China to increase defence budget by 7%

Last year GDP grew 6.7 percent, the slowest rate in a quarter of a century, and Li on Sunday lowered the growth target to “around 6.5 percent” for 2017.

Last year, China budgeted a 7.6 percent increase in military spending to 954.4 billion yuan (equal to $147 billion at the time), the slowest increase since a 7.3 percent rise in 2010.

In his presentation of the annual work report to the National People’s Congress – China’s legislature – Prime Minister Li stressed that following “the leadership of the Party Central Committee with Comrade Xi Jinping at its core” was the first among the 17 tasks that China needed to accomplish.

But this year, Mr Xi received no fewer than eight mentions, six of which held him up as the Party’s “core leader”.

The slowdown in Chinese spending growth comes as U.S. President Donald Trump vows to beef up U.S. defense spending by $84 billion over the next two years.

In that speech, Beijing signalled it would be going for growth and in doing so triggered an unexpected rally in commodity prices that 12 months later delivered Australia its biggest boost to national income in 6 ½ years.

Graham Ong-Webb, a research fellow at Rajaratnam School of International Studies in Singapore, told Al Jazeera that China’s military spending tended to focus on procurement and on modernising its capabilities.

“So the Chinese navy has to gain enough ability to protect those key trade routes around the globe”, Chu said.

China is to increase its military spending by around 7 per cent this year, its government has announced – less than the 10 per cent by which Donald Trump has vowed to grow the U.S. military budget.

The target is below expectations and indicates authorities will prioritise risk-control over short-term growth.

China should have higher levels of vigilance concerning risks from non-performing assets, debt defaults, shadow banking and internet finance, he added. Last year’s actual urban unemployment rate was 4.02 per cent.

Chinese banks doled out a record 12.65 trillion yuan ($2.41 trillion AUD) of loans in 2016, and recent data shows that new loans hit 2.03 trillion yuan in January, the second-highest ever.

On China’s disputes with neighbouring countries, Fu said China advocates dialogue and peaceful solutions in addressing those issues. He proposed cutting steel production capacity by 50 million metric tonnes and closing at least 150 million metric tonnes of coal production facilities. Li promised changes including cutting taxes for the smallest businesses and making it easier to register a private company.

Still, the growth in spending is faster than the overall economy, reflecting Mr. Xi’s determination to continue the military modernization program, according to experts.

Much of the session is marked by meeting after meeting of business-suited male delegates affirming pre-approved Communist Party talking points.

Last year, US warships conducted several freedom of navigation operations to counter what Washington sees as Beijing’s efforts to limit access in the waters and also to challenge its “excessive maritime claims” in the South China Sea.