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It's no the size of Beijing's military budget that matters

AFP, LONDON
Wednesday, Mar 09, 2005, Page 9

ILLUSTRATION: MOUNTAIN PEOPLE

China's plans to fatten its military budget this year are part of a long-term pattern but they will still worry Taiwan and likely stiffen US opposition to Europe lifting an arms export embargo on China, analysts say.

China announced last Friday that it would boost military spending 12.6 percent this year to 247.7 billion yuan (US$29.9 billion).

Jiang Enzhu (姜恩柱), spokesman for the National People's Congress (NPC), said the budget was "still a fairly small amount compared with other major countries."

By comparison, the US defense budget is about US$400 billion this year.

"Although a 12.6 percent increase sounds quite substantial, it is not extraordinary for China," said Christan Lemiere, analyst at London-based defense analysts Jane's.

"Over the last 15 years, it increased its defense budget by double digit figures every year [except] one," Lemiere said.

Because of a rapidly rising cost of living in China, Beijing had to fund higher defence pay and the introduction of social security for retirees, he said.

However, it was important to note that the budget excluded many items affecting regional security such as overseas procurement of defense equipment.

In any case, the official Chinese defense budget was not believed to represent actual military spending; many analysts believed the true figure was two to three times larger, he said.

According to Washington, Lemiere said, Chinese military spending amounted to US$50 billion to US$70 billion last year.

"Rising Chinese defense expenditures [are] a concern for regional powers -- Taiwan, India, Japan -- and the United States but I don't think this particular announcement will have much of an effect," Lemiere said.

"People have been expecting China to increase its budget as they have been doing for the 15 years. There will be no direct reaction to it but obviously Taiwan will try to continue to source [equipment] from overseas, primarily the United States," he said.

The Chinese announcement "may lead to some rhetoric from the US about the embargo," Lemiere said.

US President George W. Bush, on a visit to Brussels last month, voiced "deep concern" at EU plans to lift a 15-year arms embargo on China, despite a European scheme to toughen a voluntary code of conduct on such exports.

EU leaders have indicated that the arms embargo is likely to be lifted under the bloc's current Luxembourg president, which ends in June.

The US says this will give China access to high-tech military know-how and firepower that would threaten Taiwan and shift the strategic balance in East Asia.

"I assume that the people who are already opposed to lifting this arms embargo will use this as an additional reason for attacking this decision," said Lu Yiyi, analyst at the London-based Royal Institute of International Affairs.

But much would depend on how China used the money.

"It depends on exactly how the additional money will be spent ... if they say it is for new uniforms for the army, [for] improving salaries for army officers, then it is very different from purchasing new equipment," Lu said.

China had previously said it would use the money to fund demobilizing troops. Last Friday, the NPC spokesman said Beijing would demobilize 200,000 soldiers this year.

The People's Liberation Army is the world's largest standing army, with some 2.5 million members.

New tensions with Taiwan were "inevitable," Li said.

"Inevitably, because there is an increase in military budget, Taiwan will feel alarmed," the analyst said.

The NPC is expected to pass legislation aimed at preventing Taiwan from declaring formal independence.

Francois Godement, director of the Asia Centre at the French Institute of International Relations, noted that the Chinese military budget had been growing every since 1989, except for 2003.

Every military update -- stronger navy, battlefield electronics, a new paratrooper division -- "indicates that Taiwan is the target," he said.

"But, because of China's heavy dependence on energy and its great export and import needs, all things that travel by sea, it is normal that China should raise its naval profile," he said.
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