Mr. Li said that the government has always tried to limit military spending and had “set the defense spending at a reasonable level to ensure the balance between national defense and economic development.”
The legislature must approve the government’s 2010 budget at its session this month, but the vote is a formality.
A budget report submitted to the legislature said the government had earmarked about $77.9 billion for the military in 2010, an increase of about $5.4 billion from actual spending last year.
Basically, even if you buy the narrative of the Chinese stimulus package rescuing the Chinese economy, rather than perhaps merely creating more capacity in industries which are already in over-capacity, you cannot deny that the Chinese government's spending means cuts in other places. Growth in Chinese military spending has been in double digits since 1989, outstripping economic growth most years. The reasoning behind this is simple - since the CCP no longer exercises the kind of thought-control over the population that it was able to pre-1979, it now relies on the military as its guarantor of power should the populace turn against them as it did in the year of the Tiananmen protests. For this reason the needs of the military became paramount.
Of course, Chinese military spending still lags that of the US, China's most powerful potential adversary, by a considerable amount - even by the most exaggerated estimates it is still less than a quarter of American spending. This was less assuring when China's military spending was roughly doubling every 4-5 years, but if this trend continue perhaps China's potential adversaries can rest easy. China, of course, maintains its threat of invading Taiwan, and at various times over the last few years has rattled sabres on its borders in the Himalayas, in the South China Sea, and in the East China sea. Nor is Chinese military supremacy in the region anything more than delayed by this announcement. All the same, it does give breathing space.