NEWS ANALYSIS

China beefs up spending on social security, healthcare

While the spotlight of China's budget this year was on the 12.2 per cent boost in defence spending - its fastest pace since 2011 - there were other parts of the government's spending plan such as its boost in healthcare and social security that were as significant.

National defence took up the biggest chunk of the projected 15 trillion yuan (S$3 trillion) of national expenditure this year, unveiled on Wednesday at the opening session of the national parliament.

Still, Beijing's 9.8 per cent jump in social security and employment spending to 715 billion yuan also reflected its domestic priorities, amid growing public pressure to secure jobs for China's record 7 million college graduates every year and provide adequate safety nets for its fast-ageing population.

This compared with 657 billion yuan in actual spending last year, which exceeded last year's budget and represented a 14 per cent increase.

China also invested heavily on healthcare last year, upping expenditure by 26.4 per cent to 258 billion yuan.

In contrast, the budgeted increase in medical care will be 7 per cent, an increase to 211 billion yuan. But this slowdown comes as China launches new reforms to open up its healthcare system to private investors, which could potentially unleash much greater investments in better quality services than if the sector were funded by public monies alone.

Reflecting China's push to be a green, high-tech powerhouse, Beijing also allotted more funding to science and technology - up 9 per cent to 267 billion yuan - and education - the third-largest item on the budget with a projected 413 billion yuan of spending.

"China is seeking to upgrade its economy, so there is a greater need to spend on nurturing talent and building up innovative capability. The budget this year reflects such priorities," said Beijing-based public finance researcher Huang Wenjing.

China's defence spending will increase 12.2 per cent this year, its fastest pace since 2011, reflecting its growing security concerns over territorial disputes with neighbours and its expanding overseas interests.

The military spending spike of 12.2 per cent to 808 billion yuan (S$167 billion) this year