Image: China's Great Hall of the People
Andy Wong  /  AP
Red flags flutter against a Chinese national emblem on Beijing's Great Hall of the People, where the Chinese People's Political Consultative Conference was in session on Thursday.
msnbc.com news services
updated 3/4/2011 4:29:31 AM ET 2011-03-04T09:29:31

China will boost its defense spending by 12.7 percent this year, a legislative spokesman said Friday, while reiterating that Beijing's return to double-digit military budget growth after a dip in 2010 is not a threat to other countries.

China's defense buildup and military plans in recent years have alarmed its neighbors and the United States, where military and political leaders have spoken about a lack of transparency and cooperation in the process. The country's growing military clout has been accompanied by a more assertive tone in Chinese diplomacy, evident in skirmishes last year with Japan and Southeast Asia over disputed islets, and in numerous disagreements with Washington.

The increase to just over 601 billion yuan ($91.5 billion) would go toward "appropriate" hardware spending and salary increases for the 2.3 million members of the People's Liberation Army, spokesman Li Zhaoxing told a news conference in the Great Hall of the People, the seat of the legislature.

Chinese media reports say members of the PLA, the world's largest standing military, will receive raises of up to 40 percent this year, their third pay increase in six years.

Asset bubbles
The announcement comes a day ahead of the opening of the National People's Congress, where the country's social and economic goals will be laid out for the next five years amid lower growth targets and concerns about inflation and asset bubbles.

The increase is up from the 7.5 percent forecast in 2010, which broke a string of years of double-digit growth as China transformed its military into a more modern force as its economy boomed to become the world's second largest. The rate of increase peaked at 17.8 percent in 2007.

Li said the defense budget accounted for just 6 percent of China's national budget and less than 2 percent of its gross domestic product, a lower figure than in other countries.

"The government has always tried to limit military spending and it has set the defense spending at a reasonable level to ensure the balance between national defense and economic development," he said.

Many experts believe China's actual spending on the PLA is far higher than what the government reports.

"What this budget figure suggests is that deep down, China's priorities haven't changed," said Rory Medcalf of Australian think tank the Lowy Institute.

"The PLA is an important and powerful force in decision-making and there is obviously a desire to signal to the Chinese public and Chinese nationalists that China is going to continue to get stronger."

Li, a former foreign minister, said China's spending plans are transparent.

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"This will not pose a threat to any country," he said.

But China's assertive behavior — it sent navy vessels and military aircraft closer to Japanese territory last year than ever before — magnifies the perceived threat from its growing defense spending. India, which has border disputes with China, has also voiced concern about China's military.

Sea incidents involving the Chinese military and fishing boats are also common.

Relations between China and Japan chilled last year when Japan detained the Chinese skipper of a boat that crashed into its ships near disputed isles in the East China Sea, the site of vast potential gas and oil reserves.

China's loud, renewed claims to a vast swathe of waters and mostly uninhabited islets in the South China Sea, along with the expansion of its military presence there, likewise rattled Southeast Asian nations in 2010.

Just this week, the Philippine military deployed two warplanes near a disputed area in the South China Sea after a ship searching for oil complained it was harassed by two Chinese patrol boats, Vietnam protested Chinese military drills in a group of islands that both countries claim, and Japan scrambled F-15 fighter jets after Chinese surveillance and anti-submarine aircraft flew into airspace near disputed islands in the East China Sea.

Other nations are upgrading their forces in response to China's build-up, which included the first test flight of the J-20 stealth fighter jet in January, a show of muscle during a visit by U.S. Defense Secretary Robert Gates.

Video: Gates confirms China's stealth jet test (on this page)

China also is moving toward launching its first aircraft carrier — though it will take years to learn how to operate it — along with sophisticated new submarines and larger surface ships.

India increased annual defense spending by about 11.6 percent this week and is shopping for advanced fighter jets, transport aircraft, surveillance helicopters and submarines.

"For the United States, for Japan, for India, for all of China's neighbors, this is a burgeoning force whose capabilities are going to start seriously challenging everybody's security calculations," said Dean Cheng, China security expert at the Heritage Foundation in Washington.

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Spokesman Li said the military spending rise was justified. China posed no threat to anyone, he added.

"China's defense spending is relatively low by world standards," he said. "China has always paid attention to restraining defense spending."

China's military budget is dwarfed by what the United States spends every year, but its actual spending, including funding for new weapons and research and development, is believed to be as much as double the official figure.

The Pentagon last month rolled out a record base budget for fiscal year 2012 of $553 billion, up $22 billion from the level enacted for 2010.

Ni Lexiong, a defense expert at Shanghai University of Political Science and Law, said China needs to increase its defense spending in response to closer military cooperation between the U.S., Japan, South Korea and other countries in the region.

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He said Beijing also needs to spend more on its military to deal with threats to its citizens and property overseas. Last month, Beijing took the unprecedented step of sending military transport planes and a navy missile frigate to help evacuate 32,000 Chinese from strife-torn Libya.

High inflation, especially for food, and the need to buy supplies on the open market further justify higher military spending, Ni said.

China's latest five-year plan, which will be approved during the legislature's annual 10-day meeting, is expected to feature a shift from rapid economic growth to slower development that is of higher quality and more sustainable, with a greater emphasis on services and broader distribution of wealth.

Li promised unspecified measures to tame inflation, which hit 4.9 percent in January. He blamed price rises on a range of factors, including higher global commodity prices, speculation and media hype.

The Associated Press and Reuters contributed to this report.

Video: Gates confirms China's stealth jet test

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