China's PLA has a bigger budget now and it wants more bang for its buck

Despite a rising defence budget, China's military is tightening spending and prioritising combat readiness amid Xi Jinping's push for efficiency and anti-corruption reforms

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The Chinese military is tightening its financial oversight as it continues an extensive modernisation drive. Military officials have stressed the need to optimise spending while ensuring that funds are directed towards critical combat readiness and operational efficiency, according to a report by the South China Morning Post (SCMP).

 

The People’s Liberation Army (PLA) Daily, the military’s official publication, recently carried a commentary from the armed police force in Shandong province, highlighting the importance of resource allocation. It emphasised that while China’s economy is strengthening, the demands of military transformation require targeted spending. It called for funds to be prioritised for war preparation, new combat forces, and urgent operational needs.

 

These directives align with the recent statements from President Xi Jinping, who, during the National People’s Congress (NPC) earlier this month, called for a more precise allocation of defence investments. He also underscored the need for stricter anti-corruption measures within the military.

 

Increased defence budget and corruption concerns in the Red Army

 

China is steadily increasing its defence budget to achieve its goal of developing a “world-class” military by 2050, with significant milestones set for 2027, the PLA’s centenary year. The country has allocated 1.78 trillion yuan ($245 billion) for military spending in 2025, reflecting a 7.2 per cent rise from the previous year’s 1.67 trillion yuan.

 

Despite the consistent budgetary increases, China’s military expenditure remains relatively moderate compared to its regional counterparts. India, Japan, and the Philippines have all announced larger percentage increases in their defence budgets. However, concerns persist that corruption within the PLA could undermine the effectiveness of the ongoing modernisation efforts.

 

How has the PLA evolved and who does it answer to?

 

The origins of the PLA date back to 1927, with the Communist Party of China (CPC) launching an armed rebellion against the Nationalist Kuomintang forces. Initially called the Red Army, it operated without formal ranks or hierarchical command structures and relied on guerrilla warfare. It was later renamed the People’s Liberation Army during the final phases of the Chinese Civil War, before the establishment of the People’s Republic of China (PRC) in 1949.

 

Unlike the militaries of many other nations, which function under autonomous government institutions, the PLA remains strictly under CPC control. The Central Military Commission (CMC), China’s highest-level military decision-making body, is chaired by Xi Jinping. The dual structure of the CMC, functioning as both a party and state entity, ensures that military affairs remain closely aligned with CPC directives.

 

This system has been in place since the founding of the PRC, reinforcing Mao Zedong’s famous assertion that “political power grows out of the barrel of a gun”. Under this arrangement, military strength is directly tied to party authority.

 

History of PLA restructuring

 

Since the 1980s, China has significantly downsized the PLA to enhance efficiency. Despite troop reductions, it remains the largest standing army in the world, with over 2 million active personnel.

 

In 2015, China reduced its military strength by 300,000 troops as part of broader structural reforms. Among key organisational changes, the PLA merged its four general departments—staff, politics, logistics, and armaments—into 15 agencies under direct CMC control. Additionally, the previous seven military regions were reorganised into five theatre commands, shifting from regional management to an operational combat-focused structure.

 

Key phases in China’s military modernisation

 

China’s modernisation efforts have progressed in distinct phases. In the 1980s and 1990s, under Deng Xiaoping, the PLA analysed past conflicts, including the Vietnam War and Gulf War, and pivoted towards technology-driven warfare instead of mass troop deployment.

 

The 1997 reforms marked another major shift, as the Chinese government ordered the PLA to divest from commercial enterprises, ensuring that military resources remained focused on national security. Around this time, the PLA adopted the “limited local wars under high-technology conditions” doctrine, laying the foundation for modernisation.

 

By the 2000s-2010s, China had reduced its dependence on foreign military hardware and focused on indigenous defence technologies, developing advanced fighter jets, submarines, and missile systems. Enhanced command, control, communications, intelligence, and surveillance (C4ISR) capabilities became central to military strategy.

 

China’s defence strategy and regional impact

 

China’s National Military Strategic Guidelines outline an “active defence” doctrine, allowing counter-offensive operations only after an initial attack. However, Beijing’s interpretation of an attack remains broad, permitting pre-emptive action under certain conditions.

 

The PLA’s primary objectives include safeguarding CPC rule, maintaining national sovereignty, and ensuring territorial integrity. As China expands its military capabilities, regional tensions have escalated. Increased naval activity in the South China Sea, border disputes with India, and military exercises near Taiwan have alarmed neighbouring nations. In response, India, Japan, and the Philippines have strengthened their own defence postures.

 

China vs India: Defence budgets and strategic priorities

 

China’s 2025 defence budget is approximately $245 billion, marking a 7.2 per cent increase—its tenth consecutive year of single-digit growth. Although the budget has doubled over the past decade, China’s defence spending remains below 1.5 per cent of GDP, lower than the global average.

 

In contrast, India’s defence budget for 2025-26 is set at $78.57 billion, reflecting a 9.5 per cent increase. However, a large portion of India’s budget—26.4 per cent—is allocated to salaries and pensions, limiting available funds for modernisation. India’s defence expenditure accounts for 1.9 per cent of GDP, a higher proportion than China’s.

 

Despite extensive military advancements, analysts believe China still faces challenges in matching the global capabilities of the US military.