On Thursday, March 5, 2026, during the opening session of the National People’s Congress (NPC) in Beijing, China officially announced a 7% hike in its defense budget, bringing the total to roughly 1.91 trillion yuan (approximately $275–$277 billion).
This marks the 11th consecutive year of single-digit growth and reflects a slight deceleration from the 7.2% increases seen in 2023, 2024, and 2025.
Key Budget Highlights
The 2026 defense budget is framed as “moderate and stable” by Chinese state media, though it remains the world’s second-largest military spend.
| Metric | 2026 Target | Change from 2025 |
| Total Amount | 1.91 Trillion Yuan ($275B – $277B) | +7% Year-on-Year |
| Growth Rate | 7% | Down from 7.2% |
| GDP Target | 4.5% – 5% | Slashed (first time below 5% in 3 years) |
| Share of GDP | < 1.5% (Official) | Consistent with the last decade |
Strategic Context: The “External Pressure”
Premier Li Qiang presented the budget in a work report that acknowledged a “worsening global crisis” and “rising geopolitical risks.”
- Modernization Goals: The funding is aimed at the PLA’s 2027 Centenary Goals, focusing on advanced combat capabilities, cyberwarfare, and the “rapid upgrading” of weaponry to catch up with U.S. technology.
- The “Taiwan & South China Sea” Factor: Analysts noted that the budget supports intensified training, drills around Taiwan, and efforts to “fully restore” jurisdiction over disputed areas like the Spratly Islands.
- Global Conflict Impact: The budget comes amid the ongoing U.S.-Iran conflict and a trade war with the Trump administration, which have reportedly pressured China to lower its broader economic growth targets to prioritize security.
International Reactions
- The “Transparency” Critique: Japanese Chief Cabinet Secretary Minoru Kihara expressed concern over the “extensive and rapid increase” in Chinese military capabilities without sufficient transparency regarding the actual use of funds.
- The US-China Gap: Despite the hike, China’s official budget remains roughly 3.5x smaller than the U.S. defense budget, which exceeded $1 trillion for fiscal year 2026.
- Skepticism: Western analysts (including SIPRI and the U.S. DoD) suggest China’s actual military spending may be 30% to 60% higher than the announced figure when accounting for R&D and paramilitary costs.
Economic Slowdown
For the first time since 2023, China has lowered its annual GDP growth target to a range of 4.5% to 5%. The government cited the property market slump, high unemployment, and global instability as primary headwinds.
