China hikes defence budget, spend crosses a trillion yuan

After skipping the customary mention of the figures of defence spending in the work report submitted by Chinese Premier Li Keqiang to lawmakers on Sunday, state-run Xinhua news agency on Monday announced that the military budget for this year stands at 1.04 trillion yuan (USD 152 billion). 

China’s defence budget for 2017 will grow seven per cent from the actual figure in 2016, Xinhua has quoted an official with Ministry of Finance as saying. This is the first time that China’s military spending crossed a trillion yuan. Last year China’s military spending was 954.35 billion yuan, a 7.6 per cent increase from 2015. 

China’s defence budget is about three times higher than India’s USD 53.5 billion. There was no explanation about why the amount of the annual defence spending was not mentioned in Li’s annual work report to the National People’s Congress (NPC). 

On March 4, NPC spokesperson Fu Ying said China’s defence budget will be increased by seven per cent accounting for 1.3 per cent of the country’s GDP, compared with NATO members’ pledge to dedicate at least two per cent of GDP to defence. 

Chinese officials defended the hike this year, saying it is still smaller than the 10 per cent increase proposed by President Donald Trump to America’s defence budget to take it to about USD 654 billion, the highest in the world. 

Much of China’s budget this year is expected to go for the development of navy as Beijing looks to expand its influence beyond its shores. China currently has one aircraft carrier and is building another with a third in the planning stage to match the growing strength of the US navy in hotspots like the South China Sea.

Meanwhile, Chinese President Xi Jinping has vowed to open up China like never before as the world’s second-largest economy faces dwindling foreign exchange reserves and rising competition from countries like India for foreign investment. 

China has been trying several measures to keep the economy floating and struggling to keep the growth rate steady. It has moderated its economic growth forecast for 2017 to “around 6.5 per cent” from the 6.7-7 per cent it had targeted last year. Xi, who has emerged as China’s most powerful leader in recent years and who is nearing the end of his first term in office, told lawmakers on Sunday that China’s opening door will not close, vowing that the country will continue to open up on all fronts and continue to liberalise, state-run Xinhua news agency reported.