China has increased its defense spending for 2023 to 1.56 trillion yuan ($230 billion), allocating a slightly larger share of its budget to military spending, as it seeks to become a regional military power.
The Ministry of Finance submitted a draft budget to the National People’s Congress, indicating that China will increase defense spending by 7.2% this year, following a 7.1% increase last year. This marks the eighth consecutive year of single-digit percentage-point increases in what is now the world’s second-largest military budget.
The draft budget allocated $224 billion to military spending but did not provide a breakdown of the spending.
Comments from the analysts
Critics outside China have viewed the country’s economic and defense numbers skeptically, doubting the authoritarian government’s candor on sensitive topics. CIA Director William Burns said last month that U.S. intelligence shows Chinese President Xi Jinping has instructed the military to “be ready by 2027” to invade Taiwan, though Burns said Russia’s experience in Ukraine may be giving Beijing doubts about the plan.
Chen Daoyin, a former associate professor of political science and law at Shanghai University, noted that the increase in military spending is slightly higher than the government’s economic growth target of around 5%, but says that it is “normal,” given China’s military aspirations.
“It is a goal for the Communist Party to strengthen the military, as it aspires to become a regional military power with a goal to boost its influence in the world,” he said.
Wen-Ti Sung, a political scientist at the Australian National University, said China’s budget increase was influenced by three factors.
“Russia’s struggles during the Ukraine war likely provides significant data on the shape of contemporary warfare and what areas of improvement China’s army still needs to make. This is particularly pressing because [China President] Xi Jinping’s ‘double centennials’ discourse explicitly makes 2027 the year of China becoming a true world-class military power,” he said.
He also mentioned that military spending may be part of China’s post-COVID economic recovery plan in boosting employment in the civilian sector.
Economic Growth
New data indicates that Chinese factories experienced their most productive month in almost 11 years in February, highlighting how rapidly economic activity has rebounded following the end of the Covid-19 epidemic. The services and construction industries also performed better than they had in two years, indicating that the broader economy is similarly improving.
Moody’s Investors Service responded by increasing its China growth forecast to 5% for both 2023 and 2024, up from the previously projected 4%, citing a stronger-than-expected short-term recovery. Despite analysts’ expectations of a challenging recovery process due to global headwinds, China’s economic progress has been impressive.
The Chinese government announced a conservative target of “around 5%” for 2023 on Sunday, but the country’s economic performance thus far indicates that it may surpass that target.