Chinese defense spending to grow 7.5% in 2019 as Beijing seeks 'world-class' military

China’s defense budget will jump 7.5 percent this year, down slightly from last year’s 8.1 percent, as Beijing grapples with ongoing territorial disputes and seeks to create a “world-class” military, a draft budget from the annual session of the country’s rubber-stamp parliament showed Tuesday.

The rate is slower than last year but will still outpace the economic growth target for the year, which Beijing set at 6.0 to 6.5 percent, a separate report showed.

The 2019 draft defense budget, submitted to the annual session of the National People’s Congress (NPC), which opened Tuesday, would total 1.19 trillion yuan ( $177.61 billion), the state-run Xinhua News Agency said.

It was the fourth-straight year that the defense budget saw its growth rate fall into the single digits after five consecutive years of rising at a double-digit clip.

Beijing said Monday, ahead of the report’s release, that it will maintain “a reasonable and appropriate growth rate” for defense spending this year

Meanwhile, Premier Li Keqiang — China’s No. 2 official — said the country will cut billions of dollars in taxes and fees, increase infrastructure investment, and step up lending to small firms as the government boosts stimulus to shore up an economy growing at its slowest pace in almost 30 years.

But the country’s defense budget — the world’s second largest and a closely watched indicator of Beijing’s strategic intentions as territorial disputes simmer in the South and East China seas and over Taiwan — garnered much of the media attention.

Zhang Yesui, the spokesman for the second session of the NPC, said Monday that China’s “limited defense spending,” is aimed at safeguarding national sovereignty, security and territorial integrity, and “poses no threat to any other country.”

“China maintains a reasonable and appropriate growth rate in its defense expenditure to meet its demand in safeguarding national security and military reform with Chinese characteristics,” said Zhang, a former ambassador to Washington.

But despite China’s claims, both the Pentagon and U.S. Defense Intelligence Agency have said that Beijing’s “poor accounting transparency” meant the numbers could be significantly lower than actual expenditures.

“The formal defense budget process does not include funding for foreign weapons procurement, some research and development (R&D), and certain personnel benefits,” the DIA wrote in its 2019 China Military Power Report released in January. “Other government ministries distribute defense funds in addition to extrabudgetary funds that supplement personnel living subsidies, equipment maintenance, and other budgetary items.”

Last year, China boosted its defense spending 8.1 percent from 2017 to 1.11 trillion yuan ($165 billion), the largest increase in three years as leader Xi Jinping seeks to turn the country’s military into a top-notch force.

Under Xi, China’s military has undergone a massive modernization push to turn it into one that can protect Beijing’s interests as disputes roil relations with the U.S., its neighbors and old foe Japan.

In 2017, Xi pledged to complete the modernization of China’s armed forces by 2035, and to build a “world-class” military capable of winning wars across all theaters by 2050.

The focus on creating a more potent fighting force has seen Beijing pour cash into projects such as a second aircraft carrier, integrating stealth fighters into its air force and fielding an array of advanced missiles that can strike air and sea targets from long distances.

According to a report released last year by the International Institute for Strategic Studies think tank, China has since 2014 launched more submarines, warships, principal amphibious vessels and auxiliaries than the total number of ships currently serving in the navies of Germany, India, Spain, Taiwan and the United Kingdom.

And while the U.S. has a huge fleet of 12 nuclear-powered aircraft carriers, China has one conventionally powered carrier in operation, and another in the wings. The country’s first homegrown aircraft carrier, known as the “Type 001A,” was launched last year but has yet to join the fleet.

Collin Koh, a research fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore, said that although the defense budget’s growth appears slowed based on the stated official figure, some analysts have pointed out that this may not truly reflect the entire investment plowed into China’s defense buildup if hidden budget overlays — especially allocations for military research and development — are considered.

“But it’s a fact that Beijing doesn’t have the luxury of allocating as much as it may have desired for military expenditures given the sluggish economy and that the leadership appears more focused on socioeconomic uplift, including hastening programs to alleviate poverty especially in the rural areas nationwide,” he said, as “delivering socioeconomic goods, in the current climate of tightening of sociopolitical controls, becomes an ever more important” part of the ruling Communist Party’s legitimacy.

Nevertheless, the Chinese military has increasingly ventured further from its shores, sometimes squaring off with the U.S. or Japan. Beijing has built up a series of military outposts In the disputed South China Sea and continues to employ so-called salami-slicing tactics — small, gradual gains that, over time, fundamentally shift the balance in Beijing’s favor — near the Japanese-administered Senkaku Islands, which are also claimed by Beijing, where they are known as the Diaoyu.

In Tokyo on Tuesday, Japan’s top government’s spokesman, Chief Cabinet Secretary Yoshihide Suga, urged increased openness about Beijing’s opaque defense budgets and outlook.

“China has increased defense spending at a high rate for some time and Japan would like to see a high level of transparency in regard to its defense policy and militarization,” Suga was quoted as saying.

“We will continue to monitor the situation closely and at the same time will look to engage further with China in security dialogue in order to seek clarification,” he added.

NPC spokesman Zhang, however, had touted Beijing’s “peaceful development,” reiterating Monday the ruling Communist Party’s boilerplate line that its defense policy “is defensive in nature.”

“Whether a country is a military threat to others or not is not determined by its increase in defense expenditure, but by the diplomatic and national defense policies it adopts,” he said.

Despite the figures, China still lags far behind the United States in defense spending, with U.S. President Donald Trump saying recently that he will seek $750 billion from Congress for defense spending next year. Japan, meanwhile, unveiled a record-high draft defense budget in December for fiscal 2019 that saw expenditures rise to ¥5.26 trillion (approximately $47 billion) from ¥5.19 trillion the previous year.

“On the whole … China’s defense spending sends multiple types of signals to multiple types of external and domestic audience,” Koh said. “But where Japan is concerned, the budget is designed to demonstrate Beijing’s commitment towards sustaining its military buildup despite a slowing economy — as a political signal that it does not letup on this aspect … just because of its current economic problems.”

In a sign of this, the Chinese Defense Ministry said recently that it will hold a huge naval parade in the port city of Qingdao on April 23 to mark the 70th birthday of the Chinese Navy.

The state-run China Daily newspaper said the multinational naval activity was expected to consist of a massive sea parade of major ships, submarines and aircraft from the navy, along with vessels from other countries

Citing sources close to the navy, the daily said the event was also likely “to be even larger and more spectacular than last April’s naval parade in the South China Sea” — a massive show of naval force that involved more than 10,000 navy personnel, 48 ships and submarines and 76 naval aircraft.

Information from Reuters added