China’s new leadership hikes defence budget by 10.7%

BEIJING, March 5, 2013



China on Tuesday said it would increase its annual defence budget by 10.7 per cent in the coming year to 720.168 billion yuan ($115.7 billion), even as officials defended the increased outlay as "good for regional stability" amid tensions with several neighbours.



The new defence budget — the first under the new leadership that will take over this month completing a once-in-ten year transition that began in November — is expected to be approved by the National People's Congress (NPC) or Parliament, which opened its annual session on Tuesday morning.



The budget is now more than three times India's defence spending, which was, last week, increased by a less than expected 5 per cent to $37 billion (or Rs. 2 lakh crore). China's defence budget last year rose 11 per cent to $ 106 billion.



The crucial week-long session will formalise the appointment of new Communist Party of China (CPC) general secretary Xi Jinping as the country's next President. Second-ranked Polit Bureau Standing Committee member Li Keqiang will replace Wen Jiabao as Premier.



7.5 PER CENT GROWTH TARGET



The planned defence budget for the coming year was announced in a draft budget plan released here on Tuesday morning, when Mr. Wen presented the work report of the government to mark the start of the session.



The work report said the government would set the coming year's growth target at 7.5 per cent, with an aim to "accelerating the change of the growth model, adjusting the economic structure and improving the quality and performance of economic growth".



DEFENCE HIKE



A day ahead of the start of the NPC session, officials had set the stage for a substantial hike in defence spending. NPC spokesperson and outgoing Vice-Foreign Minister Fu Ying said China as "a big country" required a proportionately sizeable outlay "to ensure security".



Chinese analysts say the $116 billion budget for the coming year — a 10.7 per cent increase — is still dwarfed by the $531 billion U.S. budget. The budget is, however, three times India's defence outlay, which was, last week, hiked by 5 per cent to $37 billion (or Rs. 2 lakh crore).



NEIGHBOURS' CONCERNS



Asked about concerns voiced by China's neighbours, Ms. Fu, the NPC spokesperson, said China strengthening its defence "is good for stability in this region and for peace in the world".



"Our foreign policy for peace and our defensive policy have contributed to peace in this region," she said. "We have upheld this policy for decades and we have never wavered in this commitment."



Amid concerns in China about tensions with Japan and the United States "pivot", Ms. Fu pointed to prevailing regional stability in Asia as underscoring the region's focus on development.



"If we look back at history at the end of the Cold War were tensions, conflicts, instability and even wars, but Asia on the whole has been quite tranquil. This is why all countries in Asia can stay focused on their countries' development."



JAPAN TENSIONS



On tensions with Japan over disputed islands in the East China Sea, Ms. Fu defended China's response. "For problems, such as territorial disputes and difficult matters, when some countries make provocations what should we do? We should make a resolute response and handle these matters in a timely manner."



Japan has also in recent years hiked its defence spending, citing China's rise as its primary security challenge. The spike in defence outlays in the region — and primarily China's increased spending, now only second to the U.S. — has led to concerns about triggering regional tensions.



China's military focus, in the short term, would be aimed at "maintaining domestic stability, preventing Taiwan from declaring independence, and asserting China's claims in the contested Near Seas by asymmetric means", argued Andrew S. Erickson, an Associate Professor in the Strategic Research Department at the U.S. Naval War College, in a recent paper on China's defence spending.



Despite regional fears about China's defence spending being both excessive and opaque, he pointed out that contrary to widespread perceptions, "the official defence budget has



decreased (near-monotonically) from 9.5 per cent of total state financial expenditures in 1994 to 5.5 per cent in 2011."



"While China's official defence budget does not capture all defence-relevant spending, it is not exceptional in this regard," he said. "Despite perennial limitations in China's budgetary transparency, the information currently available about China's priorities and investment is sufficient to develop a good sense of its broader military trajectory.



"For example, China's efforts to develop military and civilian maritime law enforcement capabilities to resolve territorial disputes on its own terms and increase its influence in the region may be highly objectionable to some observers within and outside China — but they are hardly surprising. In recent years Beijing has voiced these objectives with increasing force and specificity, and is offering glimpses of the capabilities necessary to fulfil them with a view to deterring U.S. and allied intervention thereto."
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