Beijing, March 5 China announced a defense budget increase of approximately 1.91 trillion yuan (USD 277 billion), a 7% rise from the previous year in yuan terms, as part of its efforts to rapidly modernize its armed forces and keep pace with the US military.
Premier Li Qiang, flanked by Chinese President Xi Jinping and other top leaders during the opening session of the National People’s Congress (NPC), announced his annual work report, proposing a defense spending increase to roughly 1.91 trillion yuan (USD 276.9 billion) for the 2026 fiscal year, a 7% year-on-year increase, according to state-run China Daily.
Another key proposal was to lower the GDP target for the Chinese economy to 4.5 to 5% in the face of Trump's trade tariff war, the worsening global crisis following the US-Iran war, and economic challenges within China, including a slump in the property market and unemployment.
China, which previously experienced double-digit growth, has set a 5% GDP target for the last three years amid growing domestic and external economic challenges.
This year, the target was lowered to 4.5 to 5%, reflecting a recognition that the world's second-largest economy faces headwinds due to stagnating domestic consumption.
In response to the increasing defense spending, Chinese officials defended the move, stating that military spending will maintain single-digit growth for the 11th consecutive year since 2016, and will represent the lowest percentage increase since the 2021 fiscal year.
Chinese defense experts point to the US, the world's largest military spender, increasing its defense spending to one trillion US dollars for 2026.
A significant portion of this money would be used against China, according to the US' National Defense Authorization Act for Fiscal Year 2026.
Conversely, China's defense spending, second only to that of the US, has been growing, putting pressure on India and other neighboring countries to increase their defense budgets in response to economic challenges.
India's defense budget of Rs 7.85 lakh crore this year amounts to USD 86 billion.
Comparatively, China's defense spending is more than three times that of India.
China's defense budget figures are viewed with skepticism due to the massive military modernization efforts, including the construction of aircraft carriers, the rapid development of advanced naval ships, and the production of modern stealth aircraft, all being pursued at a feverish pace by the Chinese military.
China already possesses three aircraft carriers, with a fourth one in the pipeline.
Li's report stated that China's defense spending remains comparatively modest across key relative indicators, including its share of GDP, per capita defense expenditure, and defense expenditure per military personnel.
Last year, China announced a 7.2% increase for its national defense budget to USD 249 billion for 2025, a USD 17 billion increase compared to 2024.
Increased defense spending continued amid Xi's extensive military purges. Last week, the NPC dismissed 19 members, including nine military officers.
Last month, two senior Chinese military officials, including the highest-ranking PLA official, General Zhang Youxia, were placed under investigation for serious violations of the ruling Communist Party's discipline and laws, and for corruption, causing shockwaves within the military ranks.
General Zhang is the Vice Chairman of the powerful Central Military Commission (CMC), the overall high command of the Chinese military, headed by Xi.
Zhang's position on the CMC makes him the highest-ranking uniformed officer in the Chinese military.
His removal and subsequent detention left the seven-member CMC with only two – Xi and General Zhang Shengmin, secretary of the discipline inspection body – with remaining positions yet to be filled.
In his work report, Li emphasized that the Communist Party maintains absolute leadership over the People's Liberation Army (PLA).
China will "uphold the Communist Party’s absolute leadership over the people’s armed forces” and “comprehensively and thoroughly implement the system of the chairman of the Central Military Commission assuming overall responsibility”, Li said.
On the anti-corruption campaign in the military, Li said the “political rectification” of the military will “continue to deepen”.
The People's Liberation Army (PLA) will “steadily advance military training and war preparedness, and accelerate the development of advanced combat capabilities”, thereby “enhancing the strategic capacity to safeguard national sovereignty, security and development interests”, he said.
The government will also formulate a plan for strengthening the military during the 15th five-year plan period, carry out major defense-related projects, and launch projects to modernize military theory and promote military-civilian cooperation.
On Taiwan, which China claims as part of its territory, Li said Beijing will insist on the one-China principle and “resolutely crackdown on separatist activities”. Last year, the work report only said Beijing would "oppose" such activities.
