China on Thursday sharply increased its defense budget to $275 billion as it ramped up on efforts of the modernization of the country’s armed forces to compete with the US military.
The $275 billion China defense budget was $25 billion more than last year, according to data.
This also comes at a time when the world is seeing geopolitical conflicts in the recent years, with China itself being involved in a months-long tension with India that was recently resolved after soldiers from both sides clashed at the Galwan Valley.
China’s defense budget hike coincides with the conflict in the Middle East, where the US is showing its military prowess by launching missiles and drones in Iran. The US along with Israel has killed Iran’s Supreme Leader Ayatollah Ali Khamenei, and has caused extensive damage in the country.
1.9 trillion yuan for defense
Roughly 1.9 trillion yuan (about $275 billion) will be allocated to national defense, Chinese Premier Li Qiang announced in his work report presented to the National People’s Congress (NPC) on Thursday.
The report said 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, it said.
Last year China announced a 7.2% increase for its national defense budget to $249 billion for 2025 which is a $17 billion rise compared to 2024.
China’s defense spending, only second to that of the US, has been growing over the years putting enormous pressure on India and other neighboring countries to scale up their defense budgets in the face of economic challenges.
In 2024, China increased its defense budget by 7.2% to about $232 billion (1.67 trillion yuan) — over three times that of India — as it continues with the massive modernization of all its armed forces.
China’s defense budget figures are viewed with skepticism in the light of massive military modernisation, including building aircraft carriers, rapid construction of advanced naval ships and modern stealth aircraft being carried out at a feverish pitch by the Chinese military.
$44 billion for state-owned banks
China said on Thursday it would inject 300 billion yuan ($43.59 billion) into state-owned banks this year through a special treasury bond and deepen reforms of state-owned financial enterprises, to fend off systemic financial risks.
The measures were included in the annual government work report published by China’s top leadership at the opening session of the National People’s Congress (NPC), China’s rubber-stamp parliament.
China said it would further replenish the capital of financial institutions, and dispose of non-performing assets in the sector, according to the report.
The measures are part of Beijing’s effort to bolster its financial system as the world’s second-largest economy grapples with a prolonged property crisis, weak consumer confidence and deflationary pressure.
Chinese lenders have faced rising bad loans tied to struggling real estate developers and cash-strapped local governments.
The capital injection follows a similar recapitalization plan last year of around $72 billion to boost big state banks’ core capital, a move aimed at helping lenders manage lower profit margins and asset-quality strains.
Key Takeaways
- China’s defense budget increase signals its intent to modernize military capabilities in the face of global tensions.
- The defense spending growth adds pressure on neighboring countries like India to enhance their own military budgets.
- The juxtaposition of defense spending and economic challenges highlights the complexities within China’s financial and strategic planning.
