[China Two Sessions] Tightening the Reins on Military and Technological Rise... Preparing for Prolonged US-China Conflict

Largest Increase in Defense Budget in 4 Years
Calls for Innovation with Increased Investment in R&D Sector

China has begun strengthening its capabilities in preparation for a prolonged US-China hegemony competition by increasing its military and science and technology budgets through the National People's Congress (NPC), which is equivalent to a regular parliamentary session.

According to the budget report from China's Ministry of Finance on the 6th, the Chinese government set this year's defense expenditure at 1.5537 trillion yuan (approximately 292 trillion won), a 7.2% increase compared to last year. This is the largest increase since 2019 (7.5%), before the spread of COVID-19. Considering that China's GDP growth target for this year is set at 5.0%, which is below market expectations, it reflects the leadership's strong determination to strengthen defense capabilities. The science and technology budget also increased by about 2.0% from the previous year to 328 billion yuan this year. This amount is more than twice the total annual research and development (R&D) scale of South Korea (approximately 30.7 trillion won).

[Image source=Yonhap News]

Amid Intensifying US-China Conflict... Push to Develop a 'World-Class Military' by 2027

The defense budget increase, the largest in four years, far exceeds the growth rate of general public expenditure (5.7%). The official short-term goal of China's defense budget increase is set as "to develop the People's Liberation Army (PLA) into a world-class military by 2027." This has been emphasized several times by President Xi Jinping, and 2027 marks the 100th anniversary of the founding of the PLA.

The more fundamental background can be found in changes in the international situation, such as escalating military tensions with the United States and the necessity to deter and unify Taiwan. Premier Li Keqiang also mentioned in his NPC work report on the 5th that "China is like a ship caught in strong winds in the international environment," and at a press conference held the day before, NPC spokesperson Wang Chao explained, "The increase in military spending is appropriate and reasonable, necessary to resolve complex security issues and fulfill the responsibilities of a major power." Raphael Pantuchi, a senior researcher at the S. Rajaratnam School of International Studies (RSIS) in Singapore, told Bloomberg that "this year's defense budget reflects China's growing sense of threat and the need to prepare for contingencies," adding that "the Taiwan issue is a particularly important part."

However, the Chinese government did not provide information on expenditures other than personnel, training and maintenance, and equipment, making it difficult to gauge the direction or strategy of spending based solely on the increase in the defense budget. Nan Tian, a researcher at the Stockholm International Peace Research Institute, told the AP news agency, "Due to a lack of transparency, it is almost impossible to track specific procurements or changes in military activities," explaining, "If PLA training and patrol activities increase around Taiwan, additional costs will certainly arise, even just for fuel, but the data provided by China does not elaborate on this."

Defense Budget Sees Largest Increase in Four Years... Acceleration of Technology Advancement

China's commitment to investing in science and technology is also a notable aspect of this budget proposal. As the US administration's scope of containment against China broadens and deepens during the US-China hegemony war, China's determination for technological independence has become even stronger. Mu Longping, director of the Innovation Development Center at the Chinese Academy of Sciences, interpreted, "The increase in science and technology expenditure amid overall tight finances itself emphasizes the importance of technology," adding, "It reflects the significance for the country's future development."

The Hong Kong South China Morning Post (SCMP) noted about the disclosed science and technology budget that "it is only a part of the total R&D expenditure, excluding investments from local governments and enterprises," and predicted, "The actual spending will be even larger." According to China's National Bureau of Statistics, China's R&D expenditure exceeded 3 trillion yuan last year, a sharp increase of 10.4% compared to the previous year. The share of R&D expenditure in the total GDP also reached 2.55%.

President Xi Jinping also hinted at expanding R&D support during a meeting with the Jiangsu Province delegation on the 5th, emphasizing that the success of building a modernized strong country depends on "technological self-reliance and development." At the meeting, he said, "Facing fierce international competition, we must pioneer new paths for development, create new driving forces, and develop new strengths. All of this depends on technology." He also ordered Jiangsu Province to become the world's top innovation hub and urged the creation of an environment suitable for that. Premier Li Keqiang emphasized on the same day that "China has made breakthroughs in core technologies, and trends are emerging in manned spaceflight, deep-sea submersibles, supercomputers, quantum information, and AI," adding, "Scientific and technological progress has contributed more than 60% to national economic growth."