China NPC: Government sets trillion yuan military budget

Chinese military parade in Inner Mongolia (file image)Image copyright
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China has the world’s largest army and has focused on modernising it in recent years

China has announced a military budget of 1.11 trillion yuan ($175bn; £126bn) for the coming year.

The figure, an 8% increase on last year, was announced by Prime Minister Li Keqiang as the annual meeting of parliament got under way in Beijing.

Mr Li also set a target of 6.5% growth for the economy.

The National People’s Congress (NPC) is also expected to remove the two-term presidential limit, enabling Xi Jinping to remain in office indefinitely.

The move, which was long expected but has been controversial even in China, has helped cement Mr Xi’s status as the most powerful leader since Chairman Mao Zedong.

Thousands of Chinese legislators at Monday’s meeting burst into applause when the plan to scrap the two-term limit was read out to the chamber.

The NPC is largely a rubberstamp parliament, endorsing decisions already made by the Communist Party.

Its delegates, about 3,000 of them representing all provinces and regions, are technically elected, but in practice, hand-picked by the Party.

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Media captionHu Jia is being forced to leave Beijing

The gathering takes place under tight security – known dissidents are routinely removed from the capital before it takes place.

Tackling the debt risk

The government has said it will focus on three main goals over the coming year: tackling China’s exposure to financial risk, reining in rampant pollution and continuing to combat poverty.

In his opening report to parliament, Mr Li announced the new military budget, saying the army must be “strong as stone” in the face of “profound changes in the national security environment”.

The rise is seen as a good indication of China’s strategic ambitions, as it continues to modernise its army – the world’s largest – and develop its infrastructure in contested areas like the South China Sea and its Himalayan border regions.

While expected, the spending increase will likely further unnerve China’s regional rivals, including the US, which has just brought its massive aircraft carrier the USS Carl Vinson to Vietnam.

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Many of China’s regional delegates attend in traditional dress as a show of diversity

China is now the world’s second largest economy. After years of rapid growth, millions have been lifted out of poverty and there is a ballooning middle class.

There are also some 100 billionaires in China, many of them are members of the the Chinese People’s Political Consultative Conference (CPPCC), the top advisory body which is also meeting this week.

But a reliance on borrowing has led to pressing political concerns about debt risk.

As expected, Mr Li’s report said reining in this risk would be a key policy for the coming year, promising to “see that internal risk controls are tightened in financial institutions” and a “serious crackdown on activities that violate the law like illegal fundraising and financial fraud”.

This could indicate further action like that taken against insurance giant Anbang, which was last month taken over by insurance regulators.

Mr Li set the growth target – the amount by which the economy is expected to continue expanding – at 6.5%, slightly lower than the 6.9% growth achieved in 2017.

On the horizon, as China lays out if financial ambitions, is a potential trade war brewing with the US, as the Trump administration pursues its policy of shifting the global balance in trade.

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China’s trade surplus with the US reached an all-time high of $275.81bn in 2017.

President Donald Trump has said this is the result of “very stupid” trade deals. He has already taken announced steep new tariffs on steel and aluminium imports and has threatened further measures targeting Chinese imports specifically.

NPC spokesman Zhang Yesui said on Sunday that while China does not want a trade war “if the US takes actions that hurt Chinese interests, China will not sit idly by”.

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