China to boost military spending while boosting budget deficit

BEIJING - China is projecting a record budget deficit this year as it gives its military another double-digit spending increase and spends heavily to prop economic growth. <br> <br> The budget to be announced Wednesday to China&#39;s legislature by Finance Minister Xiang Huaicheng totals $170 billion, according to a copy of Xiang&#39;s report viewed in advance by The Associated Press. <br> <br> The $37.5 billion deficit, a 19.2 percent increase over last year, is the ``price we have to pay&#39;&#39; to keep economic growth robust at 7 percent a year, Xiang says in the report. <br> <br> Military spending is to grow by 17.6 percent to $20 billion - the 13th straight year of double-digit increases for the 2.5 million-member People&#39;s Liberation Army. The increase is slightly below last year&#39;s record 17.7 percent rise in defense outlays. <br> <br> Experts say China&#39;s true military spending is much higher than publicly reported - as much as five times the official figure. <br> <br> According to the report, some of the military spending increase will go to raising salaries for the poorly trained and equipped army. Beijing also is spending heavily on upgrading antiquated weapons technology. <br> <br> The size of China&#39;s budget deficit has nearly tripled since 1999 as it pumped money into the slowing economy by spending heavily on public building projects. The government also boosted farm subsidies and support to workers laid off in the restructuring of state industry. <br> <br> Some economists have expressed concern over the soaring deficit and China&#39;s government debt, saying it will soon reach dangerous levels. <br> <br> But Premier Zhu Rongji, in his own report Tuesday to the legislature, insisted that China&#39;s debt is ``still within safe limits.&#39;&#39; <br> <br> Zhu made it clear that Beijing saw no alternative to continued heavy spending with economic growth slowing, farm incomes stagnating and unemployment rising. <br> <br> Last year&#39;s budget deficit was $31.5 billion. <br> <br> To pay for this year&#39;s deficit, the finance minister&#39;s report says, China will issue $69 billion in bonds in 2002, with $31 billion going to make payments on older debt.

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