Beijing announces a significant increase in its military budget, marking its largest in five years amid growing tensions over Taiwan and the South China Sea.
China has announced a significant 7.2% increase in its military budget for the year, escalating to an estimated £181.7 billion (Rmb1.67tn or $232bn). This hike marks the largest boost in military spending by Beijing in five years and positions China as the world’s second-largest military spender. The increase is seen against the backdrop of growing regional tensions and an assertive posture towards Taiwan and the territories in the South China Sea.
In a notable development, China, during its annual finance ministry report, omitted the word “peaceful” regarding its goal of reunification with Taiwan. This change in language underscores a more aggressive stance on this long-standing issue, with military force not being ruled out as a means to achieve reunification. China’s ambition to evolve its military into a “world-class force” by 2027 further highlights this assertive military strategy.
The increased military expenditure is expected to benefit domestic defence companies such as Avic Xi’an Aircraft Industry Group and China Shipbuilding Industry Co, with their shares surging. It may also foster partnerships with international suppliers like Singapore Technologies Engineering and Thales, indicating a sector likely to grow regardless of China’s economic challenges.
The military budget enhancement comes at a time when China’s activities, particularly its territorial claims in the South China Sea and aggressive maneuvers in the Taiwan Strait, have raised global concerns. Countries in the region and the US have voiced apprehensions over China’s military buildup and its implications for regional stability.
In response to the perceived threats, Taiwan has announced plans to augment its missile drills and defensive capabilities, signifying an escalating cycle of military posturing in the region. This situation has garnered attention and condemnation from neighboring nations and the international community, wary of the consequences such military expansions might entail for regional peace and security.
