China Defense Spending to Climb 7.2% as Xi Pursues Buildup

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(Bloomberg) -- China’s defense spending will grow by 7.2% in 2024 — the most in five years — an increase that comes amid signs corruption is undermining a military revamp.

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Military expenditure by the central government is expected to rise to 1.67 trillion yuan ($231 billion) this year, according to a Finance Ministry report released on Tuesday. In comparison, US President Joe Biden signed an annual $886 billion defense bill late last year, one that advanced a trilateral security deal with Australia and the UK largely intended to counter China.

Chinese leader Xi Jinping has set a 2027 deadline for his nation’s military to become a “world-class force” — one his diplomats say is focused on defense — yet doubts are mounting over whether corruption is hindering that ambition. The People’s Liberation Army Daily said this year it would continue fighting the “difficult and protracted war on graft,” a pledge that came after the defense sector was shaken by a series of abrupt personnel changes.

In recent months, the defense minister of the world’s largest armed forces by number of troops and two Rocket Force generals were replaced without explanation. Top political bodies have also kicked out several other senior military figures. The Rocket Force manages China’s nuclear weapons, an arsenal that the US has warned is expanding.

Read More: US Intelligence Shows Flawed China Missiles Led Xi to Purge Army

Bloomberg News reported this year that US intelligence indicated the sweeping military purge came after widespread graft was found to have hampered Xi’s modernization drive.

The corruption in the Rocket Force and throughout the nation’s defense industrial base was so extensive that US officials believed Xi is less likely to contemplate major military action in the coming years than would otherwise have been the case, according to people familiar with the assessments who asked not to be named discussing intelligence.

The forecast rise in the defense budget means that it will continue to only be about 1.2% of GDP, below the 2% annual target that NATO sets for member nations.

Still, China’s spending on the PLA has risen by at least 6.6% each year for the past three decades, although analysts say the actual figure far exceeds its official sum, partly because R&D expenditures are not included. China’s provinces also make a small contribution to defense spending.

The Asian country now has the world’s biggest navy by number of ships and is adding to its fleet of aircraft carriers. China, the US and Russia are the only nations producing fifth-generation fighter jets. And last week, the US said China is boosting its military capabilities in space at a “breathtaking pace.”

Chinese Premier Li Qiang said while delivering a work report to the opening of an annual legislative meeting in Beijing on Tuesday that the government was determined to get the military ready to fight.

“The armed forces will strengthen all-around military training and combat readiness, and resolutely safeguard national sovereignty, security and development interests,” he said.

Read More: China’s Defense Purge Strikes at Heart of Xi’s Military Reforms

China’s stepped up financial support for its armed forces comes amid lingering military tensions with the US, especially over Taiwan, though the situation has eased since Xi and Biden met in the US in November last year. Beijing held major exercises around the democratically run island of 23 million people twice since August 2022 because its leader, President Tsai Ing-wen, met top US lawmakers.

The US and its allies also sometimes engage in tense encounters with PLA planes and ships in the South China Sea. Underscoring that friction, in autumn last year the US and China each released video footage that accused the other of provocative or unprofessional actions by military craft in and around the body of water Beijing largely claims as its own.

Li also said in his speech that his nation “will promote the peaceful development of cross-strait relations, be firm in advancing the cause of China’s reunification and uphold the fundamental interests of the Chinese nation,” phrasing regarding Taiwan that was largely in line with previous remarks.

Last week, China’s state-run Global Times newspaper said the coming increase in the defense budget was warranted, pointing to tensions in the South China Sea and the Taiwan Strait.

--With assistance from James Mayger.

(Adds more comments from Li and other details.)

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