China confirms 7% increase in 2017 defence budget

[BEIJING] Chinese defence spending will rise this year by the smallest amount in more than a decade, figures published by state media showed on Monday, after the omission of exact figures from an annual budget report sparked questions over transparency.

The military budget for 2017 will increase by 7 per cent, to 1.044 trillion yuan (S$213.736 billion), about one-quarter of the proposed US defence spending for the year.

The budget increase, a figure that is closely watched around the world for clues to China's strategic intentions, comes as economic growth has slowed, with a target of about 6.5 per cent for the year.

The spokeswoman for China's parliament, Fu Ying, said on Saturday that defence spending for this year would rise about 7 per cent.

But in a highly unusual move, the Finance Ministry did not give spending figures in a report at Sunday's opening of the annual meeting of parliament, even as China pledged to strengthen maritime and air defences.

The official Xinhua news agency gave the figures on Monday on its microblog, citing an unnamed Finance Ministry official.

The expenditures would be used "mainly to support the deepening of national defence and military reforms", the official said, adding that the 7 per cent increase was compared to actual 2016 outlays.

Last year's budgeted hike of 7.6 per cent was the lowest in six years and the first single-digit rise since 2010, following a nearly unbroken two-decade run of double-digit increases.

China has repeatedly said its defence spending is transparent and it was not clear why defence numbers were not initially released. Huang Shouhong, director of the State Council Research Office, told reporters on Sunday there was "nothing secret about it".

Asked at a regular news briefing why the figures were not released on Sunday, Foreign Ministry spokesman Geng Shuang said, "What I can tell you is that China upholds the path of peaceful development and pursues a defensive defence policy".

China's military build-up has rattled nerves around the region, with its increasingly assertive stance in territorial disputes in the East China Sea, the South China Sea and over Taiwan, which China claims as its own.

Even with the rise of 7 per cent, China's defence spending amounts to only about a quarter of the US defence budget, though many experts believe its actual spending on the military to be higher than the official figure.

The Stockholm International Peace Research Institute (Sipri) put China's 2015 expenditures at about US$215 billion, versus a US Department of Defense estimate of more than US$180 billion.

China's budget puts defence spending at about 1.3 per cent of gross domestic product - matching the level of the last few years. The United States' military expenditures were about 3.3 per cent of its GDP in 2015, Sipri says.

The White House has proposed a 10 per cent increase in military spending to US$603 billion, even though the United States has wound down major wars in Iraq and Afghanistan and is already the world's pre-eminent military power.

China has moved swiftly to upgrade military hardware, but integration of complex systems across a regionalised command structure has been a major challenge its reforms aim to tackle.

Other concerns for China's military include how to deal with the 300,000 troops President Xi Jinping announced in 2015 would be cut, mainly by the end of 2017.

Last month veterans demonstrated in Beijing for two consecutive days to demand unpaid retirement benefits in a new wave of protests highlighting the difficulty of managing demobilised troops.

REUTERS