Hendrik_2000
Lieutenant General
China defense spending will hit record this year maybe capped to 7% increase over last year close to 200 billion US$ Yup steady as it goes
China’s defense budget to continue to rise in 2021, buttressed by economic upturn, strong fiscal foundation: experts
By GT staff reportersPublished: Feb 26, 2021 05:36 PM
A military parade is held to celebrate the 90th anniversary of the founding of the Chinese People's Liberation Army (PLA) at Zhurihe training base in north China's Inner Mongolia Autonomous Region, July 30, 2017. (Xinhua/Ju Zhenhua)
Despite the impact of COVID-19 over the past year, many Chinese military analysts and observers believe that the country's defense budget for 2021 will continue to increase, likely at a higher growth rate than 2020, and they name China's positive economic growth, the tough military threats China is facing and China's own rightful needs to develop national defense capacity as the main reasons.
Economists and fiscal experts expect the world's second-largest economy to taper spending at large in 2021 on a tightening budget though, after a record 3.6 percent budget deficit target for coronavirus-inflicted 2020.
With the Chinese economy, having taken the global lead in emerging from the fallout of COVID-19, on track for a robust rebound this year, the normalization of government deficit budgeting is in due course, the experts believe, citing much smaller burdens from the pandemic on government resources.
The normalization course is less likely to be a concern for China's defense expenditure, which has come at a percentage of GDP lower than that of global military powers, especially factoring in the country's ever-increasing economic size, they agree.
Faster-paced defense spending vs pruning budget deficit target
Multiple military experts reached by the Global Times a week prior to the expected release of the figure predicted a growth rate of around 7 percent.
In May last year, at a time when many from the outside world were uncertain about China's financial situation after a huge blow dealt by COVID-19, the country still set its defense budget growth target at 6.6 percent, only slightly less than 2019's 7.5 percent, resulting in a draft budget of 1.268 trillion yuan ($196.44 billion), a figure
beyond many people's predictions.
This year, China's economy is recovering and will provide stronger momentum for steady growth of the defense budget, analysts said.
China is the only major country that maintained positive economic growth in 2020, and 2021 will be even better, so it will likely enjoy a small increase in its defense budget, Li Jie, a Beijing-based military expert, told the Global Times on Friday.
A growth rate of around 7 percent is likely, Li predicted.
Echoing Li, Song Zhongping, a Chinese military expert and TV commentator, also forecasted a slightly faster growth rate at about 7 percent, and at least not much slower than last year.
The upward trend is set to coincide with a downward spiral in government deficit budgeting, however.
The country set a budget deficit target of at least 3.6 percent of GDP for 2020 when the economy was hammered by the coronavirus. To revive the economy from this assault, the country announced plans in May 2020 to issue 1 trillion yuan of anti-virus special treasure bonds dedicated to funding the economy's recovery from the effects of COVID-19.
The record budget deficit target for 2020 was an emergency arrangement in response to the pandemic, which has run its course, and it's time for the government to revise its budget deficit in accordance with normal economic needs, Lian Ping, head of Zhixin Investment Research Institute, told the Global Times on Friday.
Throughout 2020, public fiscal revenues were down 3.9 percent year-on-year to 18.29 trillion yuan. As a consequence of the economy's strong rebound, public fiscal revenues still achieved 101.46 percent of the full-year budget for 2020, 2.5 percentage points higher than the previous year, as per statistics from Zhixin Investment Research Institute. The country's actual general budget deficit ratio stood at 6.17 percent for the past year.
With the economy resuming its normal growth momentum in 2021, the fiscal policy is expected to be more efficient, according to the institute.
With China's GDP growth on a path to a strong rebound, it's estimated that the government will focus more on preventing financial risks and curbing macroeconomic leverage. Accordingly, the country's total debt as a percentage of GDP is likely to fall about 2 percentage points in 2021 after jumping 25 percentage points last year, according to Wang Tao, chief China economist at UBS.
With much of the tax and fee cut policies expiring at the end of 2020, the fiscal deficit-to-GDP ratio is forecast to fall to 3 percent or even lower this year, according to the economist. (cont....)
