Military spending will be closely watched for what it reveals about Beijing’s strategy for the PLA. Analysts expect a “moderate” budget increase in 2024 given the “more complex” international environment, even with the slowdown in the economy.

They say there is no imminent plan for war – something that could be reflected in a significant expansion in defence spending.

Instead, Beijing is expected to continue “buying time”, meaning steady growth in military spending to build up capacity so that it can achieve its goal of reunification with self-ruled Taiwan, and to narrow the military power gap with the United States.

But the budget is also expected to take into account the risk of an armed conflict triggered by something “unpredictable”, with more military encounters in the disputed South China Sea, Taiwan electing a new independence-leaning president in January, and a possible Donald Trump comeback in the US.

‘Moderate’ growth

The PLA has a target of 2027 – the year of its centenary – to achieve its costly modernisation goals, paving the way for it to become a “world class” military power by 2049.

That initial target is not far off, yet analysts expect steady growth in defence spending to continue for the 2024 financial year, even as other militaries spend more on weapons amid conflicts in Ukraine and the Middle East.

Globally, military spending jumped 9 per cent to a record US$2.2 trillion in 2023, according to a report from the International Institute for Strategic Studies released this month. That figure is set to rise this year given Israel’s war on Gaza, the Ukraine conflict and rising tensions in the Indo-Pacific.

Chinese defence spending will increase but “the question is at what rate, given China’s economic slowdown”, according to Yun Sun, director of the China programme at the Stimson Centre in Washington.

Former PLA equipment expert Fu Qianshao expected Beijing to “make a moderate adjustment” to military spending based on GDP growth.

Economic growth in China could drop to 4.6 per cent this year, down from 5.2 per cent in 2023, according to an International Monetary Fund forecast. It expected growth to decline for the next four years, citing factors including the crisis in the property sector.

Troubled waters

Tensions are also running high in the South China Sea between China and the Philippines over the disputed Second Thomas Shoal as well as Scarborough Shoal, where vessels from the two sides have had regular stand-offs in recent months and a collision in December.

The Chinese coastguard regularly tries to block Philippine vessels from taking supplies to the BRP Sierra Madre, where a small number of Filipino troops are stationed.

According to Fu, the Philippines “is far from becoming our rival because we have a strong coastguard and armed forces”.

Still, he said the risks of “unpredictable” incidents involving Chinese and US forces in the region should not be underestimated given their frequent encounters.

“If some country from outside the region ramps up provocation by sending warplanes, it’s likely to be seen as a threat to our national security,” Fu said. “It could even lead to an accidental conflict.”

Sun from the Stimson Centre said “if things continue in their current state” there may not be too much of an escalation in tensions over Taiwan and the South China Sea this year.

“We might see more in the South China Sea, related to the Philippines, but it is far less critical for China,” she added.

In Taiwan, Lai’s inaugural address on May 20 will be closely watched by Beijing, which has labelled the island’s next leader as a “troublemaker”.

The mainland Chinese coastguard has stepped up patrols in waters near the islands, which are just a few nautical miles from the mainland city of Xiamen.

Beijing sees Taiwan as part of its territory, to be reunited by force if necessary. Most countries – including its informal ally and top arms supplier the United States – do not recognise Taiwan as an independent state but oppose any attempt to change the status quo by force.

Fu said Beijing would be waiting to see if Lai makes any moves towards Taiwanese independence when he takes power.

“If he crosses the red line or shows an intent to collude with foreign forces in a way that challenges the situation of a peaceful resolution [to achieving Beijing’s reunification goal] then patrols and exercises near Taiwan will surely be strengthened,” he said.

A matter of time?

On a range of issues, from the economy to Taiwan, Chinese leader Xi has repeatedly said that “time and momentum is on our side”. Many believe this also applies to Beijing’s assessment of China’s military playing catch-up with the US.

That includes a Beijing-based analyst who said China was “buying time” to prepare for a possible war. But the analyst, who declined to be named, said an imminent conflict was not in Beijing’s plan given the gap in military power between China and the US.

According to Fu, most of this year’s defence spending will go towards the navy and air force, as well as its rocket force, which oversees nuclear and ballistic missiles.

The PLA plans to have six aircraft carrier groups by 2035. Two aircraft carriers are already in service, while sea trials are said to be nearing for its third aircraft carrier, the Fujian.

Meanwhile, the air force is seeking to rapidly develop its capabilities in unmanned combat – something the US has also done in recent years. Chinese analysts expect more funding in this year’s defence budget to develop these advanced technologies, as well as weapons that use artificial intelligence.

China also has a powerful nuclear arsenal – US officials estimate it had more than 500 warheads as of May last year, and that it is on track for 1,500 nuclear weapons by 2035.

On a possible Trump return to the White House after the November elections and what it could mean for China, Wu Xinbo, an international relations professor at Fudan University, said the former president lacked a “sense of risk management” when it came to US-Taiwan relations.

Wu also said Trump was “more adventurous in causing conflicts”.

Leadership shake-up

Observers will also be watching the two sessions for any developments on the latest anti-corruption purge of military officials and what it could mean for the PLA – though Beijing is likely to be reluctant to address the issue.

Fu noted that corruption problems would have an impact on the military’s combat capabilities “so we must strengthen these anti-corruption efforts”.

Those efforts are part of a sweeping campaign driven by Xi for over a decade, with the military among those in the spotlight in recent months.

Ely Ratner, US assistant secretary of defence for Indo-Pacific security affairs, has speculated that high-level corruption in the PLA could have an impact on its capabilities.

“I think it should give China’s leadership pause about how deep and how systemic that corruption runs,” Ratner said earlier this month. “And to what degree this very advanced military is going to work when they need, and frankly are they ready?”