China Increases Defense Budget by 6.6% This Year... Continuous Expansion (Update)

[Image source=AP Yonhap News]

[Asia Economy Beijing=Special Correspondent Park Sun-mi] China has decided to increase its defense budget by 6.6% this year.

Li Keqiang, Premier of China, announced on the 22nd at the government work report of the 3rd annual session of the 13th National People's Congress (NPC) held at the Great Hall of the People in Beijing that this year's defense budget will be set at 1.268 trillion yuan, a 6.6% increase from last year.

China's defense spending has maintained a continuous expansion trend since the 21st century. It is more than 12 times the 107.6 billion yuan in 1999. However, this year's growth rate recorded 6%, the lowest in the 21st century. The defense budget growth rate, which exceeded 10% until 2015, has steadily maintained the 7-8% range with 7.6% in 2016, 7% in 2017, 8.1% in 2018, and 7.5% in 2019 amid Western countries' criticism of China's military rise.

The decline to the 6% range in the defense budget growth rate reflects the impact of the COVID-19 outbreak this year. China's economy contracted by 6.8% in the first quarter of this year, marking the worst performance. In this year's NPC work report, the Chinese government was unable to present a growth target for the first time.

Even though the growth rate has decreased, the defense budget growth rate this year is expected to significantly exceed the economic growth rate, which is forecasted to fall short of last year's 6.1% due to the COVID-19 impact. Premier Li emphasized when announcing the defense budget, "We will deepen reforms in national defense and the military, improve logistics and equipment support capabilities, and promote innovative development in defense-related science and technology."

Internally, even before the Two Sessions, there were arguments that China should increase its defense budget this year to build stronger military capabilities. This is because, despite COVID-19, the Chinese and U.S. militaries still maintain tense standoffs near the South China Sea and the Taiwan Strait.

Recently, Hu Xijin, Editor-in-Chief of the Global Times, advised that this year's defense budget should increase further, citing the growing necessity for China's defense needs due to U.S. pressure and the fact that China's defense spending relative to its Gross Domestic Product (GDP) remains lower compared to other countries. China's defense budget is usually at the 1% level of GDP, which is lower than the U.S. at 3.4%, India at 2.5%, and Russia at 3.8%. It is also below the 2% level that the U.S. has requested from NATO member countries.