Article Posted on : - Mar 05, 2015

BEIJING (PTI): Notwithstanding its slowing economy, China on Thursday hiked its defence budget by 10.1 per cent, posting a double-digit annual increase in its proposed military spending for the fifth year in a row.

Amounting to US$ 142.2 billion, China's defence expenditure for this year overshadows India's defence budget of US$ 40 billion, almost US$ 100 billion more.

The increase of the defence spending was announced by Prime Minister Li Keqiang in his work report submitted to China's legislature - the National People's Congress.

The hike marks an increase of over US$ 10 billion over last year's US$ 132 billion, making China the second largest military spender after the United States whose national defence budget accounted to about US$ 600.4 billion in 2013.

Chinese official media, however, said the hike is the lowest in five years as the second largest economy confronts mounting pressure in the face of an economic slowdown.

Chinese economy grew last year at 7.4 per cent, the lowest in 24 years missing the official target of 7.5 per cent.

According to a budget report released shortly before the NPC, the government plans to raise defence budget to 886.9 billion yuan (about US$ 144.2 billion).

Nonetheless, the 10.1 per cent rise represented the lowest expansion in China since 2010, when the defence budget was set to grow by 7.5 per cent.

The figure has thereon been riding on a multi-year run of double-digit increases, expanding 12.2 per cent last year.

Thursday's budget report did not explain the rationale behind this year's abated growth, but said that national defence development would be coordinated with the country's economic growth.

The report played down brewing new concerns that the world's economic powerhouse is losing steam stressing that China is now in a "new normal" state, where a balance ought to be stricken between growth and structural optimisation.

It said China will comprehensively strengthen modern logistics, step up national defence research and development of new- and high-technology weapons and equipment, and develop defence-related science and technology industries.

"Building a solid national defence and strong armed forces is fundamental to safeguarding China's sovereignty, security, and developmental interests," the report said.

China's military spending has long been a source of concern, especially to India and other countries in the neighbourhood, as also warranted them to increase their own defence spending substantially.

Amid territorial and maritime disputes with its neighbours, the world's largest military continues to maintain high defence spending to modernise its military in a bid to catch up with the US.

China's defence budgets grew at 12.7 per cent in 2011, 11.2 per cent in 2012, and 10.7 per cent in 2013.

Chinese officials said that it would be better to assess defence spending as a percentage of GDP, and on that score, China's allocation last year is 2.0 per cent compared to the 3.8 per cent of the US, Russia's 4.1 per cent and India's 2.5 per cent.

Although, the rise in the defence budget in the past years has surpassed GDP growth, China's military expenditure in 2014 accounted for less than 1.5 per cent of GDP, well below the world's average of 2.6 per cent.

Per capita military spending is even less, representing only about 4.5 per cent of the United States, 11 per cent of Britain and 20 per cent of Japan, the state-run Xinhua news agency said.

With 2.3 million personnel on rolls, the People's Liberation Army, which is the world's largest military itself, it required a large budget for salaries and upkeep, they said.

Some experts believe the expenditure is still far from the level it needs to be in the face of increasingly severe security challenges, Xinhua said.

Describing the 2015 defence budget increase as "moderate and reasonable," Chen Zhou, a researcher with the Academy of Military Sciences, said the rise was in line with China's national defence needs and its commitment to peaceful development.

"The army is in the key phase of informationisation and mechanisation as well as deepening reforms. A moderate, sustained increase in the military budget is thus necessary," he said.