China’s military budget outperforms economic growth in shift to security

China’s military spending will grow at its fastest pace in four years in 2023 and take a bigger share of the economy, underscoring Beijing’s rebalancing of security over development.

Defense spending will rise 7.2 percent in 2023, well above the 5.7 percent increase in general government spending, according to a budget proposal presented to the National People’s Congress, the country’s legislative body.

The defense budget indicates a widening gap between China’s military and economic development, reversing a more than two-decade trend in which defense capability expansion has lagged behind economic growth.

It comes as the Communist Party leadership resents strained relations with the US, lack of progress on peacefully housing Taiwan, and a host of international conflicts that Beijing sees as threats to its interests.

“From Beijing’s perspective, if the threat environment increases or stays the same, the defense budget and growth will finally decouple,” said Meia Nouwens, an expert on the Chinese military at the International Institute for Strategic Studies in London. “I think we’ll see it become more decoupled in the future.”

China is facing “strong winds and choppy waters in the international environment,” outgoing Premier Li Keqiang said in his work report to the National People’s Congress. NPC spokesman Wang Chao said the increased military spending is “reasonable and appropriate” and “necessary to meet the complex security challenges and fulfill our responsibilities as a great power.”

Despite being only a third of US levels, China’s military spending has increased fivefold over the past two decades, according to US think tank CSIS, and now exceeds the 13 next-biggest military spending in the Indo-Pacific combined. Beijing has spooked its neighbors with increasingly assertive deployments of its military, holding unprecedented drills last August to punish Taiwan for hosting US House Speaker Nancy Pelosi and its claims in the South China Sea against the Philippines and Vietnam to claim.

China’s proposed defense spending increase for 2023 is 2.2 percentage points above the government’s 5 percent growth target, a larger gap than in the budget draft a year ago, when Beijing first proposed an increase in military spending above its growth target. Proposed defense spending also significantly exceeds development-related budget items such as education, social security, and scientific research.

Projected defense spending for 2023 accounts for 5.7 percent of total government spending, the third annual increase in that share after more than 20 years of continuous cuts.

Analysts said the commissioning of China’s third aircraft carrier, which is expected this summer, rapid production of new destroyers and fighter jets, and investments in space technology and artificial intelligence for missile targeting systems are likely to be the main areas of spending this year.

China’s government provides few details on its defense spending other than a breakdown by personnel, training and maintenance, and equipment. “This lack of transparency makes it almost impossible to track specific procurements or shifts in military activity,” said Nan Tian, ​​a researcher who tracks Chinese military spending at the Stockholm International Peace Research Institute.

“The increase in the People’s Liberation Army’s exercise and patrol activities, for example in Taiwan, will certainly incur additional costs, if only for fuel, but the data provided by China does not show how to explain this.”