Chinese military spending to increase 6.8% this year

China is set to grow its defence spending by 6.8 per cent this year, a slight uptick compared with last year's increase of 6.6 per cent amid the Covid-19 pandemic.

Defence spending this year will rise to 1.36 trillion yuan (S$281 billion), up from 1.27 trillion yuan last year, figures from the country's Budget yesterday showed.

China does not provide a breakdown of its defence budget. Its defence spending is a closely watched gauge for how the world's second-largest economy will boost its military capabilities amid tensions with the United States and in the South China Sea.

In its budget report yesterday, the Finance Ministry said: "We will provide stronger financial guarantees to... help China's defence capabilities rise in step with its economic strength."

Last year, the pandemic caused China's military spending to grow at its slowest pace since 2016.

Still, Chinese naval spending, fuelled by Beijing's territorial disputes in the South China Sea, helped drive global military spending to a record US$1.8 trillion (S$2.4 trillion) last year, according to an International Institute for Strategic Studies report on Feb 25.

In recent years, China's armed forces have grown their arsenal to include aircraft carriers, stealth fighters and hypersonic weapons.

Military expert Li Nan, a visiting senior research fellow at the National University of Singapore's East Asian Institute, said this year's growth beat his expectation of a 5 per cent boost.

"It's quite an ambitious budget, given that last year's economic growth was 2.3 per cent because of the pandemic," Dr Li said, adding that last year's rise in military spending came on the back of a 6.1 per cent growth in gross domestic product in 2019.

"That's one of the factors that the government considers when coming up with the budget," he said.

He said the increase comes as China beefs up its cyber and space warfare capabilities while maintaining operations in the South China Sea and Taiwan Strait. Recent clashes with India might have also contributed to the larger-than-expected budget, he added.

Dr Collin Koh, a research fellow at the Institute of Defence and Strategic Studies, said this military budget "is an outcome of the attempt to balance economic sentiment and the need to push on with military modernisation amid what Beijing continues to perceive as a challenging security environment".

A version of this article appeared in the print edition of The Straits Times on March 06, 2021, with the headline 'Chinese military spending to increase 6.8% this year'. Subscribe