China To Boost Defense Spending

China's defense buildup has alarmed its neighbors and the U.S., where political leaders have spoken about a lack of transparency and cooperation.

BEIJING (AP) -- China will boost its defense spending by 12.7 percent this year, a legislative spokesman said Friday, while reiterating that Beijing's return to double-digit military budget growth after a dip in 2010 is not a threat to other countries.

China's defense buildup and military plans in recent years have alarmed its neighbors and the United States, where military and political leaders have spoken about a lack of transparency and cooperation in the process.

The increase to just over 601 billion yuan ($91.5 billion) would go toward "appropriate" hardware spending and salary increases for the 2.3 million members of the People's Liberation Army, spokesman Li Zhaoxing told a news conference in the Great Hall of the People, the seat of the legislature.

Chinese media reports say members of the PLA, the world's largest standing military, will receive raises of up to 40 percent his year, their third pay increase in six years.

The announcement comes a day ahead of the opening of the National People's Congress, where the country's social and economic goals will be laid out for the next five years amid lower growth targets and concerns about inflation and asset bubbles.

The increase is up from the 7.5 percent forecast in 2010, which broke a string of years of double-digit growth as China transformed its military into a more modern force as its economy boomed to become the world's second largest. The rate of increase peaked at 17.8 percent in 2007.

Li said the defense budget accounted for just 6 percent of China's national budget and less than 2 percent of its gross domestic product, a lower figure than in other countries.

"The government has always tried to limit military spending and it has set the defense spending at a reasonable level to ensure the balance between national defense and economic development," he said.

Li, a former foreign minister, said China's spending plans are transparent.

"This will not pose a threat to any country," he said.

But China's assertive behavior -- it sent navy vessels and military aircraft closer to Japanese territory last year than ever before -- magnifies the perceived threat from its growing defense spending. India, which has border disputes with China, has also voiced concern about China's military.

Sea incidents involving the Chinese military and fishing boats are also common.

Just this week, the Philippine military deployed two warplanes near a disputed area in the South China Sea after a ship searching for oil complained it was harassed by two Chinese patrol boats, Vietnam protested Chinese military drills in a group of islands that both countries claim, and Japan scrambled F-15 fighter jets after Chinese surveillance and anti-submarine aircraft flew into airspace near disputed islands in the East China Sea.

China's military budget is dwarfed by what the United States spends every year, but its actual spending, including funding for new weapons and research and development, is believed to be as much as double the official figure.

The bigger budgets fed by rapid economic growth have allowed China to speed up development of new technologies such as the J-20, a stealth fighter jet. China also is moving toward launching its first aircraft carrier -- though it will take years to learn how to operate it -- along with sophisticated new submarines and larger surface ships.

Ni Lexiong, a defense expert at Shanghai University of Political Science and Law, said China needs to increase its defense spending in response to closer military cooperation between the U.S., Japan, South Korea and other countries in the region.

He said Beijing also needs to spend more on its military to deal with threats to its citizens and property overseas. Last month, Beijing took the unprecedented step of sending military transport planes and a navy missile frigate to help evacuate 32,000 Chinese from strife-torn Libya.

High inflation, especially for food, and the need to buy supplies on the open market further justify higher military spending, Ni said.

China's latest five-year plan, which will be approved during the legislature's annual 10-day meeting, is expected to feature a shift from rapid economic growth to slower development that is of higher quality and more sustainable, with a greater emphasis on services and broader distribution of wealth.

Li promised unspecified measures to tame inflation, which hit 4.9 percent in January. He blamed price rises on a range of factors, including higher global commodity prices, speculation and media hype.

More in Supply Chain