04 March 2016

Xinhua reports China to raise 2016 defense budget by 7-8%: announced by spokesperson Fu Ying at 12th NPC

At the National People’s Congress last March, Beijing announced a 2015 military budget of 886.9 billion yuan (~$144.2 billion), a 10.1% increase from the previous year. This year, the projected military budget increase will reportedly be lower, around 7-8%. Regardless of what other Chinese defense spending is not reflected in these figures, China clearly has the world’s second largest economy and the world’s second largest military budget. Balanced, sustainable defense spending ultimately hinges on the health and wealth of a nation. Bottom line and key takeaway: Beijing’s latest defense spending figure shows that it is determined to avoid succumbing to Soviet-style military overextension, yet remains focused on enhancing capabilities to further its contested island and maritime claims in the East and South China Seas.

China to Raise 2016 Defense Budget by 7-8 pct: Spokesperson,” Xinhua, 4 March 2016.

Fu Ying (C, back), spokesperson for the fourth session of China’s 12th National People’s Congress (NPC), answers questions during a press conference on the session at the Great Hall of the People in Beijing, capital of China, March 4, 2016. The fourth session of the 12th NPC is scheduled to open in Beijing on March 5. (Xinhua/Ding Haitao)

BEIJING, March 4 — A spokesperson of the national legislature talked on Friday about what could be China’s slowest military budget increase for six years, as the world’s second largest economy feels the chill amid rising headwinds.

Fu Ying, spokesperson for the National People’s Congress annual session, said military spending is budgeted to grow by around 7 to 8 percent in 2016.

The exact figure will be released in a budget report to the session, Fu told a press conference.

China’s defense budget rose by 10.1 percent last year.

A growth rate within the range that Fu mentioned might be the lowest for years since 2010, when the figure stood at 7.5 percent.

The spokesperson said the raise in 2016 is in line with China’s national defense need and fiscal revenue.

China’s economy expanded 6.9 percent year on year in 2015, the slowest in one fourth a century, weighed down by a property market downturn, falling trade and weak factory activity.

Premier Li Keqiang will unveil the government’s GDP target on Saturday.

The figure is expected to be in a range between 6.5 and 7 percent, compared with the “approximately 7 percent” target announced by Li last year.

Additional reporting:

Jeremy Page, “China to Raise Defense Spending by 7% to 8%,” Wall Street Journal, 4 March 2016.

China said it was increasing its defense budget by 7% to 8% in 2016, the slowest rate in at least six years, a first indication that an economic slowdown is starting to hamper President Xi Jinping’s military ambitions.

But the estimate was still higher than China’s expected gross domestic product growth target of 6.5% to 7%, suggesting Beijing is prioritizing defense spending as it presses ahead with island-building in the South China Sea and the biggest restructuring of the military since the 1950s.

The military spending forecast was given by Fu Ying, a spokeswoman for the National People’s Congress, at a news conference on the eve of the annual legislative meeting, which kicks off in Beijing on Saturday. …

Maj-Gen. Chen Zhou, a researcher at China’s Academy of Military Sciences, told a small group of reporters later Friday that the military budget was keeping step with overall economic growth, and the government was trying to spend it more efficiently.

He added that much of this year’s budget would go toward the plan Mr. Xi unveiled last year to cut the People’s Liberation Army by 300,000 troops and overhaul its Soviet-modeled command structures. …

Andrew Erickson, a professor at the U.S. Naval War College, said that whatever the exact figure was for China’s defense budget, it was still the second-largest in the world.

“Beijing’s latest defense spending figure shows that it is determined to avoid Soviet-style military overextension, yet remains focused on enhancing capabilities to further its outstanding island and maritime claims in the East and South China seas,” he said.

The following analysis offers further insights and context:

Andrew S. Erickson and Adam P. Liff, “China’s Military Spending Swells Again Despite Domestic Headwinds,” China Real Time Report (中国实时报), Wall Street Journal, 5 March 2015.

Andrew S. Erickson and Adam P. Liff, “The Budget This Time: Taking the Measure of China’s Defense Spending,” ASAN Forum 2.2 (March-April 2014).

China’s Military Spending: At the Double,” The Economist, 15 March 2014.

Edward Wong, “China Announces 12.2% Increase in Military Budget,” New York Times, 5 March 2014.

Andrew S. Erickson and Adam P. Liff, “Full Steam Ahead: China’s Ever-Increasing Military Budget,” China Real Time Report (中国实时报), Wall Street Journal, 5 March 2014.

Andrew S. Erickson, “China’s Near-Seas Challenges,” The National Interest 129 (January-February 2014): 60-66.

Andrew S. Erickson, “Testimony before the U.S.-China Economic and Security Review Commission,” Panel II: “Inputs to China’s Military Modernization,” “China’s Military Modernization and its Implications for the United States” hearing, Washington, DC, 30 January 2014.

Andrew S. Erickson, “China’s Naval Modernization: Implications and Recommendations,” Testimony before the House Armed Services CommitteeSeapower and Projection Forces Subcommittee, “U.S. Asia-Pacific Strategic Considerations Related to PLA Naval Forces” hearing, Washington, DC, 11 December 2013. Click here for oral statement.

Adam P. Liff and Andrew S. Erickson, “Demystifying China’s Defence Spending: Less Mysterious in the Aggregate,”The China Quarterly 216 (December 2013): 805-30.

Nathaniel Austin, “Lifting the Shroud on China’s Defense Spending: Trends, Drivers, and Implications—An Interview with Andrew S. Erickson and Adam P. Liff,” Policy Q&A, National Bureau of Asian Research, 16 May 2013.

Andrew S. Erickson, “China’s Defense Budget: A Richer Nation Builds a Stronger Army,” Inaugural Presentation in “China Reality Check” Speaker Series, Center for Strategic and International Studies (CSIS), Washington, DC, 8 April 2012.

Andrew S. Erickson and Adam P. Liff, “China’s Military Development, Beyond the Numbers,” The Diplomat, 12 March 2013.

Andrew S. Erickson and Adam P. Liff, “A Player, but No Superpower,” Foreign Policy, 7 March 2013.
Andrew S. Erickson, “China’s Military Budget Bump: What it Means,” China Real Time Report (中国实时报), Wall Street Journal, 5 March 2013.