The Chinese defense budget for 2010 is to be around $78 billion, said Li Zhaoxing, spokesman for the National People's Congress, an annual two-week congregation of its 3,000 members.

The result is an increase in spending about half the usual military budget increase and is the first time in 20 years that the rise in spending will be less than 10 percent. But the amount of spending would account for 6.4 percent of China's total fiscal expenditure in 2010, the same as last year.

Most of this year's 7.5 percent increase will go toward supporting the organizational reform of the military and raise the living standards of service members. China has, in the past two decades, focused on buying more China-made high-tech weapons and reduced the number of military personnel in favor of a smaller but better trained armed forces.

Li, a former foreign minister, said the budget increase will help "improve its capability to deal with varied threats and complete diversified tasks," but he did not spell out what the threats were or from which countries and organizations they might come.

He also said that China has always taken the road to peaceful development and that considering its vast territory and coastline, the defense budget remains comparatively low. It accounts for around 1.4 percent of gross domestic product against around 4 percent for the United States and more than 2 percent for the United Kingdom, France and Russia.

China is also continuing to be more transparent in its military spending by submitting defense budgets to the National People's Congress for approval, as it will do during this session, and by issuing white papers every two years.

The same message was conveyed by Zhao Qizheng, spokesman of the National Committee of the Chinese People's Political Consultative Conference, the country's top political advisory body, which meets at the same time as the NPC. China's military development is solely for maintaining national sovereignty and territorial integrity, Zhao said at a news conference.

Despite Li's reassuring statements about transparency, some observers and analysts are suspicious of just how transparent any published data are, a report by the BBC said. Some are wondering if China is developing its first aircraft carrier, a major concern for its Pacific region neighbors, including India.

There is also confusion, say observers, as to why the government would announce a cutback in a budget increase at a time of tensions, including military ones, with the United States, a BBC reporter said.

There was a lot of hand wringing in Beijing when Washington announced this year that its $6.4 billion arms sale to Taiwan will go ahead.

Taiwan was called Formosa before the remnants of China's nationalist army fled there ahead of advancing victorious Communist forces in 1949. A major plank of Chinese foreign policy for decades has been its claim of sovereignty over the self-governing island of Taiwan.

China's position on suspending its military visits with the United States "remains unchanged" due to the arms sale, a Chinese military spokesman told the national government news agency Xinhua at the end of February.

"The United States should bear full responsibility for the current difficult situation on China-U.S. military exchanges," said Defense Ministry spokesman Huang Xueping. The sale violates a 1982 Sino-U.S. joint communique that said the United States would not seek to carry out a long-term policy of arms sales to Taiwan and would gradually reduce arms sales.

Exchanges on hold include a visit by U.S. Defense Secretary Robert Gates and mutual visits of warships.

The U.S. arms sale to Taiwan "seriously endangers China's national security, damages China's core interests, greatly disturbs the relations between the two countries and the two militaries and tremendously harms the overall China-U.S. cooperation and stability across the Taiwan Strait."

But Beijing has also reassured its neighbors Japan that any Chinese military buildup is not offensive in nature. The defense ministry said last month that Japan's concern and exaggeration of China's military power hurts bilateral ties, a report by Xinhua said.

Huang made the remarks after reports said Japanese leaders may revise defense policies to strengthen the Japan-U.S. alliance and confront China's increased military strength.

China recognizes the Japan-U.S. military alliance as an "outcome of history," Huang said. "We hope the Japanese side will do more to promote the sound development of China-Japan relations. Japan's defense measures should be conducive to regional peace and stability."

earlier related report
China unveils smallest defence budget hike in years
Beijing (AFP) March 4, 2010 - China on Thursday announced its smallest defence budget increase in years amid national belt-tightening, and vowed that its rapid military modernisation posed no threat to other countries.

The proposed military budget for 2010 is 532.1 billion yuan (77.9 billion dollars), up 7.5 percent from actual defence spending in 2009, a government spokesman said.

The figure breaks a string of double-digit increases going back many years that has caused worry among China's neighbours and the United States over the intent of an effort to rapidly upgrade its once-backward armed forces.

"China is committed to peace," Li Zhaoxing, spokesman for the National People's Congress (NPC), said in unveiling a figure he called "reasonable."

"The sole purpose of China's military strength is to protect China's sovereignty and territorial integrity," he told a news conference.

Experts on China's military said the slower rate of increase was most likely aimed at heading off any possible domestic criticism of the military enjoying continued big budget hikes at a time of relatively slow economic growth.

"At least from a symbolic level the message is that in tough economic times, the military has to tighten its belt too," said Tai Ming Cheung, a researcher at the University of California Institute on Global Conflict and Cooperation.

Li alluded to this, saying China has kept spending under control by "balancing national defence construction with economic development."

The budget will be submitted to the NPC, China's rubber-stamp parliament, which opens its annual session on Friday and typically approves such items by an overwhelming margin.

Li, a former foreign minister, said the bulk of the spending increase was to improve conditions for China's 2.3 million service personnel and for the military's modernisation.

It would help China "face multi-faceted military threats (and) improve capabilities for diverse military tasks," he said, without elaborating.

He stressed the figure amounted to only about 1.4 percent of China's gross domestic product, compared with what he said was four percent for the United States and more than two percent for Britain, France and Russia.

It was not immediately clear when China last announced such a low rate of increase due to the lack of transparency in official statistics.

However, it was the slowest in at least a decade, and less than half of the 15.9 percent average rate of increase from 1999-2008, according to figures reported last year by state media.

The 2009 increase was announced at 14.9 percent.

However, the figure is widely viewed as under-representing actual spending, with some key military programmes kept off the official books. Cheung said actual spending was probably two to three times the official budget.

A Beijing-based Western expert on Chinese defence issues who asked not to be named said the budget "is certainly not as big as the military brass would have liked in order to pursue their modernisation efforts."

He said it would cause various forces in the military to jockey for funds.

Cheung said the budget could also be a symbolic gesture to Taiwan.

"There has been an improvement in cross-strait relations and a reduction in security tensions so they may offer this as a token olive branch," he said.

China has claimed the self-ruled island since they split at the end of a civil war six decades ago and does not rule out using force to reclaim it.

But ties have warmed dramatically since the 2008 election of the more China-friendly Taiwan President Ma Ying-jeou.

Tensions have however emerged between China and the United States after Washington approved the sale of 6.4 billion dollars in weapons to Taipei.

In retaliation, China said in January it was cutting off military contacts with the United States and could sanction the US firms involved in the deal.

During National Day celebrations last October, China put its modernisation on display by parading a range of sophisticated homegrown weapons including missiles, fighter jets, high-tech radar and other support systems.

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