Analysts suspect real growth figure above 12.7pc

PUBLISHED : Thursday, 04 March, 1999, 12:00am
UPDATED : Thursday, 04 March, 1999, 12:00am

Analysts expressed doubt yesterday over the 12.7 per cent increase in the 1999 military budget, saying the real allocation could be much higher.

Finance Minister Xiang Huaicheng is expected to report to deputies of the National People's Congress on Saturday that the PLA will receive 104.6 billion yuan (HK$97.2 billion) under the state budget this year, up 12.7 per cent from last year.

Most analysts expected a larger share of cash for the PLA as compensation for the army being ordered to hand over their hundreds of thousands of enterprises to the state.

Some estimated a payment of as much as 50 billion yuan had been agreed with the PLA for the closure of 15,000 military enterprises and plants, which made 15 billion yuan profit a year.

According to several official reports last year, at least two major PLA units - the Beijing and Guangzhou military regions - had said the disengagement of their subordinate businesses was non-compensatory, partly to bolster their claims to more money from the state.

'It's got to be more than a 12.7 per cent increase, which barely keeps up with inflation and other extraordinary expenses, such as the colossal flood-fighting operations last summer,' said a senior military source, who estimated there would be a 25 per cent increase for the entire PLA.

Another source said: 'The PLA defence budget has always been a political figure which means very little in the actual implementation.

'The budget does not take in incomes generated from military-related deals, such as arms sales and satellite launches. Nor does it cover the operating expenses of quasi-PLA units, such as the People's Armed Police (PAP).' Concerns for domestic stability had justified a massive build-up of the PAP, including a recent transfer of a number of PLA divisions, as mobile rapid-reaction units, to enforce social security.

'The expenditure for the PAP operations has never been addressed and is understood to be covered in the state budget,' the source said.

The source took the extra three billion yuan earmarked for the new anti-smuggling police force as an indicator of the separate budget and the large operational costs for the paramilitary force.

'104 billion yuan is the best the state can do when considering China's record budget deficit and the uncertain prospect of the socio-economic front for this year.'