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China Announces Further Budget Increase for Military Expenditures

By John Pomfret

China will announce another 17 percent rise in defense spending this week, completing a one-third increase in acknowledged military expenditures over the last two years, Chinese and other Asian sources said Monday. The increase reflects Beijing’s ambition to build a powerful military to complement its robust economy and underpin its strategic position in Asia.

But despite more than a decade of big jumps in the defense budget, Asian and Western military officers and Chinese sources said the 2.5-million member People’s Liberation Army, the largest standing fighting force in the world, is struggling with its modernization program, handicapped by low pay, poor morale and difficulty absorbing new weapons.

Finance Minister Xiang Huaicheng will announce an increase of around 17.6 percent in the defense budget when he reveals China’s finances on Wednesday during a meeting of the legislature, Chinese sources, Asian diplomats and Chinese-language media reports said. China increased defense spending by 17.7 percent last year; the jump this year will bring its publicly acknowledged defense budget to $20 billion.

China’s real defense spending, including funds expended but not reported, is considered the highest in Asia, considerably more than the $45 billion spent annually by Japan. By comparison, the Bush administration has proposed a $379 billion defense budget for the next fiscal year.

Beijing explained its increase last year as a response to “drastic changes” in the military situation around the world, a reference to the U.S.-led war in Kosovo in 1999. This year, sources said, Beijing needs more money to bolster its nuclear forces following the Bush administration’s decision to withdraw from the Anti-Ballistic Missile Treaty and continue work on a missile defense system.

China has often voiced concern that, if the United States builds a missile shield, the Chinese nuclear force would lose its strategic deterrent without more and better warheads and delivery vehicles.

China’s main modernization efforts, however, focus on turning the People’s Liberation Army from an army of farmers into a modern, streamlined fighting force and to abandon the doctrine of People’s War, which involves basic guerrilla tactics, in favor of more traditional doctrines used by world powers.

The goal, according to Pentagon reports, is to become a “regional hegemony,” project Chinese power into any corner of Asia, protect sea lanes for Chinese oil, replace the United States as the preeminent power in the region and use Chinese power to guarantee reunification with Taiwan.

To do so, China has embarked on a shopping spree for weapons from Russia, Israel and South Africa and a worldwide hunt for technology to improve its nuclear weapons and rocketry programs. China was the world’s biggest arms importer in 2000, according to the Stockholm International Peace Research Institute.

Starting in 1997, China shed 500,000 troops from the army, transferring them to the People’s Armed Police, which deals with internal security. It has also launched an ambitious program to enhance training, education and living standards for the 2.5 million men and women currently in uniform.

Chinese analysts consider morale a major problem for the army.