China on Sunday announced a 7.2% increase in its defense budget for the coming year, up slightly from last year’s 7.1% rate of increase. China’s government announced plans for a consumer-led revival of the struggling economy as its legislature opened a session Sunday that will tighten President Xi Jinping’s control over business and society. Premier Li Keqiang, the top economic official, set this year’s growth target at “around 5%” following the end of anti-virus controls that kept millions of people at home and triggered protests. The Associated Press has the story:
China expands defense budget 7.2%, Econ. 5%
Newslooks- BEIJING (AP)
China on Sunday announced a 7.2% increase in its defense budget for the coming year, up slightly from last year’s 7.1% rate of increase.
That marks the eighth consecutive year of single-digit percentage point increases in what is now the world’s second-largest military budget. The 2023 figure was given as 1.55 trillion yuan ($224 billion), roughly double the figure from 2013.
Along with the world’s biggest standing army, China has the world’s largest navy and recently launched its third aircraft carrier. According to the U.S., it also has the largest aviation force in the Indo-Pacific, with more than half of its fighter planes consisting of fourth or fifth generation models.
China also boasts a massive stockpile of missiles, along with stealth aircraft, bombers capable of delivering nuclear weapons, advanced surface ships and nuclear powered submarines.
The 2 million-member People’s Liberation Army is the military wing of the ruling Communist Party, commanded by a party commission led by president and party leader Xi Jinping.
In his report Sunday to the annual session of China’s rubber-stamp parliament, Premier Li Keqiang said that over the past year, “We remained committed to the Party’s absolute leadership over the people’s armed forces.”
“The people’s armed forces intensified efforts to enhance their political loyalty, to strengthen themselves through reform, scientific and technological advances, and personnel training, and to practice law-based governance,” Li said.
Li touched on what he called a number of “major achievements” in national defense and military development that have made the PLA a “more modernized and capable fighting force.”
He offered no details but cited the armed forces’ contributions to border defense, maritime rights protection, counterterrorism and stability maintenance, disaster rescue and relief, the escorting of merchant ships and China’s draconian “zero-COVID” strategy that entailed lockdowns, quarantines and other coercive measures.
“We should consolidate and enhance integration of national strategies and strategic capabilities and step up capacity building in science, technology and industries related to national defense.” That includes promoting “mutual support between civilian sectors and the military,” he said.
China spent 1.7% of GDP on its military in 2021, according to the World Bank, while the U.S., with its massive overseas obligations, spent a relatively high 3.5%.
Although no longer increasing at the double-digit annual percentage rates of past decades, China’s defense spending has remained relatively high despite skyrocketing levels of government debt and an economy that grew last year at its second-lowest level in at least four decades.
Li set a growth target of “around 5%” in his address, as he announced plans for a consumer-led revival of the economy still struggling to shake off the effects of “zero-COVID.”
While the government says most of the spending increases will go toward improving welfare for troops, the PLA has greatly expanded its overseas presence in recent years.
China has already established one foreign military base in the Horn of Africa nation of Djibouti and is refurbishing Cambodia’s Ream Naval Base that could give it at least a semi-permanent presence on the Gulf of Thailand facing the disputed South China Sea.
The modernization effort has prompted concerns among the U.S. and its allies, particularly over Taiwan, the self-governing island democracy that China claims as its territory to be brought under its control by force if necessary.
That has prompted a steady flow of weapons sales to the island from the U.S., including ground systems, air defense missiles and F-16 fighters. Taiwan itself recently extended mandatory military service from four months to one year and has been revitalizing its own defense industries, including building submarines for the first time.
In his remarks on Taiwan, Li said the government had followed the party’s “overall policy for the new era on resolving the Taiwan question and resolutely fought against separatism and countered interference.”
Along with Taiwan, tensions have been rising with the U.S. over China’s militarization of islands in the South China Sea, which it claims virtually in its entirety, and most recently, the shooting down of a suspected Chinese spy balloon over the U.S. east coast.
The huge capacity of China’s defense industry and Russia’s massive expenditures of artillery shells and other materiel in its war on Ukraine have raised concerns in the U.S. and elsewhere that Beijing may provide Moscow with military assistance.
China sets this year’s economic growth target at ‘around 5%’
Newslooks- BEIJING (AP)
China’s government announced plans for a consumer-led revival of the struggling economy as its legislature opened a session Sunday that will tighten President Xi Jinping’s control over business and society.
Premier Li Keqiang, the top economic official, set this year’s growth target at “around 5%” following the end of anti-virus controls that kept millions of people at home and triggered protests. Last year’s growth in the world’s second-largest economy fell to 3%, the second-weakest level since at least the 1970s.
“We should give priority to the recovery and expansion of consumption,” Li said in a speech on government plans before the ceremonial National People’s Congress in the Great Hall of the People in central Beijing.
The full meeting of the 2,977 members of the NPC is the year’s highest-profile event but its work is limited to endorsing decisions made by the ruling Communist Party and showcasing official initiatives.
