China announces about 7 per cent hike in defence spending

With India announcing a less than expected 6.2 per cent rise in February to around $40 billion, China's spending will be more than three and a half times India's.

China on Saturday said its defence budget in the coming year would rise by around 7 per cent, with its spending likely to cross 1 billion Yuan for the first time and dwarf India's by three-and-a-half times.

The budget, which will be approved at the annual National People's Congress (NPC) or Parliament session which opens on Sunday, comes as China pushes forward a massive modernisation programme and as its Navy expands its global footprint.

With India announcing a less than expected 6.2 per cent rise in February to around $40 billion, China's spending will be more than three and a half times India's.

China's defence spending last year was 954 million Yuan or $146 billion in 2016, an increase of 7.6 per cent - the lowest in six years. China's defence outlay grew 10.1 per cent in 2015 to 886.85 billion Yuan after many years of double-digit growth.

An around 7 per cent hike would take spending to more than 1 billion Yuan, but is not a huge increase in dollar terms. With a depreciating Yuan, a seven per cent rise would be around $148 billion, up from $146 billion last year.

WHY DID CHINA INCREASE ITS SPENDING?

China's actual defence spending, some experts say, was closer to $225 billion last year, given the overlap between many civilian industries and paramilitary forces with the military.

NPC spokesperson Fu Ying defended the hike, pointing to the US military which spends more than $600 billion on its military. Fu pointed out that China spend 1.3 per cent of its GDP on defence, less than many other countries.

"The US will continue to grow military spending," Fu said.

On concerns of China's neighbours, Fu said it was China's view that territorial and maritime disputes should be "settled peacefully".

But at the same time she said China "needs the ability to safeguard its sovereign interests and rights."

The hike comes as China goes forward with modernising its armed forces and expanding its navy.

Much of the hike, analysts say, is likely to fund the PLA Navy's plans. Last month, China announced that its second aircraft carrier was nearing readiness and would likely be operational by 2020.

Yin Zhuo, a rear admiral and a senior researcher at the PLA Navy Equipment Research Center, told the Global Times that "in order to protect China's territories and overseas interests, China needs two carrier strike groups in the West Pacific Ocean and two in the Indian Ocean. So we need at least five to six aircraft carriers," he said.