China’s defense budget to continue to rise in 2021, buttressed by economic upturn, strong fiscal foundation: experts
By GT staff reportersPublished: Feb 26, 2021 05:36 PM
A military parade is held to celebrate the 90th anniversary of the founding of the Chinese People's Liberation Army (PLA) at Zhurihe training base in north China's Inner Mongolia Autonomous Region, July 30, 2017. (Xinhua/Ju Zhenhua)
Despite the impact of COVID-19 over the past year, many Chinese military analysts and observers believe that the country's defense budget for 2021 will continue to increase, likely at a higher growth rate than 2020, and they name China's positive economic growth, the tough military threats China is facing and China's own rightful needs to develop national defense capacity as the main reasons.
Economists and fiscal experts expect the world's second-largest economy to taper spending at large in 2021 on a tightening budget though, after a record 3.6 percent budget deficit target for coronavirus-inflicted 2020.
With the Chinese economy, having taken the global lead in emerging from the fallout of COVID-19, on track for a robust rebound this year, the normalization of government deficit budgeting is in due course, the experts believe, citing much smaller burdens from the pandemic on government resources.
The normalization course is less likely to be a concern for China's defense expenditure, which has come at a percentage of GDP lower than that of global military powers, especially factoring in the country's ever-increasing economic size, they agree.
Faster-paced defense spending vs pruning budget deficit target
Multiple military experts reached by the Global Times a week prior to the expected release of the figure predicted a growth rate of around 7 percent.
In May last year, at a time when many from the outside world were uncertain about China's financial situation after a huge blow dealt by COVID-19, the country still set its defense budget growth target at 6.6 percent, only slightly less than 2019's 7.5 percent, resulting in a draft budget of 1.268 trillion yuan ($196.44 billion), a figure
beyond many people's predictions.
This year, China's economy is recovering and will provide stronger momentum for steady growth of the defense budget, analysts said.
China is the only major country that maintained positive economic growth in 2020, and 2021 will be even better, so it will likely enjoy a small increase in its defense budget, Li Jie, a Beijing-based military expert, told the Global Times on Friday.
A growth rate of around 7 percent is likely, Li predicted.
Echoing Li, Song Zhongping, a Chinese military expert and TV commentator, also forecasted a slightly faster growth rate at about 7 percent, and at least not much slower than last year.
The upward trend is set to coincide with a downward spiral in government deficit budgeting, however.
The country set a budget deficit target of at least 3.6 percent of GDP for 2020 when the economy was hammered by the coronavirus. To revive the economy from this assault, the country announced plans in May 2020 to issue 1 trillion yuan of anti-virus special treasure bonds dedicated to funding the economy's recovery from the effects of COVID-19.
The record budget deficit target for 2020 was an emergency arrangement in response to the pandemic, which has run its course, and it's time for the government to revise its budget deficit in accordance with normal economic needs, Lian Ping, head of Zhixin Investment Research Institute, told the Global Times on Friday.
Throughout 2020, public fiscal revenues were down 3.9 percent year-on-year to 18.29 trillion yuan. As a consequence of the economy's strong rebound, public fiscal revenues still achieved 101.46 percent of the full-year budget for 2020, 2.5 percentage points higher than the previous year, as per statistics from Zhixin Investment Research Institute. The country's actual general budget deficit ratio stood at 6.17 percent for the past year.
With the economy resuming its normal growth momentum in 2021, the fiscal policy is expected to be more efficient, according to the institute.
With China's GDP growth on a path to a strong rebound, it's estimated that the government will focus more on preventing financial risks and curbing macroeconomic leverage. Accordingly, the country's total debt as a percentage of GDP is likely to fall about 2 percentage points in 2021 after jumping 25 percentage points last year, according to Wang Tao, chief China economist at UBS.
With much of the tax and fee cut policies expiring at the end of 2020, the fiscal deficit-to-GDP ratio is forecast to fall to 3 percent or even lower this year, according to the economist. (cont....)
