China Lifts Military Spending for needing more warships, missiles and fighter planes
2012-03-05 (China Military News cited from businessweek.com) -- China plans to increase defense spending 11.2 percent this year as the countrys expanding global commitments and lingering territorial disputes drive demand for more warships, missiles and fighter planes.
Military spending is set to rise this year to about 670 billion yuan ($106.4 billion), Li Zhaoxing, spokesman for Chinas National Peoples Congress, said yesterday ahead of a speech today by Premier Wen Jiabao to open the annual 10-day session of the countrys legislature.
Chinas defense spending, the second highest in the world after the U.S., has risen in tandem with the expansion of its economy and a new focus by the Obama administration on the Asia- Pacific region. China is also involved in spats with Vietnam, the Philippines and Japan over control of oil- and gas-rich waters.
Chinas got a lot of things that require a state to have military hardware for, Geoff Raby, who was Australias ambassador to China until last year, said in a telephone interview. China lives in a neighborhood where it doesnt have any natural allies or friends.
Satellite Maker Rises
China North Optical-Electrical Technology Co. (600435), the maker of military control systems and sensors, rose as much as 9.7 percent in Shanghai trading, the biggest intraday gain in more than a month. The Beijing-based company was up 6.3 percent at 10.31 yuan as of 10:14 a.m. China Dongfanghong Spacesat Co. (600118), which builds satellites, advanced as much as 3.9 percent.
Defense spending has more than doubled since 2006, tracking a rise in nominal gross domestic product from 20.9 trillion yuan to 47.2 trillion yuan in that time. Chinas spending on domestic security will be higher than military spending this year for the third straight year, according to Finance Ministry figures released today, underscoring the governments concerns about growing social unrest and threats to stability in Tibet and Xinjiang province.
The growing defense budget has stoked concerns among Chinas neighbors and the U.S., which announced last year a strategic shift toward Asia including deploying forces to a base in Australia. Chinese defense spending as a percentage of GDP was about 1.3 percent in 2011, falling from about 1.4 percent in 2006.
Reasonable and Appropriate
The Chinese government has maintained reasonable and appropriate growth of defense spending on the strength of rapid economic and social development and the steady increase of fiscal revenues, Li said.
He spoke a day before the start of the annual meeting of the National Peoples Congress, the 3,000-member parliament that is legally the highest governmental body in China. Sessions run from today to March 14.
U.S. analysts say actual Chinese defense spending is much higher than the amount announced by Li yesterday. Phillip Saunders, director of the Center for the Study of Chinese Military Affairs at National Defense University in Washington, estimates Chinas true defense spending is 50 percent higher than the official budget because items such as research and development as well as foreign weapons procurement are not included. Li said research and procurement are included.
Off-Budget Items
Taylor Fravel, a professor at the Massachusetts Institute of Technology who studies Chinas relations with its neighbors, said the number of off-budget items such has foreign arms procurement have decreased in recent years. China includes support for veterans in its budget while the U.S. does not, Fravel said.
While Chinese military spending is still officially less than a fifth of U.S. defense spending, its neighbors are concerned about the countrys expansive territorial claims. China claims indisputable sovereignty over the islands, reefs and shoals of the South China Sea and their surrounding waters, demarcating a tongue-shaped claim on Chinese maps extending hundreds of miles from mainland China.
China is always ready to use force if necessary to ensure its territorial integrity in the South China Sea, Maj. Gen. Luo Yan, deputy secretary general of the Chinese Academy of Military Science, said today. Chinas military should be strong and big, and the country should do more to mark its rightful claim to the area, he told reporters in Beijing.
Military Buildup
Beijing is also continuing a military buildup across the Taiwan Strait. The U.S. is obligated by a 1979 law to provide defensive weapons to Taiwan, which China claims as a province. A Pentagon report published last August said that as of December, 2010, Chinas Peoples Liberation Army had deployed between 1,000 and 1,200 short-range ballistic missiles to units opposite Taiwan even as cross-Strait ties have improved.
Last year the U.S. announced it would sell Taiwan $5.3 billion in upgrades for its 145 Lockheed Martin Corp. (LMT) F-16 fighters.
China will boost spending on domestic security by 11.5 percent this year to 701.8 billion yuan, outstripping spending on defense by 31.5 billion yuan, according to a table in the work report issued by the Finance Ministry.
Economic Interests
Economic interests around the world, including 812,000 workers abroad at the end of 2011, mean Chinas military may increasingly deploy across the globe. China set a frigate to Libya last year to help evacuate thousands of Chinese nationals during the revolt that saw the overthrow of Muammar Qaddafi. Li said Chinese warships have made eight deployments to help international efforts to protect sea lanes from Somali pirates. Chinese peacekeepers now patrol as part of a United Nations mission in Sudan.
The country is also increasingly dependent on global commerce for its well-being, factors which in past eras led countries such as the U.K. and the U.S. to boost military spending. Combined imports and exports last year amounted to $3.6 trillion, and China, the worlds biggest energy consumer, is also the worlds second-biggest oil importer after the U.S.
The U.S., with an economy less than three times the size of Chinas, has a military budget about between five and six times as big. The Pentagon is asking for $613.9 billion next year, which also includes $88.5 billion in supplemental spending for wars. Unlike Chinas, the U.S. defense budget is shrinking. The Pentagons request is $31.8 billion less than the amount enacted by Congress for 2012.
Chinas defense spending increased an average of 16.2 percent a year from 1999 to 2008, according to figures from a defense white paper published in 2009. While building up spending, China has also proclaimed that it takes a nonconfrontational approach in the region.
Chinas limited military strength is aimed at safeguarding sovereignty, national security and territorial integrity, Li said. It will not in the least pose a threat to other countries.
China Military News