China boosts defence spending 7% in drive to modernise by 2035

• China defence budget to rise 7%, lowest rate since 2021.
• China pledges development of ‘advanced combat capabilities’.
• Premier reiterates goal of “reunification” with Taiwan.
  

China will boost defence spending by 7% in 2026, it said on Thursday, the lowest rate in five years but still outpacing wider economic growth targets and the rest of Asia at a time of growing regional tension, including over Taiwan.

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%.

“All these steps will boost our strategic capacity to safeguard China’s sovereignty, security, and development interests,” Li said in his work report, adding that President Xi Jinping held ultimate command responsibility.

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.

“Essentially, the People’s Liberation Army budget has been growing at a fairly consistent rate as a percentage of GDP … roughly the rate of GDP growth plus inflation,” added Char, a China defence scholar.

It comes amid the highest-profile purge of upper military ranks in decades, with the two most senior generals ensnared in disciplinary investigations.

Zhang Youxia, a veteran military ally of Xi, was placed under investigation in January, while another, He Weidong, was expelled in October last year.

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.

“Guided by the principle of ensuring political loyalty in the military, we will continue to improve military political conduct and make major strides towards the centenary goals of the People’s Liberation Army.”

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 of last year.

That would “promote the peaceful development of cross-Strait relations and advance the cause of national reunification”, he added.

Taiwan says only the island’s people can decide their future. Its government said it did not see any major policy changes towards Taiwan in Li’s comments, but was concerned about China’s defence spending.

“Even under conditions of an unstable economy and weak private consumption, they are still willing to allocate a very large budget to military spending,” said Liang Wen-chieh, a spokesperson of the Mainland Affairs Council in Taipei.

“And of course, that poses a threat to Taiwan,” the spokesperson told reporters.

International environment

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”.

In Tokyo, Japan’s Chief Cabinet Secretary Minoru Kihara said China was not sufficiently transparent about its continued high level of defence spending and stronger capabilities.

Despite China’s efforts to change the status quo in the East and South China Seas by “force or coercion”, Japan would keep up efforts to build constructive, stable ties with it, Kihara told a press briefing.

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 US President Donald Trump signed into law in December.