China’s defence spending this year will rise 6.6% from 2019, according to a report issued at the opening of the country’s annual meeting of parliament on Friday, a slower rate than last year. The figure, set at 1.268 trillion yuan ($178.16 billion), is closely watched as a barometer of how aggressively the country will beef up its military capabilities.

China set a 7.5% rise for the defence budget in 2019, outpacing what ended up as full-year gross domestic product (GDP) growth of 6.1% in the world’s second-largest economy. China’s economy shrank 6.8% in the first quarter of 2020 compared with a year earlier, as the novel coronavirus spread from the central city of Wuhan, where it emerged late last year.

China omitted a 2020 economic growth target for the first time and pledged government support for the economy in Premier Li Keqiang’s work report on Friday, launching the country’s annual parliament meeting. Despite the coronavirus outbreak, the armed forces of China and the United States have remained active in the disputed South China Sea and around Chinese-claimed Taiwan. The coronavirus has worsened already-poor ties between Beijing and Washington.

The Ministry of State Security warned in a recent internal report that China faced a rising wave of hostility in the wake of the coronavirus outbreak that could tip relations with the United States into armed confrontation. China routinely says that spending is for defensive purposes, that it is a comparatively low percentage of its GDP, and that critics just want to keep the country down.

China reports only a raw figure for military expenditure, with no breakdown. It is widely believed by diplomats and foreign experts to under-report the real number. Taking the reported figure at face value, China’s defence budget in 2020 is about a quarter of the U.S. defence budget last year, which stood at $686 billion.

China has long argued that it needs much more investment to close the gap with the United States. China, for example, has only two aircraft carriers, compared with 12 for the United States. Experts point out that increasing defence spending could give the economy a much-needed shot in the arm, with manufacturing struggling and domestic consumption slack over worries about job security.

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