China prioritizes defence budget despite economic woes

On 5 March, China announced its defense budget for 2023. Although the world’s attention is on Russia’s bloody war of attrition in Ukraine, China is continuing to ramp up its military modernization at tremendous pace, with unrelenting year-on-year increases.
According to figures released on the opening day of the first annual session of the 14th National People’s Congress (NPC), China’s 2023 defense budget will rise 7.2% to CNY1.5537 trillion (USD224.59 billion). This was the largest percentage increase in the past four years. Last year, the military budget rose 7.1%, with expenditure increasing to CNY1.45045 trillion. The year before that, defense spending grew 6.8%.
This year’s amount underscores that the defense budget’s rebound is continuing strongly, after “slumping” to a mere 6.6% increase in 2020 as COVID-19 hit hard. Indeed, this year’s percentage increase is approaching the 7.5% of 2019 and 8.1% of 2018 prior to the pandemic.
In absolute terms, the 2023 budget is approximately CNY103.25 billion (USD14.92 billion) more than last year. Even though China is not achieving the double-digit percentage increases it enjoyed up until eight years ago, Chairman Xi Jinping is spending far more on the People’s Liberation Army (PLA) each successive year. So what does this year’s increase tell us?
As Professor Andrew Erickson, Professor of Strategy and Research Director in the China Maritime Studies Institute of the US Naval War College, commented: “US domestic politics aside, here’s a single quotation to cut through reams of PRC propaganda papering over decades of major defense spending increases: ‘Don’t tell me what you value. Show me your budget , and I’ll tell you what you value.’ (Joe Biden).”
Indeed. Remember that China is now facing stiff economic headwinds, with its predictions for GDP growth in 2023 “about 5%”. With its economy hurting because of COVID-19 and Xi’s harsh countermeasures, as well as signs of a global recession and amidst strategic competition with the USA, Beijing can still manage to summon a 7.2% increase in defense spending. China’s financial year commenced on 1 January, meaning the money is already being spent. This shows precisely where Xi’s priorities lie, as national security and the military are certainly at or near the top in terms of importance. Consider too that Chinese spending on general public services will decline 0.7% in 2023, and education expenditure will increase by only 2%.
Defense accounts for 5.7% of total central government expenditure in 2023, the third straight year it has grown as a proportion. Furthermore, Beijing’s defense expenditure has multiplied by five in the past 20 years.