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China hikes defence budget to USD 106.4 billion

China on Sunday announced it would hike its defence budget by 11.2% to a whopping USD 106.4 billion, pushing its military spending for the first time to the triple digit.

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China on Sunday announced it would hike its defence budget by 11.2% to a whopping USD 106.4 billion, pushing its military spending for the first time to the triple digit, a move that may fuel concerns among neighbours and others about its growing might in Asia Pacific.

Beijing this year proposes to spend on defence 670 billion yuan (USD 106.4 billion), which is an increase of 11.2% over the previous year, Li Zhaoxing, spokesman for China's top legislature, the National People's Congress (NPC), said at a press conference here.

China, which has the world's largest standing army of 2.3 million, had been hiking its defence budget by double-digits during most part of the last decade. Analysts believe its actual spending is much higher than the official figures.

Last year, the country unveiled its first aircraft carrier, a former Soviet-era vessel which is expected to enhance the reach of the Chinese navy.

According to the officials figures, China had spent about USD 92 billion on defence last year, which represented a 12.7% increase over the 2010 budget of USD 77 billion. This year's increase would represent a hike of USD 14.4 billion.

Besides, the specified military spending, which many western analysts say is far higher than the official version, China last year spent over USD 100 billion on internal security.

Analysts say the hike in China's defence budget, which is now almost triple of the Indian defence spending, may impact New Delhi's military expenditure.

India had allocated USD 36.04 billion for defence last year, which represented an 11.59% growth over the 2010 budget.

Defending the hike in defence budget, Li, former Foreign Minister, said the Chinese government followed the principle of coordinating defence development with economic development and its defence spending was far lower compared to the US and Britain.

"You see China has 1.3 billion people. We have a large and long coast line but our defence spending is relatively low compared with other countries," he asserted.

"China's defence spending as share of GDP in 2011 was only 1.28%. Whereas the figure for the US and UK and other countries exceed two%," he said.

He said that during the last three years, since the outbreak of international financial crisis, China's GDP has grown year-on-year by 14.5%.

"China's national fiscal expenditure grew by year-on-year 20.3%. But China's defence expenditure grew only by 13% year-on-year. The share of the defence spending in China's GDP dropped from 1.33% in 2008 to 1.28% in 2011," he said.

The share of defence spending in fiscal expenditure dropped from 6.68% in 2008 to 5.53% in 2011, Li said, adding that China had been quite open about its military spending, contrary to criticism that much of it was concealed.

Questioning the sceptics, Li wondered why the western journalists were so focused on China's defence spending.

He said the money is primarily spent on daily necessities of defence personnel, their training and maintenance, equipment, research, experiment, procurement, repair, transport and storage of all weapons equipment, including new types of weapons which are included in the defence budget that is published every year.

China is committed to the path of peaceful defence development and national defence policy which is defensive in nature, Li said.

China's rapid military build-up has triggered concerns among several countries, including the US and Japan. The US had also recently announced a defence strategy focussed on countering China's rising power.

Though last year China's military spending rose by 12.7% compared to 11.2% this year, it is still likely to spark concerns over China's growing military might in the Asia-Pacific region.

China is having disputes with countries like Vietnam, the Philippines, Taiwan, Brunei and Malaysia over its claim to almost all of the South China Sea.

The latest hike in the Chinese budget followed a Jane's report released recently which projected that China would double its defence spending by 2015, surpassing the combined defence budgets of India and 10 other Asian countries.

The European think tank put last year's military spending by China to around USD 119.8 billion, which it claimed may touch USD 238.2 billion in 2015.

China, however, denied the report saying that it was speculative.

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