China on Thursday sharply increased its defense budget to $275 billion as it accelerated efforts to modernize the country’s armed forces to compete with the US military.
China’s $275 billion defense budget was $25 billion more than last year, according to the data.
It also comes at a time when the world has been experiencing geopolitical conflicts in recent years, with China itself involved in months-long tensions with India that were recently resolved after troops from both sides clashed in the Galwan Valley.
The increase in China’s defense budget coincides with conflict in the Middle East, where the US is demonstrating its military prowess by launching missiles and drones in Iran. The US along with Israel killed Iran’s Supreme Leader Ayatollah Ali Khamenei and caused extensive damage in the country.
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1.9 trillion yuan for defense
Roughly 1.9 trillion yuan (about $275 billion) will be allocated to national defense, Chinese Premier Li Qiang announced in a work report submitted to the National People’s Congress (NPC) on Thursday.
The report notes that China’s defense spending remains relatively modest across key relative indicators, including its share of GDP, per capita defense spending, and defense spending per military personnel.
China last year announced a 7.2% increase in its national defense budget to $249 billion for 2025, an increase of $17 billion compared to 2024.
China’s defense spending, second only to that of the US, has been rising over the years, putting enormous pressure on India and other neighboring countries to increase their defense budgets in the face of economic challenges.
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China has increased its defense budget by 7.2% to about $232 billion (1.67 trillion yuan) in 2024 – more than three times that of India – as it continues a massive modernization of all its armed forces.
China’s defense budget figures are viewed with skepticism in light of the massive military modernization, including the building of aircraft carriers, the rapid construction of advanced naval vessels and advanced stealth aircraft, that the Chinese military is carrying out at a fever pitch.
$44 billion for state banks
China said on Thursday it would inject 300 billion yuan ($43.59 billion) into state-owned banks this year through a special government bond and deepen reforms of state-owned financial enterprises to avert systemic financial risks.
The measures were included in the annual government work report released by China’s top leadership at the opening session of the National People’s Congress (NPC), China’s parliament.
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China said it would further recapitalize financial institutions and shed non-performing assets in the sector, according to the report.
The measures are part of Beijing’s efforts to strengthen its financial system at a time when the world’s second-largest economy is grappling with a prolonged housing crisis, weak consumer confidence and deflationary pressures.
Chinese lenders have faced rising bad loans linked to struggling property developers and cash-strapped local governments.
The capital injection follows a similar recapitalization plan last year of about $72 billion to shore up the capital of big state-owned banks, a move aimed at helping lenders manage lower profit margins and pressures on asset quality.
Key things
- China’s defense budget increase signals its intention to modernize military capabilities in the face of global tensions.
- Rising defense spending is increasing pressure on neighboring countries such as India to increase their own military budgets.
- A juxtaposition of defense spending and economic challenges highlights the complexity of China’s financial and strategic planning.
