China boosts military spending 10.7%
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BEIJING -- China's military spending will grow by 10.7 percent this year, a notable increase in the face of sluggish economic growth, according to official reports delivered Tuesday at the kickoff of a two-week meeting that will culminate in elevation of China's new president and premier.
The military increase continues nearly two decades of double-digit growth and comes at a critical time, as the incoming leaders are consolidating their power and shoring up personal relations with China's generals.
Leaders also set their target for China's economy to grow 7.5 percent this year, a number unchanged from last year and modest compared with prior decades of furious growth. The goal reflects a belief that the effects of China's economic slowdown likely will linger in the coming year.
The latest figures delivered by China's outgoing Premier Wen Jiabao opened the National People's Congress, an annual parliamentary meeting of highly choreographed speeches, news conferences and rubber-stamp votes for initiatives the ruling Communist Party lays out. The meeting is expected to end March 17 with party leader Xi Jinping becoming China's new president.
Mr. Wen's remarks included standard praise for the past year's work but sprinkled with admissions of problems that he and President Hu Jintao were leaving their successors: unsustainable development, corruption, pollution, innovation stifled by dominant state-owned enterprises, income disparity and the gap between rural and urban development. "We are keenly aware that we still face many difficulties," Mr. Wen said, acknowledging that some "have been caused by inadequacies and weaknesses in our government work."
The report sets up the possibility of economic, government and social reforms that Mr. Xi and other new leaders have been promising in recent months. But many experts, and even some within the party, believe that substantive changes may prove difficult to deliver in a system geared toward the entrenched interests of government officials, China's state companies and those with political connections.
As China's next president, Mr. Xi has spent recent months quickly shoring up a power base among the military, according to experts and officials with ties to the military.
China's projected military budget at $115.7 billion still pales in comparison with the U.S. military's $656.2 billion budget in 2012, a point made by several Chinese military officials and experts in interviews Tuesday. But U.S. experts have long believed that China understates its military spending in its annual reports. The increase also carries strong symbolism, continuing recent years of rapid modernization of China's forces, even as the U.S. and other Western powers are struggling with budget cuts. And it bolsters an increasingly aggressive foreign posture that China has taken toward its neighbors, especially in territorial disputes with nations such as Japan.
Like many in the military, Maj. Gen. Luo Yuan, deputy secretary-general of the Military Science Society, played down the increase and any possible intimidation to neighboring countries. "Our foreign policy goal is peaceful development and strengthening defensive abilities, rather than growing our ability to plunder others," he said.
On the economic front, Mr. Wen emphasized China's broader long-term strategy of weaning the country's dependence away from exports by increasing domestic consumption.
Some experts interpreted the modest 7.5 percent target for GDP growth as a signal by the central government to provincial leaders that GDP increases are no longer the only priority, after years of single-minded development have resulted in rampant pollution and other problems.
To reign in property prices and a possible housing bubble, leaders also have said in recent days that they plan to tighten curbs, such as implementing a 20 percent tax on property sales. That news over the weekend sent Chinese stocks into a sharp decline Monday.
Leaders see economic reform as a necessary but tricky proposition, said Shen Jianguang, chief economist at Hong Kong's Mizuho Securities Asia. Too much change too quickly risks upsetting China's economic system, he said. "The government also worries that if the economy faces a hard landing, that could trigger other things like social unrest."
Other reforms expected to be discussed at the People's Congress include a consolidation of some government ministries into a more streamlined group of "super ministries," as well as possible reform of China's widely despised labor camp system. But former officials and analysts said more ambitious earlier proposals on both fronts seem to have been scaled back in recent days.
Analysts also are closely watching upcoming high-ranking personnel appointments for clues about who may be positioning for a future seat on the party's ruling standing committee.
First Published March 6, 2013 12:00 am