China Commits to Leveraging Market Forces to Strengthen Defense Capabilities, Reports Reuters

BEIJING – On Thursday, China announced plans to enhance its defense capabilities by leveraging its economy, admitting that it has not sufficiently integrated market forces into military development.

President Xi Jinping has prioritized military modernization, focusing on the creation of a "blue water" navy capable of ocean operations, stealth aircraft, and other advanced technologies to protect China’s expanding global interests.

Officials have emphasized the necessity of strengthening the military-industrial complex to ensure that the armed forces remain robust and effective.

A directive from the State Council stated that China should utilize market mechanisms to optimize military resource allocation and actively direct investments in both economic and social sectors. It stressed the need to address systemic challenges, structural contradictions, and policy issues that hinder the integrated development of the economy and national defense. The directive also mentioned plans to advance mixed-ownership reform pilot programs.

The necessity for deeper civil-military integration was highlighted, with officials acknowledging existing issues related to outdated thinking and inadequate top-level planning and coordination.

China’s defense budget, set at 954.35 billion yuan (approximately $143 billion) for 2016, is only a fraction of the U.S. Department of Defense’s $573 billion budget for the same year. Nonetheless, this budget is set against a backdrop of growing concerns over China’s actions in various territorial disputes.

China’s military ambitions have raised alarms across Asia and attracted significant attention from Washington. Despite these concerns, officials assert that China holds no hostile intentions and genuinely requires upgrades to its outdated military forces to safeguard its status as the world’s second-largest economy.

Despite the push to rapidly modernize military hardware, China continues to face significant challenges in integrating diverse and complex systems within its military command structure.

President Xi, who also serves as chairman of the Central Military Commission governing the military, has committed to reducing troop numbers, combating corruption within the ranks, and establishing a unified operational command structure by the year 2020.