China defense spending up by 10.1% amid neighbors' unease

BEIJING — China said Thursday it will boost defense spending by 10.1 percent, a smaller rise than last year but in line with large annual increases that have drawn concern among the country's neighbors over Beijing's military and territorial ambitions.

Beijing says the higher spending is needed to modernize equipment and improve conditions for the 2.3 million-member People's Liberation Army, the world's largest standing military. Observers in the U.S. and the region say the spending reflects the growing power of the world's second-largest economy and its desire to assert itself in the region and globally.

The last 15 years have seen spending increases as high as 17.7 percent annually, but those have declined steadily since the global economic crisis of 2008-2009. That's roughly in line with the overall Chinese economy's settling into what leaders call the "new normal" of slower expansion, with the government on Thursday setting a target of just 7 percent growth for 2015.

In its budget report to the annual session of the national legislature, the Finance Ministry said China's forces should be strengthened "so that they are constantly developing their ability to complete their missions and tasks; so that they safeguard China's sovereignty, security and territorial integrity; and so that they ensure its peaceful development."

The PLA makes up the largest single delegation to the legislature known as the 2,954-member National People's Congress, and its leaders have been vocal in the past on the need for ramped-up defense spending.

This year's figure compares to an increase last year of 12.2 percent, but Lt. Gen. Zhong Zhiming of the northeastern Shenyang Military Region said the smaller increase was understandable given the slowing of the overall economy.

"The military definitely needs funds for growth, but the military also needs to consider the situation of ordinary citizens and I think this level is appropriate and acceptable," Zhong told reporters following the session on the steps of the Great Hall of the People in central Beijing.

Despite China's assurances that its military posture is strictly defensive, neighboring countries have increased spending on their own armed forces in part to counter China's rise.

Japan, which is locked in a bitter island dispute with China, increased its defense budget by 2.8 percent this year to a record $42 billion. India, which disputes Himalayan territory with China, increased its spending this year by 11 percent to $40 billion.

China also has disputes with several neighbors over territory in the South China Sea, where U.S. Director of National Intelligence James Clapper said last week that Beijing is expanding outposts as part of an "aggressive" effort to assert sovereignty.

State Department spokeswoman Marie Harf told reporters Wednesday that the U.S. was monitoring China's military developments. She called for China to be more transparent and use its capabilities "in a manner that's conducive to maintenance of peace and stability in the Asia-Pacific region."

China's official military spending is still less than a third of the U.S. defense budget, a proposed $534 billion this year along with $51 billion for the conflicts in Afghanistan, Iraq and Syria. But it comes against a background of anticipated flat or falling American spending on its armed forces in coming years.

The Pentagon and global arms bodies estimate China's actual military spending may be anywhere from 40 to 50 percent more because the official budget doesn't include the costs of high-tech weapons imports, research and development, and other programs.

The fuzzy math has fueled complaints from the U.S. and others over Beijing's lack of transparency about its defense spending along with how it intends to use its stronger military. Those objections won't likely abate anytime soon, despite the lower rate of spending growth, said Adam Liff, assistant professor at Indiana University's School of Global and International Studies.

"In my view, China's continued low military transparency does everyone with an interest in stability in East Asia — including itself — a major disservice," Liff said.

The growing disparity between defense spending increases and overall economic growth represented a new trend that could become a drag on the economy.

China's low inflation could make this year's increase close to or bigger in real terms than rises in recent years, when rapid price increases eroded the military's buying power.

China is seeking to improve conditions for the military amid rising labor costs and competition with the private sector for top graduates in science and technology.

The need for ever-more sophisticated weaponry is also increasing the costs, with the addition of an aircraft carrier combat wing, the roll-out of two prototype stealth fighters and cruise missiles that fly faster than the speed of sound.

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Associated Press writer Matthew Pennington in Washington contributed to this report.