China raises defence

spending again

By F.J. Khergamvala

TOKYO, MARCH. 5. The Chinese Premier, Mr. Zhu Rongji kicked off the 10-day annual session of the National Peoples Congress, the Parliament, with an announcement to realise an average annual real growth of seven per cent in the five-year period 2001-2005.

Eighty million new jobs, a 17.7 per cent increase over the previous year's defence budget and measures towards doubling the size of the economy by 2010 are the features of the new 10th five-year plan.

On the political and security side, the Falun Gong seemed to occupy greater attention than the usual focus of preventing Taiwan going its own way.

The Chinese Finance Minister, Mr. Xiang Huaicheng will present the defence budget of $17 billion on Tuesday.

For the fiscal year 2001, in real terms, the planned 17.7 per cent increase actually means going to 19.1 per cent, because of last year's deflationary trend. The enhancement marks a double- digit increase in defence spending for the 13th year in a row.

Analysts are generally sceptical of China's official defence spending figures. Most recognized think-tanks understand it to be in the range of $65 billion plus. Mr. Zhu said the infrastructure development would continue to be financed by long-tern bonds worth $18 billion.

This is almost the same amount of deficit spending undertaken last year. The yield from issuing of long- term treasury bonds will be invested in development projects in the western region.

The real economic and political challenge before China is the creation of the 80 million jobs.

The target is 40 million new jobs for the urban unemployed and 40 millions for those rendered jobless from the agriculture sector. The real problem is of a far greater magnitude. China's planners do not refer to the 90 odd million additional jobless as unemployed, but as people roaming the cities looking for jobs.

On the Falun Gong sect, Mr. Zhu said, ``We need to mete out severe punishment to the small number of criminals while making unremitting efforts to unite, educate and rescue the vast majority of people who have been taken in.'' Mr. Zhu equated the sect with terrorists and separatists. On Taiwan, it was the standard line to ``resolutely put a stop to any separatist attempt.''

Mr. Zhu also referred to the ``one-China'' principle but did not use this occasion to elaborate, reiterate or respond to Taiwan's variant of the same term.

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Section  : International
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