A massive military parade marking the 70th anniversary of victory over Japan and the end of World War II is held in Beijing on September 3, 2015. Presiding over the event, President Xi Jinping vowed to cut 300,000 troops from its 2.3-million strong military - the world's largest. Photo by Stephen Shaver/UPI | License Photo
HONG KONG, March 1 (UPI) -- China could soon announce a significant increase in its military budget in order to accommodate the army's reorganization and continue its defense of disputed territories in the East and South China Seas.
The proposed budget, to be made public Saturday during the annual National People's Congress, could increase as much as 20 percent, according to an unidentified source who spoke to the South China Morning Post.
"I think even an increase of 20 percent would be acceptable this time, even though it would be the highest since 2007," the source close to the military said.
In September, during Victory Day, which marked the 70th anniversary of Japan's defeat, President Xi Jinping had announced a landmark decision to cut 300,000 military personnel by 2017.
The People's Liberation Army will still remain the world's biggest military force when troops will number 2 million, but the expense of the layoffs, and the cost of modernizing and improving the army's efficiency, means more spending for Beijing.
"A big reduction in troops doesn't mean the PLA will cut the budget immediately, as it should allocate a certain proportion of spending for retirement pay or other layoff compensation in the coming two years," the source said.
Another source close to the Chinese navy said the defense budget is also expected to account for spending that's necessary for Beijing to maintain security over reclaimed islands in the South China Sea.
Beijing has voiced opposition to what it sees are provocations from U.S. warships that have begun sailing near the China-built islets since October.
The growth in military spending, however, has slowed, increasing to 10.1 percent in 2015, the lowest rate in five years. The Chinese defense budget was also a fraction of similar U.S. spending. Whereas the Pentagon spent $597 billion in 2015, China spent $135.5 billion.
But Chinese actions overseas are drawing controversy.
The New York Times reported China to date has built seven new islands by moving sediment from the seabed to reefs. Beijing has also built ports, three airstrips and radar facilities on the islands, prompting the head of the U.S. Navy's Pacific Command, Adm. Harry Harris, to assert China's actions are threatening freedom of navigation in the region.