the People’s Liberation Army (PLA) itself required a large budget for salaries and upkeep, they say.

Some experts believe the expenditure is still far from the level it needs to be in the face of increasingly severe security challenges, state-run Xinhua news agency said.

Describing the 2015 defence budget increase as “moderate and reasonable,” Chen Zhou, a researcher with the Academy of Military Sciences, said that the rise was in line with China’s national defense needs and its commitment to peaceful development.

“The army is in the key phase of informationisation and mechanisation as well as deepening reforms. A moderate, sustained increase in the military budget is thus necessary,” he said. — PTI