China to increase military spending by 7.2% amid global tensions

China plans to increase its military spending by 7.2% this year in response to geopolitical uncertainties, according to a draft budget presented at the start of this year's session of the National People's Congress in Beijing.

The uptick in defence spending is proportionately higher than the planned increase in total expenditure.

Addressing almost 3,000 delegates in the Great Hall of the People, outgoing Chinese Premier Li Keqiang called for the expansion of the country's armed forces, which should "boost combat preparedness, and enhance military capabilities so as to accomplish the tasks entrusted to them by the Party and the people."

A spokesman for the meeting a day earlier had justified the above-average increase with "complex security challenges" and China's "responsibilities as a great power."

China's defence budget has repeatedly risen faster than total spending in recent years. Last year the military budget increased by 7.1%.

The focus of the annual week-long meeting of hand-picked delegates is the approval of the planned formation of a new government and the setting of the country's economic and political course.

China's economy is expected to grow "around 5%," Li said as he opened this year's session.

Following the end of the strict zero-Covid strategy, which had weighed heavily on the world's second-largest economy last year, Li said he expects China to recover significantly.

Last year's growth target was around 5.5%.

However, under pressure from the strict zero-Covid policy of lockdowns, forced quarantines and mass testing, which was only abandoned in December, the world's second-largest economy achieved just 3% growth.

It was the second-worst growth rate since 1976 and only slightly better than 2020's 2.2% at the start of the pandemic.

To stimulate the economy, China is planning to create more new debt in 2023 than last year. According to the government's draft budget published on Sunday, the deficit will be around 3% of economic output. In 2022, the deficit was set at 2.8%.

"It is important this year to prioritize economic stability," Li said.

He stressed the need in particular for measures to help revive consumption and said 12 million new jobs are to be created in China's cities - 1 million more than planned last year. The government is aiming for an unemployment rate of about 5.5% and around 3% inflation.

After two terms in office, 67-year-old Li is to be replaced by the former party leader of Shanghai, Li Qiang.

State and party leader Xi Jinping, who cemented his hold on power at the party congress in October, is certain to be confirmed for an unprecedented third term as president.