This marks the third consecutive year that China has maintained the same rate of growth in military expenditure.
China has unveiled its defence budget for 2025, confirming a 7.2% year-on-year increase as Beijing continues its steady military expansion under President Xi Jinping. This marks the third consecutive year that China has maintained the same rate of growth in military expenditure, underscoring its commitment to modernising the People’s Liberation Army (PLA) amid global geopolitical tensions.
Announced on 5 March during the Third Annual Session of the 14th National People’s Congress (NPC), China’s legislature, the new defence budget stands at CNY1.784665 trillion (approximately USD249 billion). This cements China’s position as the world’s second-largest military spender, second only to the United States.
John Culver, a former US national intelligence officer and retired CIA analyst, noted that China’s defence budget follows a long-term strategic pattern. “Beijing sets the defence budget target increase over each five-year period. It adjusts for inflation or emergency contingencies if necessary. From 2001 until the global financial crisis, they programmed a doubling of the budget every five years, and hit it almost to the decimal point. Since 2010, they’ve programmed a doubling every ten years. The announced annual budget figure is top-down, not bottom-up. Example: 2014 = RMB808 billion; 2024 = RMB1,670 billion.”
The budget was swiftly approved by the NPC’s 2,977 members, who typically rubber-stamp national spending proposals put forward by the ruling Chinese Communist Party (CCP). The annual NPC session, often referred to as the “Two Sessions,” is a key event in China’s political calendar, where major policy decisions are formalised.
A Shift from Double-Digit Growth
A decade ago, China’s defence budget saw double-digit percentage increases, but those days are now long gone. The latest 7.2% rise marks the tenth consecutive year of single-digit growth. This measured approach aligns with China’s broader economic strategy, as its economy grapples with slowing growth. The government has projected a 5% GDP growth rate for 2025, consistent with its targets for the previous two years.
Despite maintaining that defence spending remains below 1.5% of GDP, questions persist about China’s actual military expenditure. Official figures are widely believed to understate the real scale of spending, as various military-related expenses are not included in the official defence budget. This includes allocations for China’s military-run space programme, defence mobilisation funds, operational costs for provincial military bases, military pensions, civilian research with dual-use applications, and the substantial budgets of paramilitary organisations such as the People’s Armed Police and the China Coast Guard.
The Stockholm International Peace Research Institute (SIPRI) estimated that China’s actual defence spending in 2023 was approximately 37% higher than the officially reported figure. Meanwhile, the UK-based International Institute of Strategic Studies (IISS) put the discrepancy at 42%. The US Department of Defence has similarly assessed that China’s true military expenditure could be 30-40% higher than publicly stated.
China Deflects Attention to US
Amid scrutiny of its rising military expenditure, China’s Ministry of National Defence (MND) sought to shift the focus onto the United States. Senior Colonel Wu Qian, an MND spokesperson, labelled US defence spending as “concerning” for the international community. “I believe the United States should be the first to cut its nuclear arsenal and military expenditure and put into practice ‘America First’ in this regard,” he said.
Chinese state media echoed these sentiments. A Xinhua report reiterated Beijing’s longstanding narrative, stating, “China upholds a national defence policy that is defensive in nature, with its military spending mainly focused on protecting its sovereignty, security, and development interests. China’s development strengthens the world’s forces for peace, and the country will never seek hegemony or engage in expansionism, no matter what stage of development it reaches.”
Furthermore, Xinhua highlighted China’s contributions to international peacekeeping efforts, claiming that over 50,000 Chinese military personnel have been deployed on UN peacekeeping missions in more than 20 countries over the past 30 years. It also pointed to China’s role in humanitarian aid and disaster relief efforts.
How China Allocates Its Military Budget
With an officially stated budget of USD249 billion, China’s military spending surpasses that of the next 22 Indo-Pacific nations combined, including India, Japan, South Korea, Australia, and Taiwan. However, the breakdown of this budget remains opaque, with little publicly available information on how funds are allocated.
The MND’s Wu indicated that increased funding would primarily support the development of “new-domain forces with new combat capabilities” and enhance “systems and capacity for reconnaissance and early warning, joint strikes, battlefield support, and integrated logistics support.” He also noted that spending would be directed towards improving military training under realistic conditions and further advancing military reform.
The PLA has been particularly focused on modernising its nuclear arsenal and expanding its naval capabilities. Satellite imagery suggests that China is constructing a fourth aircraft carrier in Dalian, with some indications that it may be nuclear-powered.
Premier Li Qiang, delivering the government work report, reaffirmed the CCP’s commitment to strengthening the PLA. He promised that China would “step up military training and combat readiness to firmly safeguard China’s sovereignty, security, and development interests.” Meanwhile, President Xi Jinping called for deeper civil-military integration, more stringent anti-corruption oversight, and an accelerated push for “new-quality combat capabilities.”
Military Expansion Amid Taiwan Tensions
As the 14th Five-Year Plan (2021-25) nears completion, Beijing’s focus on military expansion remains unwavering. Xi has repeatedly emphasised the importance of reaching key military goals by 2027, coinciding with the PLA’s centenary.
Taiwan remains a central concern for Chinese military planners. In his speech, Premier Li reiterated Beijing’s stance that China “resolutely opposes” any move towards Taiwanese independence, a position that aligns with the CCP’s longstanding rhetoric. He stressed that Beijing prefers a peaceful solution but warned against external interference.
Taiwanese President Lai Ching-te has dismissed Beijing’s claims, insisting that the island’s future is a decision for its people alone. Despite offering to hold talks with China, Lai has been labelled a “separatist” by Beijing. Taiwan’s Defence Minister Wellington Li-Hsiung Koo has underscored the need for increased military preparedness, citing “the rapidly changing international situation and escalating threats from adversaries.”
