China’s 6.6 per cent defence spending boost marks slowest growth in three decades

China will boost defence spending by 6.6 per cent this year – the lowest rate in three decades – as Beijing faces growing security risks and economic fallout from the coronavirus pandemic.

The 1.27 trillion yuan (US$178.6 billion) defence budget was announced on Friday, the opening day of the legislature’s annual meeting in Beijing. But although the increase marks the slowest growth since 1989, it is a minor adjustment from last year’s 7.5 per cent rise in military spending.

It comes after China’s economy saw its first quarterly decline since 1992, with shutdown measures to contain the coronavirus resulting in a 6.8 per cent contraction in the first three months of the year.

For the first time, Beijing did not set a target for the year’s economic growth. The central government also said it would cut spending across a range of sectors including foreign affairs, education and science, with general public services to take the biggest cut of 13.3 per cent.

But Premier Li Keqiang, delivering the government work report, said military spending would continue to expand.

“We will deepen reforms in national defence and the military, increase our logistics and equipment support capacity and promote innovative development of defence-related science and technology,” he told National People’s Congress deputies.

China’s military had sought a substantial increase in military spending as it grapples with a range of challenges at home and abroad, including rising tensions with the United States.

“At the moment China is very, very pessimistic about the situation it is facing,” said Song Zhongping, a Hong Kong-based military commentator and former People’s Liberation Army officer.

Relations with the US have worsened amid the Covid-19 pandemic, and as the two countries continue to spar over Beijing’s territorial claims in the South China Sea and Taiwan, their militaries have increased activity in the region.

“This year, there are difficulties with the economy, so the increase for the defence budget was smaller,” Song said, noting that growth in military spending had always exceeded GDP growth.

The defence budget was also a message to adversaries that Beijing would assert what it saw as its core interests, said Collin Koh, a research fellow with the S. Rajaratnam School of International Studies at Singapore’s Nanyang Technological University.

“The budget does fulfil real national needs but often it reflects policies, and in a way serves also to signal intent to domestic and external audiences,” he said.

Beijing was also responding to growing calls at home for more military spending, given the security challenges and economic uncertainties, according to Koh.

“It’s a tough balance Beijing has to strike,” he said.

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China’s standing army is the world’s largest, and the PLA has been undergoing a major overhaul since 2015, driven by President Xi Jinping, aimed at turning it into a modern fighting force.

That progress was highly costly, noted Macau-based military expert Antony Wong Dong.

“Even domestically built weapons are very expensive,” he said. “Without enough funding, they won’t be able to meet their defence procurement needs.”

Beijing-based military analyst Zhou Chenming said this year’s budget also had to cover the PLA’s costs in the Covid-19 fight, and inflation had to be taken into account.

Tens of thousands of personnel were sent to Wuhan, the outbreak’s initial epicentre, in January and the PLA provided doctors to treat patients and soldiers, as well as logistics for lockdowns.

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Beijing claims it always keeps military spending to about 1.3 per cent of its annual GDP; but it has long been criticised for a lack of transparency in its defence budgets and for omitting important items. Last year, China announced defence spending of US$176 billion, but the Stockholm International Peace Research Institute estimated the figure at US$261 billion. That would be just over a third of the US$732 billion spent by the US.

On Thursday, Zhang Yesui, spokesman for the National People’s Congress, said China’s military spending was “moderate and restrained” and denied there were any “hidden expenses”.