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China Ups The Ante

Beijing Announces Double-Digit Boost In Its Defense Spending Goal: Catch Up With The West In High-Tech Military Hardware Concerns About Missile Defense, Taiwan Fuel Spending Drive

BEIJING, March 6, 2001 AP (CBS) China announced plans Tuesday to raise its defense spending by nearly 18 percent this year, in part to fuel its drive to catch up with Western militaries' high technology and citing "drastic" changes in the world military situation.

Finance Minister Xiang Huaicheng said a large share of the $17.1 billion military budget - which analysts say represents only a portion of China's total defense spending - would go to higher salaries and to improving weapons technology.

Xiang told delegates to the Communist-controlled national legislature in its annual session that the increase, one of China's largest over the past decade, was needed "to adapt to drastic changes in the military situation of the world and prepare for defense and combat given the conditions of modern technology, especially high technology."

That was seen as a clear reference to U.S. plans to build a national missile defense system protecting itself from attack as well as a theatre missile defense in East Asia that Beijing fears would protect Taiwan, which it views as a renegade province.

China is lobbying Washington hard not to sell Taiwan high-tech weapons, including the Aegis and Patriot anti-missile defense systems.

"That is an oblique reference to the Americans and the potential ill of selling things like Aegis-equipped vessels to Taiwan," one Western diplomat said of Xiang's speech.

Foreign Minister Tang Jiaxuan said the budget increase was not directed at Taiwan.

"You shouldn't artificially connect China's natural increase in military spending and the Taiwan question," he told a news conference on Tuesday.

Indeed, China has announced double-digit increases in military spending each year for 12 straight years as it seeks to modernize its poorly trained and equipped People's Liberation Army (PLA), the world's largest with 2.5 million troops. Last year, the military budget grew 12.7 percent. It increased by 21 percent 1995 and 18 percent in 1994.

Jiaxuan also said that the United States' proposed $310 billion defense budget dwarfed Beijing's.

"Although you could draw the conclusion from a couple of figures that China's defense spending has increased significantly, the defense budget is the smallest among major nations," Tang said.

Besides China's high-tech concerns, the May 1999 bombing by NATO of its embassy in Yugoslavia and the 1991 Gulf War also added urgency to its defense spending drive.

Robert Karniol, Asia-Pacific editor at Jane's Defense Weekly in Bangkok, said China's actual defense spending was thought to be up to five times the official budget. "In the last white paper, the government denied that. Basically, we don't believe them," he said.

Lagging far behind the West, China is believed to be spending more than $1 billion a year to buy foreign military technology, much of it from Russia.

Among the weaponry it has bought from Moscow are destroyers carrying supersonic anti-ship missiles considered a serious threat to U.S. warships based in Okinawa and to any U.S. navy attempt to aid Taiwan in the event of Chinese attack. Defense analysts say the PLA currently lacks the air and amphibious naval capability to invade Taiwan, but is seeking it.

"It's bad news for the U.S. Navy," Erich Shi, senior editor at the Taiwan monthly magazine Defense International, said of the new budget.

Karniol said another reason for the big spending boost was that Beijing had to compensate the army for the divestiture of its vast commercial empire, in the past a large source of military income.

On the economic front, Premier Zhu Rongji and other top officials have outlined to the national legislature an ambitious program of boosting lagging rural incomes, ceding state ownership in favor of private enterprise, and of revamping inefficient industries to compete in the global market.

At the same time, they're promising help to the millions of workers and farmers who could lose their livelihoods as long-protected markets open to foreign imports with China's entry into the free-trading World Trade Organization, expected this year.

MMI The Associated Press. All Rights Reserved.,1597,276653-412,00.shtml

-- Martin Thompson (, March 06, 2001

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