China said on Thursday it would increase defence spending by 7% in 2026 — the slowest pace in five years but still faster than the country’s broader economic growth targets and higher than most of Asia, as regional tensions, including over Taiwan, continue to rise.
Security analysts and regional military attaches are watching China’s budget closely as it scrambles to modernise the military by 2035, while stepping up deployments across East Asia and purging the top brass to tackle graft.
China will improve combat readiness and accelerate the development of “advanced combat capabilities”, Premier Li Qiang said at the opening of parliament’s annual meeting, at which he unveiled a broader GDP growth forecast of 4.5% to 5%.
Moderniation and Military Purge
The figure of 7%, which follows three years of annual rises of 7.2% and is the lowest since 6.8% in 2021, is part of a spending campaign in which China’s military has developed new advanced missiles, ships, submarines and surveillance methods.
This year’s increase showed Beijing was keeping to a long-held principle of balancing economic growth with national defence goals, said James Char of the S. Rajaratnam School of International Studies in Singapore.
It comes amid the highest-profile purge of upper military ranks in decades, with the two most senior generals ensnared in disciplinary investigations.
The purge leaves just two members of the usual seven on the supreme Central Military Commission, Xi himself as its chair, and a newly promoted vice chairman, Zhang Shengmin.
The corruption crackdown showed “Beijing will keep a tighter watch on military spending,” said Wen-Ti Sung, a security analyst based in Taiwan, although it was clear all levels of government were getting more frugal.
The government remains committed to the ruling Communist Party’s “absolute leadership over the armed forces”, Li added.
Some regional analysts believe the founding anniversary, which falls next year will bring further increases in military drills and deployments around Taiwan, the democratically-governed island that Beijing views as its territory.
‘Reunification’ With Taiwan
China would “resolutely fight against separatist forces aimed at ‘Taiwan independence’ and oppose external interference”, Li vowed, virtually reprising comments last year.
That would “promote the peaceful development of cross-Strait relations and advance the cause of national reunification”, he added.
Taiwan’s government, which says only the island’s people can decide their future, had no immediate reaction to Li’s remarks.
Li toned down a warning about the international environment from a year ago, calling it “complex and challenging” rather than “increasingly complex and severe” in comments that had cited “changes unseen in a century”.
While the graft crackdown left gaps in the PLA’s command structure and dented short-term readiness, it was expected to keep improving capabilities and broaden modernisation, the International Institute of Strategic Studies said.
Growth in Chinese military spending was consistently outpacing the rest of Asia amid a global surge in defence budgets, the London-based IISS said in a report last month.
China’s share of Asia’s total military expenditure grew to almost 44% in 2025, up from an average of 37% between 2010 and 2020, it added.
China gives no breakdown of defence spending, though its budget of 1.91 trillion yuan ($277 billion) is just about a quarter of a $1-trillion defence bill U.S. President Donald Trump signed into law in December.
(With inputs from Reuters)
