China unveils 18% defense budget increase

Beijing`s defense budget for 2001 has been set at 141 billion yuan (about 22.5 trillion won), which accounts for 8.1% of the total budget and represents a 17.7% increase from a year earlier, China`s finance minister Xiang Huaicheng said in the ongoing meeting of the National People`s Congress Tuesday.

``We increased the defense budget to carry out the nation`s defense operations smoothly amid great changes in the military sector, the modernization of technology and the growing dependence on high-tech equipment,`` he said.

The increased budget is also designed to raise the wages of military officers and enlisted personnel and provide them with needed subsidies and bonuses, Xiang added. Analysts countered that the higher defense outlay was meant to widen the gap in military spending between China and Taiwan. The increase in China`s defense budget was the highest since 1995. Since that time, China had gradually lowered military expenditures and devoted more funds to economic development. In 1996, when China launched its 9th five-year plan, the defense budget climbed by 12.29% from the previous year. The increase rate remained at the 12% level until last year, when it rose to 13%.

Military analysts in Beijing attributed the sharp increase mainly to the change in relations between China and Taiwan in the wake of the inauguration of United States President George W. Bush. Taiwan recently signed a contract with the U.S. to purchase 300 M109A-type guns equipped with high-tech equipment. It is also widely known to have negotiated the purchase of several billions of dollars worth of advanced weapons, including four destroyers, 24 Apache helicopters, and eight diesel-powered submarines.

In response, China introduced 100 Russian-made engines for SU27 fighters and went into the assembly-line production of the aircraft. It is also reportedly seeking to purchase 80-90 engines from Britain for use in JH7 fighters.

China also increased the number of its short-range missiles targeted at Taiwan. Beijing has warned several times that it would prevent Taiwan from participating in the U.S.-proposed Theater Missile Defense, even through the use of military force.

With the strengthening of its military power, China seems to be seeking the leverage needed to take Taiwan by force or at least forestall Taiwanese moves for independence, analysts said.

Taiwan warns that budget threatens cross-channel relations:

Taipei said the rise in Chinese defense spending posed a threat to two-way relations and overall stability in the East Asian region. Saying a stronger Chinese military would upset the balance of military power between Taiwan and China by 2005, a spokesman for Taiwan`s defense department said, ``The strengthening of China`s military is sure to cause serious concerns among Asian countries as well as the United States.``

Lee Jong-Hwan lihzip@donga.com