Article Posted on : - Mar 13, 2014

BEIJING (PTI): In a major strategic shift, China has for the first time decided to spend more from its USD 132 billion defence budget to upgrade navy and air force amid deepening conflict with Japan, South China Sea dispute and US military push into Asia-Pacific.

The shift in allocation of funds, changing the old pattern of their equal distribution among the three forces in the past was part of a blueprint drawn by China's new leadership headed by President Xi Jinping at a key meeting recently where big structural reforms for the country's military were finalised, official media here reported.

Significantly, Xi - in his meeting with defence delegates attending the annual session of the Parliament on Tuesday asked the 2.3 million-strong world's largest standing military to hasten modernisation, focussing on combat capability.

He also sent out a stern message to the countries with which China has territorial disputes.

"We expect peace, but we shall never give up efforts to maintain our legitimate rights, nor shall we compromise our core interests, no matter when or in what circumstances," he said.

He also hinted at permitting private sector in military hardware production.

Market can play bigger role in military modernisation to jointly create a highly effective development pattern that features army-civilian integration, he said.

His remarks followed a CCTV report stating that China opted to spend more money on naval upgrade in view of raising maritime disputes and the growing interests of Chinese military interests overseas, shifting the balance towards improving the capability of the navy and air force.

Under this, more money will be allocated to navy and its high-tech capability, the report said.

China last week allocated a whopping USD 132 billion for defence, a hike of 12.2 per cent in one of the highest in its two decade-long double-digit raise in military spending.

In the last few years, China commissioned its first aircraft carrier, with plans to build three more besides acquiring long-range capability to launch missile attack on rival aircraft carriers. Strategic analysts say this would largely limit the mobility of the US aircraft carriers, most of which were expected to be shifted to Asia-Pacific in the next few years under the Obama Administration's pivot to Asia.

The rapid development of Chinese Navy raised concerns in India as it becomes a major challenge to Indian Navy's own plan to emerge as strong blue-water navy with wide range of capabilities.

The huge increase in China's defence spending came in the first budget after Xi took over power last year emerging as the most powerful leader, heading the ruling Communist Party, the military and the presidency, unlike his predecessor, Hu Jintao who started his ten-year tenure only with the party and the presidency.