China hikes military spending as threats, external attempts 'escalate'

• 

China revealed on Sunday that the defense budget this year will be the highest in four years at 1.55 trillion yuan ($225 billion) as foreign threats increase against the Asian giant that ranks second after the US in military spending having allocated a staggering budget of over $800 billion this year.

The announcement made by the parliament came prior to Chinese President Xi Jinping's expected third term. 

The 7.2% increase in defense spending came after Beijing said its target GDP this year stands at 5%.

Read more: China is not afraid of competition with US says MoFA

Li Keqiang, China's outgoing premier, said in an address to the National People's Congress (NPC), "External attempts to suppress and contain China are escalating," referring to the US and its allies' escalating hostility toward the country.

"The armed forces should intensify military training and preparedness across the board," he added.

The army must "devote greater energy to training under combat conditions, and... strengthen military work in all directions and domains," Li stressed.

China-US relations have gone further downhill as Washington is increasingly hyper-militarizing Pacific Asian countries, such as Japan and South Korea, in the face of Beijing, in addition to its weapons sales to Taiwan and gradually attempting to break the One China policy.

Read more: China, US tensions on the rise over alleged 'espionage' aerial objects

Commenting on China's new budget, the head of Stockholm-based NGO, the Institute for Security and Development Policy, said the Asian giant seems to be "investing in its capacity to take over Taiwan and keep the US out of the region."

"We have a military arms race in Northeast Asia, and Chinese armaments are driving this forward," said Niklas Swanstrom.

30 US troops are currently stationed in Taiwan. However, it is planned that an additional 100 to 200 soldiers are likely to arrive over the coming months.

The newly deployed troops will include special operations forces and US Marines that will be tasked to expand a pre-existing training program that the Pentagon wanted to keep out of the public eye.

Momentum for economic growth

The declared economic growth target of 5% comes after China missed last year's target by 2.5%, hitting 3% compared to the announced goal of 5.5%, due to the impact of the pandemic and the overall global economic situation.

"The growth target came in at the low end of the market expectation. But it should be taken as a floor of growth the government is willing to tolerate," said Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management.

Read more: China top trading partner to more than 120 Countries

"Given the very low base of economic activities last year, it is unlikely to see growth drop below five percent," he said.

China's economy "is staging a steady recovery and demonstrating vast potential and momentum for further growth," the outgoing premier said, praising the country's "effective and well-coordinated" economic and social development.

"Overcoming great difficulties and challenges, we succeeded in maintaining overall stable economic performance," Li added.