March 10, 2016 12:00 pm JST

Slowing growth dents China's defense budget

KEN MORIYASU, Nikkei staff writer

BEIJING   President Xi Jinping's "Chinese Dream" of attaining great power status envisions a modern military that can protect China's borders as well as the islands and waters that it considers its own. But it will pursue that endeavor with slower growth in its military spending, as the government set aside 954.35 billion yuan ($146.34 billion) -- a 7.6% increase from last year -- for defense.

     This is the lowest growth since 2010, when the government tightened its belt after the global financial crisis, and only the second single-digit increase since 1989. The budget, disclosed on the first day of the National People's Congress, reflected the country's weaker gross domestic product growth, which is forecast at 6.5-7%.

     The figure was lower than the U.S. was expecting. The Pentagon's annual report to Congress on China's military development last year noted that China's military budget had grown at an average of 9.5% per year in inflation-adjusted terms from 2005 through 2014, and it "will probably sustain defense spending growth at comparable levels for the foreseeable future."

     Although the Chinese military has not fought a war since 1979 -- when it fought the Vietnamese -- the world's largest military has been on a spending spree, obtaining foreign technology and reproducing it to suit their own purposes. The Pentagon has warned that "China's military modernization has the potential to reduce core U.S. military technological advantages."

     The dent in this year's budget will not bring about immediate changes in the landscape. "The fruits of military spending show up 10 years, 20 years down the road," said Kunihiko Miyake, research director at the Canon Institute for Global Studies. "The weapons the Chinese are using today are the result of years and years of double digit growth in military spending."

     "Chinese budgets are more of a political statement than a sum of actual figures," said Tetsuo Kotani, chief researcher at the Japan Institute of International Affairs, a think tank. "They kept the growth of defense higher than the overall GDP to show consideration to the military, yet they kept it low enough to deflect any criticism from the U.S. and the world."

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