China Wants More Guns, Less Butter

China has at once decreased it economic forecast and bolstered its military budget. The change signals its search for higher-quality manufacturing and a modest military ambition. 

What's the Latest Development?


China has released its new military budget and announced decreased expectations for economic growth in the years ahead, causing concern over political stability in East Asia and the strength of global markets. For 2012, China will increase military expenditures by 11.2 percent, breaking the $100 billion mark. From 2005 to 2011, the Chinese government forecast annual economic growth at eight percent, a goal it easily overcame every year. From 2011 to 2015, it has lowered its expectations to seven percent growth annually. 

What's the Big Idea?

China's increased military spending does not threaten the US and will do little to change the region's power scheme as the US shifts many of its forces to Southeast Asia and maintains an annual military budget of over $600 billion. Economically, China is set to focus less on its production of exports, preferring to develop a consumption-based domestic economy. That will mean introducing, "structural tax cuts and helping small and midsize businesses with preferential tax policies," Chinese Premier Wen Jiabao said before the country's legislature. 

Photo credit: shutterstock.com


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