The recently held annual session of the National People’s Congress – China’s parliament – placed a lot of emphasis on the relatively low increase in the country’s defence budget despite the leadership’s ambitioys plans to modernise and reform the Peoples Liberation Army (PLA). Zhang Dejiang, chairman of the standing committee of the NPC, also took the opportunity to defend the recent counter-terrorism law, suggesting Beijing is increasingly driven by a sense of internal insecurity as opposed to external.
Zhang declared that
China had “a solid legal foundation for accelerating the establishment
of a national security system and taking a distinctly Chinese approach
to national security.” This was seen by many in the West as a strong
rebuttal of the criticism of China’s counter-terrorism law and the draft laws on cyber security
and management of NGOs. Zhang, who is also a member of the politburo
standing committee and is the third ranked leader in the Chinese
hierarchy, said that that China was facing a complex threat from
terrorism and needed to intensify its counter-terrorism activities.
The broad outcome of the NPC session was to put the legislature’s
imprimatur on the annual work report of the premier, Li Keqiang as well
as the 13th five year plan, which gets underway this year. As such, it
approved the smaller-than-expected increase in the defence budget, and
sought to flesh out its national security views through a separate
chapter in the plan.
In his speech explaining the targets, President Xi Jinping noted that
6.5% growth would be needed if the Chinese were to be able to double
the 2010 GDP by 2020. The plan to double GDP by 2020 – linked to the
goal of building “a moderately prosperous society” by then – is one of
the “twin centenary” goals of the Communist Party of China.
The challenges of achieving this, Xi noted, were dealing with China’s
industrial over-capacity and the need to restructure the economy and
shift it to a consumption and innovation-driven model.
The reportage of the NPC as coming from the official Chinese media is
that everything is fine, all targets are being met and there will be no
hard landing for the economy. External observers aren’t so sure. It
will not be easy for the economy to achieve its target range of 6.5-7%
growth without more stimulus, but this in turn could add to its
problems, rather than resolve them. However, monetary adjustments such
as increasing the budget deficit and enhanced money supply could boost
growth for the short term, but the problem is with the long term.
The fact is that despite rhetoric about the “decisive role” of market
forces, supply-side reforms and restructuring of the SOEs, nothing has
really happened. There are no indicators in Li Keqiang’s speech that any
new measures will be launched soon. But the temptation to spend its way
out of its problem remains in China, as indicated by plans to build a
second railway to Tibet and invest in 20 more airports.
Besides the problem of retiring and retrenching old industries and
creating new jobs, are the demographic pressures. The ending of the
one-child norm has not really taken off. Only 1.69 million people (15.4%
of those eligible) had applied to have a second child.
Getting more bang from less buck
In his work report
to the NPC, Li Keqiang also referred to the need to build up the armed
forces “through political work and reform and run them by law.” China
is seeking to modernise the military and make it a cutting edge force,
even while maintaining the leadership of the party. Besides all-round
preparedness, the effort would be to reform the military leadership and
command structures and restructure the size of the force and its
On March 4, the spokesperson for the NPC, Fu Ying announced that the
budget increase for defence would be between 7-8%. Finally, when the
sums were done, China set its 2016 defence budget at 954 billion yuan
($146 billion), a rise of 7.6%. Last year the increase was 10.1%, so
this is the lowest increase in recent years
Speaking to the PLA delegation at the NPC on March 13, Xi Jinping said
that theoretical and technological innovations were at the heart of the
ability of the country to upgrade its military capabilities. He wanted
the PLA to imbibe a “military theory that is up-to-date, pioneering and
unique.” And at the same time, the PLA needed to work to turn cutting
edge military technology into effective combat capacity. To achieve
this, the PLA must adopt “better management concepts, systems and
Beyond issues like structural change and reform, Xi emphasised the
quality of human resources that constituted the PLA and the need to
promote talented individuals. Both were manifested by their ability to
deal with theoretical issues of military art and innovation to enhance
The NPC session came in the wake of major structural changes at the
apex level of the PLA that saw the abolition of the general departments,
the creation of a general command for the army, PLA Rocket Force, the
PLA Strategic Support Force and the regrouping of the seven military
regions, into five theatre commands.
2016 is the year in which the PLA’s strength will be reduced by
300,000 men, indicating that there would be savings, despite some
expenditure in rehabilitation, which is likely to be taken up by local
authorities and SOEs.
Chinese experts like Maj Gen Luo Yuan and Chen Zhou insist there are no hidden costs
in the budget, which is meant to be spent for acquisitions,
restructuring the military, and training. However, expenditures like the
cost of building and maintaining facilities in the South China Sea may
come through other heads.
emphasised the modesty of the Chinese budget in comparison to the
United States, noting that while China was the second largest economy in
the world, its defence expenditures were not at the same level.
