May 18, 2020 / 7:27 AM / 16 days ago

China's defence budget likely to grow despite economic cost of coronavirus

BEIJING(Reuters) - China, facing what it sees as increasing military pressure from the United States, is likely to shrug off the pall hanging over its economy from the novel coronavirus and increase its defence budget again this year.

FILE PHOTO: Military delegates leave the Great Hall of the People after a meeting ahead of National People's Congress (NPC), China's annual session of parliament, in Beijing, China March 4, 2019. REUTERS/Aly Song/File Photo

China’s military spending, due to be announced at the opening of the annual meeting of parliament on Friday, is closely watched as a barometer of how aggressively it will beef up its military capabilities.

China set a 7.5% rise for the defence budget in 2019, outpacing what ended up as full-year gross domestic product (GDP) growth of 6.1% in the world’s second-largest economy.

Its economy shrank 6.8% in the first quarter of 2020 from a year earlier, as the novel coronavirus spread from the central city of Wuhan where it emerged late last year, and the government has said economic conditions remain challenging.

Despite the coronavirus outbreak, the armed forces of China and the United States have remained active in both the disputed South China Sea and around Chinese-claimed Taiwan.

Xie Yue, a professor of political science at Shanghai’s Jiao Tong University and a security expert, said that while it is hard to predict if the defence budget would grow at a higher or lower rate than last year, it would definitely rise.

“From the national security point of view, China needs to appear strong to the West, especially the United States, which has been putting more pressure on China on all fronts, including militarily,” he said.

The coronavirus has worsened already poor ties between Beijing and Washington, with accusations from the Trump administration of a Chinese cover-up and delayed release of information about the outbreak.

The Ministry of State Security warned in a recent internal report that China faced a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into armed confrontation.

“Even if the government cuts everything else, it won’t cut defence,” said Tang Renwu, dean of Beijing Normal University’s school of public administration.

The Defence Ministry did not respond to a request for comment. China routinely says spending is for defensive purposes only, is a comparatively low percentage of its GDP, and that critics just want to keep the country down.

‘UNBEARABLE COSTS’

China reports only a raw figure for military expenditure, with no breakdown. It is widely believed by diplomats and foreign experts to under-report the real number.

Taking the reported figure at face value, China’s defence budget in 2019 - 1.19 trillion yuan ($167.52 billion) - is about a quarter of the U.S. defence budget last year, which stood at $686 billion.

China has long argued that it needs much more investment to close the gap with the United States. China, for example, has only two aircraft carriers, compared with 12 for the United States.

Hu Xijin, editor of the ruling Communist Party-backed Global Times newspaper, wrote in a WeChat post on Monday that he anticipated the defence budget would rise.

“China needs more military power as a deterrent, to ensure the U.S. will not act on its impulses because of unbearable costs,” Hu said.

Hu had previously argued that China should expand its stock of nuclear warheads to 1,000, including “at least 100 DF-41 strategic missiles”, an intercontinental missile capable of striking the continental United States.

Experts point out that the benefit of increasing defence spending when the economy is weak is that it can give the economy a much-needed shot in the arm, with manufacturing struggling and domestic consumption slack over worries about job security.

FILE PHOTO: Military vehicles carrying DF-41 intercontinental ballistic missiles travel past Tiananmen Square during the military parade marking the 70th founding anniversary of People's Republic of China, on its National Day in Beijing, China October 1, 2019. REUTERS/Thomas Peter/File Photo

China’s 2019 defence spending represented slightly over 5% of total government expenditure and about 1.2% of GDP for the year.

Xie said investing in home-grown military technology research and development would be money well-spent, as tightening sanctions meant it was increasingly hard for China to buy technology on the global market.

“With nationalist sentiment running high, not only will the increase in military expenditure not be criticised too much, it may even lead to citizens feeling more pride in the country,” he said.

Reporting by Yew Lun Tian; Additional reporting by Ben Blanchard in Taipei; Editing by Robert Birsel

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