China Increases Defense Budget by 7.1% Compared to Last Year

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] China has decided to increase its defense budget by 7.1% compared to last year. This is the largest increase since 2019 and is interpreted as reflecting the intensifying strategic competition between the U.S. and China.

On the 5th, China's Ministry of Finance reported at the annual session of the National People's Congress (NPC) held at the Great Hall of the People in Beijing that this year's defense expenditure was set at 1.45045 trillion yuan (approximately 279 trillion won), a 7.1% increase from last year.

China increased its defense budget by more than 10% annually for five consecutive years from 2011 to 2015, then has been increasing it by about 6-8% annually since 2016 (7% increase compared to the previous year).

The 7.1% increase in the defense budget is 0.3 percentage points higher than last year's increase and is the largest increase in three years since 2019 (7.5% increase compared to the previous year).

In 2020, due to the COVID-19 pandemic, the defense budget was increased by 6.6% compared to the previous year, and last year it was set at 1.35 trillion yuan, a 6.8% increase.

China set this year's economic growth target at 5.5%, the lowest in 31 years, but appears to have increased the defense budget to respond to the U.S.'s strengthened containment measures against China in the Indo-Pacific region amid the U.S.-China strategic competition.

The U.S. has been rallying allies through the Quad (Quadrilateral Security Dialogue among the U.S., Japan, Australia, and India) and AUKUS (security alliance among the U.S., UK, and Australia), while continuing freedom of navigation operations in the South China Sea and naval transits through the Taiwan Strait despite China's opposition.

Premier Li Keqiang stated in the NPC work report that "significant progress has been made in national defense and military construction over the past year," and "in the new year, we will thoroughly implement Xi Jinping's strong army thought and the military strategic guidelines for the new era."

Premier Li added, "We will comprehensively strengthen the Party's leadership and construction of the military, deepen training for war preparedness, and conduct military struggles firmly and flexibly to safeguard national sovereignty, security, and development interests."

In particular, Premier Li reported plans to accelerate the construction of modern military logistics systems, military asset management systems, modernization management systems for weapons and equipment, and innovation in defense science and technology.

China's defense budget is the second largest in the world after the U.S. According to foreign media, the Biden administration in the U.S. is expected to set the defense budget for the next fiscal year (October 1, 2022 ? September 30, 2023) at $770 billion (approximately 937 trillion won) when submitting it to Congress.

This content was produced with the assistance of AI translation services.