OUTLAY ON DEFENCE UP 12.7 PER CENT

Beijing has budgeted 120.5 billion yuan (HK$113.2 billion) for defence, up 12.7 per cent from last year's outlay.

The percentage increase is the same as last year's. Mr Zhu said the increase was mostly for salaries and troops' living expenses.

A total of 5.6 billion yuan has been earmarked to offset the losses sustained by the PLA in ending its business operations.

To boost the economy, the Government will this year incur a record budget deficit of 229.9 billion yuan.

Total expenditure is set at 920.3 billion yuan, or 12.3 per cent more than last year.