China keeps defence budget growth steady as modernisation deadline looms

China has announced a 7% increase in its 2026 defense budget, allocating 1.91 trillion yuan (US$277 billion) for military spending during the annual National People's Congress session. This represents a slight decrease from last year's 7.2% growth rate but continues a pattern of steady increases that outpace China's 4.5-5% GDP growth target. The announcement comes as the White House signals plans to ramp up U.S. military expenditure, maintaining the strategic spending gap between the world's two largest economies. Military analyst Song Zhongping described the increase as reflecting "moderate growth in defence spending" necessary for maintaining new systems and training.

Technical analysis reveals the budget supports China's ongoing military modernization drive, which faces impending deadlines for key capability milestones. The PLA requires sustained investment in advanced equipment and personnel training, particularly for next-generation systems like hypersonic weapons, naval vessels, and space capabilities. However, Song emphasized that in peacetime, China must balance military needs with greater allocations to education, science, technology, and public welfare—suggesting defense spending "must remain modest" relative to domestic priorities. The steady growth rate indicates Beijing's calculated approach to military development amid economic pressures and strategic competition with the United States, whose defense budget remains approximately three times larger at over $800 billion annually.