China is spending more on policing its own people (RMB 769bn) than on its defense budget (RMB 720bn)

China is spending more on policing its own people than on its defense budget

By Lily Kuo — 6 hours ago

Red alert! China plans to spend 720 billion yuan ($114 billion) on its military this year, according to a budget released at the National People’s Congress this morning. With the world’s second-largest military in terms of spending, the Chinese government has increased its defense budget by double-digit percentages annually since 2000. This year’s increase will be 10.7%, similar to last year’s and faster than the target GDP growth of 7.5%.

But perhaps this is the headline the Chinese government would rather the media focus on. Buried in the budget numbers is another figure: 769 billion yuan, to be spent on what is officially termed “public security.” That means money for China’s vast network of official and unofficial police, armed militia, jails and overall state security, i.e. keeping the country’s 1.3 billion people in check as discontent mounts over pollution (paywall), government corruption, and inequality. Chinese officials have countered that this is a misrepresentation, saying that some of the funds also go to things like improving public transportation or food safety.Critics say the emphasis on social control feeds the unrest it’s meant to manage, as more money is spent on a massive defense apparatus instead of social welfare. “It shows the party is more concerned about the potential risks of destabilization coming from inside the country than outside, which tells us the party is much less confident,” Nicholas Bequelin, a researcher at Human Rights Watch, told Reuters. “A confident government that is not afraid of its population doesn’t need to have a budget for domestic security that is over defense spending.”

Protests as well as clashes in regions like Xinjiang, Tibet, or Inner Mongolia, where minorities resent Beijing’s rule, have prompted the government to raise domestic spending. Cases of unrest or “mass incidents” have jumped from 8,700 in 1993 to roughly 90,000 in 2010, according to government studies; the government hasn’t released official figures for recent years. In 2011, the same year of protests swept the Middle East and inspired the small and quickly squashed Jasmine Revolution in China, the government raised its domestic security budget above the country’s military budget for the first time, setting aside 624 billion yuan, a 13.8% jump from the year before. Since then it has set aside more for internal security than the military, though this year the increase in internal security spending was smaller.

China’s military spending is still only about one fifth of the United State’s but some say its budget, which doesn’t account for things like research and development, may be much higher.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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