China to ramp up military spending by 7.2% while US looks to cut costs

CHINA is set to increase its defense spending by about 7.2 per cent in 2025, matching last year’s growth and reflecting President Xi Jinping’s ambition to build a military that can challenge the US.

The outlay will rise to about 1.78 trillion yuan (S$328 billion) this year, according to a Finance Ministry report released on Wednesday at an annual parliamentary meeting in Beijing.

China’s rise in defence spending contrasts with the Trump administration’s plans to cut military funding by 8 per cent over the next five years as part of a broader effort to reduce the federal budget and headcount. The US spends more on its military than any other country, with China a distant second. 

Earlier this year, former US Defense Secretary Lloyd Austin proposed a five-year plan starting with a US$926.5 billion defence budget for fiscal 2026, increasing to over US$1 trillion in fiscal 2028. 

In comparison, China’s outlay on the People’s Liberation Army has risen by at least 6.6 per cent annually for the past three decades, though the actual figure is likely much higher than the official number. Last year, the Pentagon estimated that China’s total spending was around US$330 billion to US$450 billion — 1.5 to two times the publicly reported amount.

Despite the funding gap with the US, Xi has set a 2027 deadline to build a modern military, with the goal of making China’s armed forces among the world’s best by 2049. As part of that effort, the US has said Beijing is rapidly building out its arsenal of nuclear weapons, targeting to have at least 1,000 warheads by 2030, up from 500. The US has about 3,750.

On Wednesday, Chinese Premier Li Qiang vowed “all-out efforts” to meet the 2027 goal, which coincides with the PLA’s 100th anniversary. 

“We will step up military training and combat readiness so as to firmly safeguard China’s sovereignty, security and development interests,” Li said as he delivered the annual government work report in Beijing.

China’s rising military assertiveness has seen the PLA hold military exercises off Australia, Vietnam and Taiwan, while its growing projection of power has attracted criticism from the Philippines, Japan, South Korea and India.

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The PLA is especially focused on Taiwan, a self-governing democracy of 23 million people, located about 161 km off China’s coast. Beijing wants to bring Taiwan under its control, by force if necessary.

The Chinese military — which has more troops and naval vessels than any other nation — has carried out at least three rounds of major manoeuvres is near the US-backed island since President Lai Ching-te took office in May last year.

China’s military ambitions face challenges from endemic corruption. A sweeping graft purge has ensnared at least 30 senior officials since mid-2023, including two that sat on the body leading the armed forces, the Central Military Commission. BLOOMBERG