The budget must also be seen in the context of Chinese arms trade.
Just how these are related to the annual budget spending is not clear.
In the past five years, China’s arms imports fell by 25%, and exports,
though mainly in light weapons, doubled. The quality of Chinese
equipment has improved in recent years and its larger products are
attracting markets elsewhere. The principal recipient of Chinese
military sales is Pakistan, accounting for 35% of its exports, followed
by Bangladesh and Myanmar accounting for 20 and 16% respectively. All
three are neighbours of India.
In its imports, China depends on foreign suppliers for large
transport aircraft, helicopters and engines for aircraft vehicles and
ships. Here again we need to note that India’s principal supplier,
Russia, is also the largest exporter to China accounting for some 59% of
A second reason for the low defence budget figure announced, perhaps,
is to reassure China’s neighbours. The previous increases accompanied
by greater sabre rattling in the South China Sea and the Sino-Indian
border had alarmed China’s neighbours and countries like Japan,
Philippines, Vietnam and India have come closer to the United States in a
bid to balance Beijing’s growing clout on their borders.
A third reason could be the Chinese desire to pace their military
spending with their economy. It makes sense to restrain the defence
budget in a period in which the economy itself facing turbulence.
Clouds on the horizon
The NPC’s session must also be seen in the context of its inter-session work through 2015. In July 2015, it passed a broad National Security Law,
which was aimed at shoring up the authority of the CPC. The law said
that security had to be all-pervasive and apply in all fields, ranging
from culture to education, outer space, maritime zones and cyberspace.
In late December, the NPC had passed a draconian counter-terrorism
law, which made it mandatory for companies to provide technical
information to assist security authorities investigating terrorism
cases. The law provided China with a legal definition of terrorism,
enabled Chinese forces to operate outside their borders in CT operations
and cooperate in international CT efforts.
In 2016, the NPC is likely to take up a law on cybersecurity and on
the management of foreign NGOs which are related to its overall drive to
tighten security at home and abroad. These laws have been open for
public review for the past year.
The draft 13th five year plan, released on March 5, contains an entire chapter on “building a national security system”. In an article
published by a Hong Kong-based digital media company, Ding Ding, a
scholar specialising in politics, noted that for the first time the
“concept of general national security” was discussed in detail. This, he
said is a subject that has been a project with the National Security
Commission chaired by Xi. Not surprisingly, the concept is all-inclusive
and virtually limitless, covering every aspect of life from politics
and the military to culture, society and the economy. Within this, the
“subversion” and “sabotage” heads the list even beyond terrorism and
separatism. In his view, the government is more worried about domestic
disorder than the usually touted threats from separatists in Tibet and
Another scholar, Ryan Martinson
of the US Naval War College, basing himself on the draft plan released
in November, notes that the plan calls for the development of China as a
“maritime power” in all its attributes, and for the country to grow a
maritime economy, exploit maritime resources, protect the maritime
environment and safeguard maritime rights and interests. It calls on a
further geographic expansion of China’s maritime activities including
develop “a system to protect overseas interests.”
As the Chinese economy slows and it seeks to shift tracks, it is in a
state of heightened tension. But the centre of gravity of that tension
appears to be within China, not without. As a nuclear-armed state with a
powerful military, China faces no existential threat from any foreign
enemy. What it appears to fear is “subversion”, “sabotage” and “the
enemy within”. This is the enemy that can often manifest itself through
the problems that arise from displacement and retrenchment, as well as
in the case of Tibet and Xinjiang, separatism, and resistance to
Despite the challenges of internal restructuring, or perhaps because
of them, China has also undertaken to assert itself in its periphery, be
it the South China Sea or South Asia. This has triggered a pushback
which is viewed with some alarm in Beijing.
What the developments of the past year, between the previous NPC and
the current session, reveal is that China is in an increasing danger
zone from the point of view of security. But the problems are more
internal, than external.
Just before the NPC convened, the authorities shut the social media
account of tycoon Ren Zhiqiang who had been criticising Xi Jinping’s
efforts to tighten control over the media. On March 15, a reporter, Jia Jia was arrested
as he was about to board a flight to Hong Kong. He was accused of being
a signatory of a letter demanding the resignation of Mr Xi. In the past
year human rights lawyers and publishers have faced arrest and
Many political observers say that Xi Jinping is the most powerful
general secretary since Deng was the supreme leader of the CPC. But the
behaviour of the government in his charge indicates a lack of confidence
or a sense of insecurity on his part. The focus of internal dissent
detracts from the effort the government should be making on pushing
reform. While the agenda of reforming the PLA seems to be on track, the
same cannot be said of the economy.
The Wire April 2, 2016