BEIJING — China's military spending increase continues nearly two decades of double-digit growth and comes at a critical time as the incoming leaders are consolidating their power and shoring up personal relations with China's generals.
“We should resolutely uphold China's sovereignty, security and territorial integrity, and ensure its peaceful development," outgoing President Wen Jiabao told the almost 3,000 delegates at Beijing's Great Hall of the People on Tuesday.
Leaders also set their target for China's economy to grow 7.5 percent this year — a smaller percentage than the military hike, and modest compared with previous decades of furious growth. The goal reflects belief that the effects of China's economic slowdown will likely linger in the coming year.
China's changing guard
The latest figures delivered by Wen opened the National People's Congress, an annual parliamentary meeting comprised of highly choreographed speeches, press conferences and rubber-stamp votes for initiatives laid out by the ruling Communist Party. The meeting is expected to end on March 17 with party leader Xi Jinping becoming China's new president.
Wen's remarks included standard praises for the past year's work but was sprinkled with admissions of problems he and President Hu Jintao were leaving their successors: unsustainable development, corruption, pollution, innovation stifled by dominant state-owned enterprises, income disparity and the gap between rural and urban development.
“We are keenly aware that we still face many difficulties," Wen said, acknowledging that some “have been caused by inadequacies and weaknesses in our government work."
The report sets up the possibility of economic, government and social reforms that Xi and others new leaders have been promising in recent months. But many experts and even some within the party believe substantive changes may prove difficult to deliver in a system geared toward the entrenched interests of government officials, China's state companies and those with political connections.
The military
As China's next president, Xi has spent recent months quickly shoring up a power base among the military, according to experts and officials with ties to the military.
Like many in the military, Luo Yuan, a major general and deputy secretary-general of the Military Science Society, downplayed the increase and any possible intimidation to neighboring countries.
“Our foreign policy goal is peaceful development and strengthening defensive abilities rather than growing our ability to plunder others," he said.
Spending on public security is getting an 8 percent boost to $124 billion, making this the third year in a row that outlays for the police, courts and other law enforcement exceeds defense spending. This, despite public unhappiness over the enormous state security system that is used to repress threats to the party and runs roughshod over the legal system.
More military spending appeared to be popular with some Chinese. “To be a powerful country, we need to strengthen our military," Ni Huiying, a famous Chinese opera singer, told USA Today. “Otherwise, it will be hard to achieve other aspects of development. Our neighbors should not be worried, as China is a friendly nation."
The U.S. response is more tepid. “I don't have a specific reaction," White House press secretary Jay Carney responded to a question at a news briefing in Washington on Tuesday. “Obviously, we work very closely with our international partners ... in the Asia-Pacific region."
China's wider economy
Wen emphasized China's broader long-term strategy of weaning the country's dependence away from exports by increasing domestic consumption.
Some experts interpreted the modest 7.5 percent target for GDP growth as a signal by the central government to provincial leaders that GDP increases are no longer the only priority after years of single-minded development have resulted in rampant pollution and other problems.
To rein in property prices and a possible housing bubble, leaders also have said in recent days they plan to tighten curbs such as implementing a 20 percent tax on property sales. That news over the weekend sent Chinese stocks into a sharp decline on Monday.
Economic reform is seen by leaders as a necessary, but tricky proposition, said Shen Jianguang, chief economist at Mizuho Securities Asia in Hong Kong.
Too much change too quickly risks upsetting China's economic system, he said. “The government also worries that if the economy faces a hard landing, that could trigger other things like social unrest."
Other reforms
China's government pledged to repair the country's ravaged environment and boost public services under its new leadership, an acknowledgment that quality of life was sidelined during the outgoing administration's decade of breakneck economic growth.
Wen detailed a list of problems that had grown in recent years and was being left to his successors: a sputtering growth model; poisoned air, waterways and soil; a vast and growing rich-poor gap; and rampant official corruption that has alienated many Chinese.
“Is this a time bomb?" Yao Jianfu, a retirement government researcher, asked. Yao's specialty is China's army of migrant workers who are often deprived of access to housing, education and other government services. “If there's an economic downturn and massive unemployment, will the 200 million migrant workers become the main force of the next Cultural Revolution?" he said, referring to the excesses of the chaotic 1966-76 period.
The unfinished agenda of China's past decade are now central concerns of the new leadership as it seeks to assuage a public that is looking beyond pocketbook issues, empowered by the Internet and increasingly vocal about the need for change.
Other reforms expected to be discussed at the people's congress include a consolidation of some government ministries into a more streamlined group of “super ministries" as well as possible reform of China's widely despised labor camp system.
Analysts are also closely watching several high-ranking personnel appointments in coming days for clues about who may be positioning for a seat in coming years on the party's top ruling standing committee.