2nd Ld Writethru-Xinhua Insight: China to announce lowest defense budget rise in six years

China on Friday announced what could be its lowest military budget increase in six years in the wake of rising economic headwinds and last year's announcement of a slimmer military.

Fu Ying, spokesperson for the National People's Congress (NPC) annual session, said military spending of the world's most populous country is budgeted to grow by 7 to 8 percent in 2016.

"China's military budget will continue to grow this year but the margin will be lower than last year," Fu told a press conference on Friday.

The exact figure will be released in a budget report presented to the session on Saturday, Fu said.

China's defense budget rose by 10.1 percent in 2015.

The fresh raise could put the 2016 defense budget at around 950 billion yuan (about 146 billion U.S. dollars), up from last year's 886.9 billion yuan.

It would also make the world's second largest economy the second largest defense spender, both next to the United States which, in the exact words of U.S. President Barack Obama, spends more on military "than the next eight nations combined."

Last month, Obama proposed a 534-billion dollar defense budget package for the 2016 fiscal year, about 3.6 times China's budget this year. This year's new increase will do little to close that gap.

It would, however, break a multi-year run of double-digit increases in China's defense budget, and mark the slowest growth in years, if not decades.

Before 2016, China's military expenditure had seen a five-year run of steady double-digit increases since 2010, when the defense budget was set to grow by 7.5 percent. The year prior to that, it was 15 percent.

The raise in 2016 is in line with China's national defense needs and its fiscal revenue, Fu said.

Her words came as China is faced with increasing economic headwinds with uncertainty clouding global recovery.

China's economy expanded 6.9 percent year on year in 2015, the slowest in a quarter of a century, weighed down by a property market downturn, falling trade and weak factory activity.

Premier Li Keqiang will unveil the government's 2016 GDP target on Saturday.

The growth rate is estimated to be in a range between 6.5 and 7 percent, compared with the "approximately 7 percent" target announced by Li last year.

If so, the "7-to-8 percent" rise in military budget, compared with the slowing economy, shows that the brakes are being pressed harder than last year in this area.

A number of overseas media had speculated that there would be a "sharp" rise in China's defense budget as a result of the military reform program, which aims to streamline the People's Liberation Army (PLA) and make it combat-capable, and tensions in the South China Sea.

President Xi Jinping announced a cut of 300,000 service people in September, but it is not clear whether the effects would kick in so soon.

In an interview with Xinhua, Maj. Gen. Chen Zhou, too, touched on the surprise slowdown with China's "economic and social status quo."

"A single-digit rise following years of double-digit growth is a prudent, moderate move," Chen, also an NPC deputy, said.

"We do not go for an arms race," he said.

His words were echoed by Maj. Gen. Luo Yuan.

"Had we wanted a bigger military budget, we would have had it," Luo said. "The Chinese economy can afford a relatively large defense budget despite downward pressure."

"But China only wants a reasonable increase -- enough to meet its defence needs," Luo said.

Both Chen and Luo shrugged off concerns from Western observers over China's growing military spending.

Though recent rises in defense budgets surpassed GDP growth, China's military expenditure in 2015 accounted for just 1.33 percent of GDP, well below the world's average of 2.6 percent.

The per capita military spending is even less, representing only about 5.6 percent that of the U.S., 11 percent that of Britain and 25 percent that of Japan, Chen said.

He said defense spending still counts for "rigid demands" for China in the face of geopolitical competition in Asia Pacific, territorial and maritime disputes, as well as growing terrorist, separatist and extremist threats.

New equipment and combat capabilities in addition to better training, as well as on-going military reform within the PLA all require investment, Chen said.

To modernize management and administration, the PLA inaugurated a General Command for the army, the PLA Rocket Force and the PLA Strategic Support Force in December. In February, it replaced seven former military area commands with five PLA theater commands.

"The PLA is in the key phase of deepening reforms," Luo said, "a moderate increase in the military budget is necessary."

Chen, meanwhile, noted that China's defense policy is defensive in nature, and rejected the much-hyped "China threat" theory.

"Whether a country constitutes a threat to others depends on its external and internal policies, not its military capabilities," Chen said.

"China itself was a victim of aggression in the past, it would not inflict its own sufferings on others," he said. "We know the price for peace." Endi