This month, the NPC is due to endorse the appointment of a government of Xi loyalists including a new premier after the 69-year-old president expanded his status as China’s most powerful figure in decades by awarding himself a third five-year term as party general secretary in October, possibly preparing to become leader for life. Li, an advocate of free enterprise, was forced out as the No. 2 party leader in October.
Xi’s new leadership team will face challenges ranging from weak global demand for exports and lingering U.S. tariff hikes in a feud over technology and security to curbs on access to Western processor chips due to security fears.
Separately, the Ministry of Finance announced a 7.2% budget increase for the ruling party’s military wing, the People’s Liberation Army, to 1.55 trillion yuan ($224 billion), the 29th straight annual increase. China’s military spending is the world’s second highest after the United States. The Stockholm International Peace Research Institute says the two countries together account for half of global military outlays.
Li’s report called for boosting consumer spending by increasing household incomes but gave no details in his unusually brief, 53-minute speech. It was less than half the length of work reports in some previous years.
The premier called for “building up our country’s strength and self-reliance in science and technology,” an area in which Beijing’s state-led efforts to create competitors in electric cars, clean energy, telecoms and other fields have strained relations with Washington and other trading partners. They complain China steals or pressures foreign companies to hand over technology and improperly subsidizes and shields its fledgling competitors in violation of its market-opening commitments.
Xi earlier singled out encouraging jittery consumers and entrepreneurs to spend and invest as a priority at the ruling party’s economic planning meeting in December.
Beijing needs to “fully release consumption potential,” Xi said, according to a text released last month.
Since taking power in 2012, Xi has promoted an even more dominant role for the ruling party. He has called for the party to return to its “original mission” as China’s economic, social and cultural leader and carry out the “rejuvenation of the great Chinese nation.”
Xi has crushed dissent, stepped up censorship and control over information, and tightened control over Hong Kong.
Xi’s government has tightened control over e-commerce and other tech companies with anti-monopoly and data security crackdowns that wiped billions of dollars off their stock market value.
Beijing is pressing them to pay for social welfare and official initiatives to develop processor chips and other technology. That has prompted warnings economic growth will suffer.
Li’s report Sunday reinforced the importance of state industry. It promised to support entrepreneurs who generate jobs and wealth but also said the government will “enhance the core competitiveness” of state-owned companies that dominate industries from banking and energy to telecoms and steel.
Li also called for “resolute steps” to oppose formal independence for Taiwan, the self-ruled island democracy claimed by Beijing as part of its territory. He called for “peaceful reunification” between China and Taiwan, which split in 1949 after a civil war, but announced no initiatives.
Taiwan never has been part of the People’s Republic of China, but Beijing says it is obligated to unite with the mainland, by force if necessary. Xi’s government has stepped up efforts to intimidate the island by flying fighter jets and bombers nearby and firing missiles into the ocean.
Chinese economic growth has struggled since mid-2021, when tighter controls on debt that Beijing worries is dangerously high triggered a slump in the vast real estate industry, which supports millions of jobs. Smaller developers were forced into bankruptcy and some defaulted on bonds, causing alarm in global financial markets.
Longer term, the workforce has been shrinking for a decade, putting pressure on plans to increase China’s wealth and global influence.
Consumer spending is gradually recovering, but the International Monetary Fund and some private sector forecasters expect economic growth this year as low as 4.4%, well below the official target.
A measure of factory activity rose to a nine-year high in February. Other measures of activity including the number of subway passengers and express deliveries rose.
A central bank official said Friday real estate activity is recovering and lending for construction and home purchases is rising.
A recovery based on consumer spending is likely to be more gradual than one driven by government stimulus or a boom in real estate investment. But Chinese leaders are trying to avoid reigniting a rise in debt and want to nurture self-sustaining growth based on consumption instead of exports and investment.
The official in line to become premier is Li Qiang, a former party secretary of Shanghai who is close to Xi but has no government experience at the national level. Li Qiang was named No. 2 party leader in October.
That reflects Xi’s emphasis on promoting officials with whom he has personal history and bypassing party tradition that leadership candidates need experience as Cabinet ministers or in other national-level posts.
If achieved, the official growth target would be an improvement over last year but down sharply from 2021’s 8.1%.
Last year’s slump had global repercussions, depressing Chinese sales of autos and consumer goods and demand for oil, food and other imports. Even after the end of anti-virus curbs, auto sales fell by double digits in January and retail sales contracted.
Entrepreneurs and foreign companies have been rattled by tighter political controls.
Foreign business groups said last year global companies were shifting investment plans away from China because travel curbs blocked executives from visiting the country.
Li, the premier, tried to reassure foreign investors by promising to open Chinese markets wider and repeating official pledges of equal treatment with domestic enterprises.
“China is sure to provide even greater business opportunities for foreign companies,” he said.
The party has indicated its tech crackdown is winding down but has given no sign it is backing off a campaign to tighten political control over the industry.
Entrepreneurs were shaken anew in mid-February when a star banker, Bao Fan, who was involved in some of the biggest tech deals, disappeared. His company announced last week Bao was “cooperating in an investigation” but gave no details.
