OPINION | China signals slowing economic growth will not hold back military modernisation  

China’s announced military expenditure remains the world’s second largest

As China’s annual ‘Two Sessions’ near their conclusion, the defence and national security signals emanating from Beijing deserve careful reading. Between the draft 15th Five-Year Plan, Li Qiang’s Government Work Report, a 7% defence budget hike to 1.91 trillion yuan, and Xi Jinping’s 7 March address to the People’s Liberation Army, there is a somewhat familiar, and yet, fascinating tapestry of ambition, anxiety, and political messaging to unpack.

Growth in defence spending outpaces that of GDP

First comes the headline number. A 7% increase in defence spending, marginally down from 7.2 per cent over the preceding three years, still outpaces the officially stated GDP growth target of 4.5 to 5%.

At roughly $277 billion, China’s announced military expenditure remains the world’s second largest, though it is likely that the actual spending, once off-budget items are factored in, is considerably higher.

Military modernisation is China’s priority

Even as the economy encounters headwinds in the form of a lowered GDP target, persistent property sector fragility, and mounting local government debt, military modernisation retains its protected status.

“Three-step” modernisation strategy

The defence-related sections of the draft 15th Five-Year Plan, which will, more or less, dictate the trajectory of China’s strategy and policy in the next five years, are worth parsing closely.

Section XV, spanning Chapters 55 and 56, reaffirms the PLA’s “three-step” modernisation strategy. This comprises achieving the centenary goal of building a strong PLA in the ‘New Era’ by 2027, basic modernisation (completed informatisation and heavy intelligentisation) by 2035, and a “world-class military” by mid-century.

Preparing for future warfare

This timeline has been articulated since 2018, but what matters now is the operational detail being layered onto it. The FYP calls for strengthening strategic deterrence forces – a formulation that encompasses nuclear modernisation, missile capabilities, and space and counter-space assets – while simultaneously accelerating the development of unmanned and intelligent combat systems.

The push towards “new-domain and new-quality combat forces” reflects a military establishment that is taking seriously the character of future warfare, even as it acknowledges that it is plagued by the peace disease.

Desire for “high-quality” military personnel

Equally notable is the FYP’s emphasis on the human dimension. Building “high-quality, professional, new-type military talent” is an essential introduction to perhaps try and solve for the PLA’s biggest institutional challenge.

Its rapid technological upgrade demands a corresponding transformation in the quality of the personnel operating and commanding these systems. The FYP document specifically calls for improvements in military academy education, the recruitment of engineers and scientists, and the cultivation of specialised technical cadres.

Whether the PLA can attract and retain top-tier talent in competition with China’s thriving civilian tech sector remains an open question — but the policy intent is clear. 

Civil-military fusion

Further, Chapter 56 of the FYP revisits and reiterates the construction of an “Integrated National Strategic System and Capabilities,” an idea Xi first spotlighted at the Two Sessions in 2023. The concept envisions the unification of resources across jurisdictions to produce an outcome greater than the sum of its parts. In practice, this means deeper civil-military fusion, i.e. aligning provincial planning with military requirements, embedding national defence considerations into major infrastructure, and promoting interoperability between civilian and military standards.

The FYP’s insistence on pre-positioning defence requirements across the country’s infrastructure backbone, and on deepening cross-military-local coordination, carries an undertone of strategic urgency.

Beijing appears to be girding its national architecture for sustained competition – and possibly contingency – across multiple domains. 

 Xi and “political army-building”

With the guiding fundamentals set in the FYP, Xi’s 7 March remarks to the PLA delegation supplied the political compass. His chosen theme – “political army-building” as the foundational “magic weapon” – is revealing of a disloyalty and corruption crisis rocking Chinese military leadership.

At a time when the PLA is still absorbing the aftershocks of a sweeping anti-corruption purge that has removed or sidelined ~100 senior officers, Xi’s message unambiguously stated that loyalty to the Party is not negotiable, and the campaign against graft will continue with full intensity into the 15th FYP period. 

Xi was notably specific on the mechanics of oversight. He called for close monitoring of fund flows, the exercise of power, and quality control, alongside strengthened supervision of major projects and integrated military-civilian oversight mechanisms. His demand for reformed military budget management and “full-chain control and performance evaluation” of expenditure suggests a leadership that remains deeply concerned about where defence money actually goes and whether it translates into real capability. His emphasis on “diligence and frugality” further reinforced this anxiety.

Reading the tea leaves

What emerges from these collective signals is a picture of a military establishment caught between aspiration and apprehension. The aspiration is that of building a force capable of fighting and winning modern wars, and one which is undergirded by cutting-edge technology, intelligent systems, and joint operations capability.

The apprehension is equally palpable, in that without political discipline and robust oversight, the modernisation effort risks being hollowed out from within.

The broader national security framing in Chapter 51 of the FYP on the ‘Overall National Security Concept’, adds another layer. Its emphasis on political security as the foundation of all other security domains, its call to combat infiltration, subversion, and separatism, and its directive to fortify a “people’s line of defence” reflect a party-state that perceives threats as much from within as from without. 

The key takeaway in the defence-related signals from the ‘Two Sessions’, is this – China’s military modernisation is a deeply political project, shaped by the Party’s perception of internal vulnerabilities as much as by its assessment of external threats. The Two Sessions confirm that Beijing intends to press forward with more money, more institutional reform, and more political control.

Whether that combination produces a more capable military or a more rigid one is a question that the coming years will answer.

(Anushka Saxena, a Staff Research Analyst (China) with the Indo-Pacific Studies Programme at the Takshashila Institution, Bengaluru.)

Views are personal, and do not represent the stand of this publication.