7 March 2001
PRC defence spending continues to rise

ROBERT KARNIOL; JDW Asia-Pacific Editor
Bangkok

The People's Republic of China (PRC) is set for the 13th consecutive year of double-digit growth in its official defence spending with the announcement on 6 March that Beijing's defence budget for 2001 will rise by 17.7% to Rmb141.004 billion ($17.05 billion).

Finance Minister Xiang Huaiching presented the draft budget to the fourth session of the Ninth National People's Congress. Overall expenditure is pegged to increase by 8.2% to Rmb1.102 trillion, with defence accounting for 12.8% of the national figure.

Xiang's report states that the rise in defence expenditure "is mainly to meet the need to raise the salaries of officers, enlisted men and women and office staff as well as the need to adapt to drastic changes in the military situation of the world and prepare for defence and combat given the conditions of modern technology, especially high technology."

The People's Liberation Army (PLA) has been making efforts to improve military salaries in order to attract and retain skilled personnel increasingly drawn to the private sector. It has also been striving to reduce the dependence on conscripts, with an objective over the past three years of cutting the number of conscripts from 82% of total military strength to under 65%.

The inflation rate, which peaked at 20% in 1994, has since stabilised and is projected at 1-2% this year. It should no longer influence the defence allocation, but the leadership is probably still bolstering military spending to compensate the PLA for the loss nearly three years ago of much of its purely commercial business activities (Jane's Defence Weekly 23 September 1998).

The launch of a new procurement cycle with the 2001-2005 development plan may also be a factor.

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1. How many front companies do the chinese have in panama especially in the canal zone ?

2. If the panama canal is rendered impassable how much of the US fleet is relegated to Atlantic duty and how much time does it add to shipping transit (Atlantic to Pacific, all types)?

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