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China's Defense Budget

Although China claims that the share of defense spending as a percentage of the overall state budget has declined from 17.4 percent in 1979 to 9.5 percent in 1994 and 7.7 percent in 2004, the government has announced double-digit increases in military spending nearly every year for more than a decade.

The defense budget for 2006 is expected to reach US$35.1 billion, the largest increase in four years and 16 percent higher than 2005 (estimated at US$29.5 billion). The report submitted in March 2006 at the Fourth Session of the 10th National People’s Congress (NPC) contained a request for a budget increase to strengthen China’s defensive capability and ability to respond to emergencies and to raise officer and enlisted pay levels.

The NPC stated that China’s military spending is still low compared to the United States, United Kingdom, France, Germany, and Japan.

However, the actual defense budget is likely to be higher than expected because of the inclusion of defense-related items in nondefense budgets.

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