China increases defence spending by 7.1%, decreases GDP target to 5.5%

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According to a draft budget, defence spending would be increased by 7.1 per cent to 1.45 trillion Yuan, or roughly $ 230 billion.

Digital Desk: China announced a 7.1 per cent increase in defence spending on Saturday and a 5.5 per cent annual GDP growth target for the coming year. The GDP target was declared by China’s Premier and second-ranking leader, Li Keqiang, at the start of the week-long session of the National People’s Congress (NPC), or Parliament, which determines policies for the coming year. According to a draft budget, defence spending would be increased by 7.1 per cent to 1.45 trillion Yuan, or roughly $ 230 billion. Notably, last year, when the military budget surpassed $200 billion for the first time, it was increased by 6.8%. On the other hand, India’s military spending this year is expected to be approximately $70 billion, a 4.4 per cent increase from the last year; however, a larger portion of it will go towards imports and pensions. According to the Communist Party-run Global Times, this year, the hike is due to security threats that China is experiencing. “The United States has been applying military pressure on China over the past few years, stirring up trouble on China’s doorsteps through operations like provocative, monthly warship transits in the Taiwan Straits, close-in reconnaissance missions with spy planes in the East China Sea and the South China Sea totalling more than 1,200 times in 2021, and several warship intrusions in Chinese territorial waters in the South China Sea in the name of freedom of navigation,” according to Global Times. “While the situation along the China-India border has remained steady and manageable. The standoffs have yet to be totally resolved following rounds of discussions,” it added. In recent years, a growing portion of the money has gone toward modernizing the PLA Navy, which will launch China’s third aircraft carrier this year. Moreover, China is planning to increase the production of the J-20 stealth fighter jet and to modernize the nuclear arsenal as a part of broader plans to build a world-class military on par with the United States by 2049, when the People’s Republic of China celebrates its 100th birthday,” the Global Times said. On the other hand, Premier Li set a GDP target of about 5.5 per cent for this year, down from the 6 per cent target last year, when the economy rose by 8.1 per cent but dropped to 4 per cent in the fourth quarter. He stated that economic stability was the top focus, with an 11 million new job target set for 2022. He also stated that China would continue its regular covid-19 control to avoid inbound cases and internal resurgences. Moreover, international travel restrictions will likely be maintained in China, which is the only large country to do so. Reportedly, the GDP target will include striking a compromise between maintaining growth and investing in fixed assets while not increasing the debt situation. According to the IMF, China’s growth is expected to be 4.8 per cent this year, which cites subdued private consumption and real estate investment as obstacles. “As a result, significant slack in the economy is expected to persist in 2022,” the forecast said, adding that a wave of regulatory policy measures targeting technology sectors, while intended to strengthen competition, consumer privacy, and data governance, has increased policy uncertainty, which has been exacerbated by the financial stress faced by large property developers as a result of deleveraging policy efforts.