The Second Session of the Fourteenth National People's Congress (NPC) was held in Beijing on March 5, 2024. Li Qiang, Premier of the State Council, delivered the “Government Work Report” in which he stated defense and military issues as “the constructions of defense and military have made new achievement and progress in the past year, and the People’s Liberation Army (PLA) has completed its assigned missions remarkably. We should fully implement Xi Jinping’s thinking on strengthening the army and the military strategy for the new era, uphold the Party’s absolute leadership over the people’s army, fully and thoroughly implement the system whereby the Chairman of the Central Military Commission assumes overall responsibility over military affairs, and complete the crucial tasks of building a strong military to achieve the goal for the centenary of the PLA in 2027. The military should strengthen its training and preparedness across the board, coordinate and advance preparations for military struggle, devote greater energy to training under combat conditions, and firmly safeguard national sovereignty, security and development interests. We should build a modern military governance system, implement the 14th Five-Year Plan for military development, and enhance constructions of major projects for defense development. We should consolidate and enhance integrated national strategies and strategic capabilities, improve the system and layout of science, technology and industries related to national defense, raise public awareness of national defense, and improve national defense mobilization capacity and the development of reserve forces. Governments at all levels should give strong support to the development of national defense and the armed forces and conduct extensive work to promote mutual support between civilian sectors and the military for the unity between the military and the government and between the military and the people.”
According to the draft budget proposal submitted by the State Council, China’s 2024 defense budget is RMB1.66554 trillion (around US$231.37 billion, about NTD7.32 trillion), an increase of 7.2% over the previous year, almost the same growth grate as that of 2023, accounting for 1.3% of the GDP. Public data shows that China’s defense budget has remained one-digit increase in 9 straight years (from 2016 to 2024), with growth rate of 7.6%, 7%, 8.1%, 7.5%, 6.6%, 6.8%, 7.1%, 7.2%, 7.2% respectively. China’s defense budget has become the world’s second largest, following the US, after continuous increase of many years.
China’s national defense spendings are divided into different categories based on specific use: “equipment expenditures (including R&D testing, procurement, maintenance, transportation, storage of weapons and equipment and the related ammunition),” “training support expenditures (including troop training, education in military academies, maintenance of military engineering facilities and constructions and homeland air defense),” and “personnel living expenditures (including pay, allowances, food, clothing, insurance, welfare, pensions, bonuses, and housing provident funds).” At present, equipment expenditures account for 42% of the national budget, personnel living expenditures 31%, and training support expenditures 27%. It shows that the priorities of China’s national budget still focus on the upgrading and replacement of main equipment of various forces, and the increase of pay and benefits for military personnel.
Li Qiang highlighted the implementation of the 14th Five-Year Plan for military development in the Government Work Report. It indicates that China is working on the upgrading and replacing military equipment of PLA’s various forces to achieve the goal of building a strong power for the centenary as scheduled with high quality. Though the equipment expenditures account for 42% of the national budget, China has made use of projects like “integration of civilian and military” and “joint constructions of military and local government” to transfer some of the spendings that should have been shouldered by the defense budget to local governments (provinces, cities, counties) or ministries (commissions). In addition, China also transfers the military R&D spendings to private or state enterprises through “civilian participation in military initiatives” and “the use of military efforts for civilian purposes.” Though China has repeatedly stressed that there is no “hidden military spendings,” actually the spendings transferred to the local governments, ministries (commissions), and civilian enterprises as well as the revenues of military sales are not included in the defense budget, which suggests that there is still huge amount of military spendings hidden in local budgets aside from the defense budget.
China’s economy has been adversely affected by the pandemic and US-China trade war, and ever since 2022 its civil service has faced salary cut of 25%; various industries and sectors have experienced salary reduction; and migrant workers and university graduates are encountering unemployment pressure while the military has seen an overall raise in pay. The reason behind it is to reach the goal of recruitment. College graduates have been generally reluctant to join the military in recent years, so China has changed the recruitment process to twice a year and offered various subsidy policies and educational and employment benefits to raise their willingness to serve in the military. In reality, there has been common instances of refusal to serve in or desertion from the military judging from the provisions of the newly issued Regulations for Recruitment of Soldiers in 2023. Therefore, China has kept the 2024 national defense budget in an increase of 7.2%, partly because it will use the funds to raise the benefits of the military personnel.
In summary, China’s 2024 national defense budget is up to RMB1.66554 trillion, a detailed analysis of its spendings reveals that the R&D costs for new equipment, maintenance spendings for county (township)-level people’s armed forces, and expenses for militia training, totaling RMB300-400 billion, are allocated from budgets outside the military. In addition, China has repeatedly stressed that its defense budget is made by needs that will not lead to arms race among major powers and regional countries. As a matter of fact, China has accelerated the R&D and production of main combat equipment of various forces since 2010 and initiated defense and military reforms in 2016, that have significantly boosted PLA’s comprehensive strength, leading to an escalation of arms race and posing huge threats to its neighboring countries and the regional security. Besides, though China’s 2024 defense budget is only 1/4 of the US military budget, if the factors like consumer price index (CPI), work hours, hidden military spendings, and the long-term military costs in wars by US troops are considered, China’s defense budget is no difference from that of the US, and China’s production efficiency is much better than that of the US. In other words, the efficiency that China spends its annual defense budget surpasses that of the US military, worthy of our long-term attention.
（Tai-yuan Yang, Contract Research Fellow of the Institute of Chinese Communist Studies）
（Translated to English by Tracy Chou）
