Any country's national defence budget must be steadily increased as the military is modernized and national security developed to keep the country safe.

China's defence budget stood at 170.78 billion yuan (US$20.65 billion) in 2002 and 190.8 billion yuan (US$23.07 billion) in 2003, accounting for 1.62 per cent and 1.63 per cent of country's gross domestic product (GDP) each year.

The budget this year was 211.7 billion yuan (US$25.6 billion).

In the past two years, defence as a percentage of GDP and State financial expenditure remains basically the same.

The growth rate has stayed lower than that of State financial expenditure in most years in the last decade.

The Chinese Government, in accordance with the national defence law, adopts a policy of co-ordinating its national defence building with its economic progress.

The 2004 defence white paper details five major areas in which the extra money was spent -- raising salaries, establishing a social security system for servicemen, supporting structural and organizational reform, developing skills among staff, and improving equipment.

Even so, China's total defence budget still lags far behind some major Western countries.

In 2003 China's defence budget was just 5.69 per cent of the United States', 56.78 per cent of Japan's, 37.07 per cent of Britain's and 75.96 per cent of France's. The US defence budget in 2003 fiscal year was US$404.92 billion, accounting for 3.6 per cent of its GDP. It increased to US$460.55 billion in the 2004 fiscal year, an increase of 13.7 per cent and roughly half of the world's total defence spending that year.

National defence and armed force building need constant input and updating.

Over the past two years, China's national defence input has risen, and most was spent on national defence and armed force building.

When looking at a country's national defence spending, sheer increased numbers are not the most important point. This is the real intention behind the increase: whether it is for defence or expansion.

China has unswervingly stuck to a defensive policy, firmly opposing any hegemony or expansionist policy.

China's military building is purely for self-defence, and poses no threat to any other country.

Its spending is composed of three parts -- head count costs, 32.5 per cent; maintenance expenses, 33.6 per cent; and equipment expenditure, 33.9 per cent in 2003.

Head count and maintenance expenses account for two thirds of all spending, which is in part confirmation that China's national defence is self-defence in nature.

For a long time after the country opened up and embarked on its reform policies of the early 1980s, China's defence budget increase has been kept at a very slow pace in line with its "economic construction first" policy.

Real defence spending actually declined in those years, leaving many army sectors short of cash.

Armed forces were compelled to engage in commercial activities to make up for the inadequate spending, which, to some extent, has negatively affected building up the defence system.

China has gradually increased its spending since the central government decided to give the military full financial backing and banned the military from doing business in July 1998.

Any budget increase since the late 1990s has mainly been of a compensatory nature.

Despite trying to make up the shortfall, it only accounted for 7.74 per cent of the State budget in 2003, far below 1979's 17.37 per cent and 1997's 8.8 per cent.

The white paper maintains that while moderately increasing the defence budget, China should also improve efficiency and use the money where it is needed most.

It also calls to strengthen budget management to regulate its allocation better.

(China Daily December 29, 2004)