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

China's defense 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 percent and 1.63 percent 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, defense 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 defense law, adopts a policy of coordinating its national defense building with its economic progress.

The 2004 defense 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 defense budget still lags far behind some major Western countries.

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

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

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

When looking at a country's national defense spending, sheer increased numbers are not the most important point. This is the real intention behind the increase: whether it is for defense 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-defense, and poses no threat to any other country.

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

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

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

Real defense 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 has, to some extent, negatively affected building up the defense 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 percent of the State budget in 2003, far below 1979's 17.37 percent and 1997's 8.8 percent.

The white paper maintains that while moderately increasing the defense 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)