Update | China’s military budget boost the lowest in six years
7-8pc rise far lower than 20pc experts said was needed for modernisation
China’s military budget will grow by between seven and eight per cent this year, the slowest increase in six years, National People’s Congress spokeswoman Fu Ying announced on Friday.
Analysts and sources close to the People’s Liberation Army said the increase was surprising low but did not include compensation for the 300,000 personnel to be cut as part of President Xi Jinping’s military overhaul. It also did not cover outlays for long-term military modernisation and dual-use research, they said.
However, Major General Luo Yuan and Academy of Military Sciences researcher Chen Zhou insisted there were no “hidden expenses” in the country’s defence spending, according to Xinhua.
The funds would be used to upgrade weapons and equipment, restructure the military and train personnel, they said.
The budget announcement came after military experts and officials said the army needed a 20 per cent budget increase this year to cover its modernisation programme and challenges in the South and East China seas. It also needed the extra funds for retirement and redundancy pay.
“I couldn’t believe it. I thought [Fu] said this year’s budget increase will be seven to eight per cent more than last year’s 10.1 per cent growth, making it 17 to 18 per cent,” a Beijing-based retired senior colonel said.
The increase is the lowest since 2010 when Beijing announced a 7.5 per cent rise.
“A seven to eight per cent increase actually means no rise. But there are other ways for the central government to act, such as putting retirement and redundancy pay into a special fund,” the retired senior colonel said.
Another source close to the PLA said the retrenchment compensation would not be made public.
On Thursday, Lieutenant General Wang Hongguang, former deputy commander of the Nanjing Military Command, said the army needed at least 100 billion yuan (HK$118 billion) to cover costs associated with the personnel cuts. China is trying to modernise its military by regrouping its military commands and building up facilities in the South China Sea, raising expectations that Beijing would announce a substantial increase in the defence budget this year.
The retired senior colonel said some outlays might be come under budgets in the years ahead and it was not possible to be transparent about military spending.
“Military modernisation is a long-term goal, and some spending in sensitive areas, such as aircraft carriers and space projects might also be counted in budgets for coming years.”
Some of the South China Sea facilities could also be classified as civilian or maritime infrastructure as part of the “One Belt, One Road” project, he said.
READ MORE: China’s military needs budget increase of 20pc, says general
Shanghai-based naval expert Ni Lexiong said the less-than-expected increase could help send a message that China wanted to resolve territorial disputes through peaceful means.
Ni said various domestic issues, including slower growth, meant it was not a good time to dramatically boost military spending.
An analyst with a Shanghai-based hedge fund said: “The growth in military spending looks slower, but there is also room to divert some of the defence spending to under other fiscal spending items.”
The PLA’s budget increased 10.1 per cent last year to 886.9 billion yuan. The US defence budget was US$597 billion that year.
Additional reporting by Xie Yu
