China Shifts Gears with Smaller Defense Increase

China's government proposed its smallest increase in defense spending in two decades Thursday - a symbolic down payment on efforts to lift public spending, boost consumers and even out a persisting rich-poor gap that's stoking social tensions.Premier Wen Jiabao will further flesh out the government's shift in priorities in a speech Friday that is China's equivalent of the State of the Union. Social programs are expected to benefit as the government moves to re-gear the economy toward domestic consumption and away from the binge on easy credit and state investment that warded off the global recession.In a preview, a spokesman for the national legislature said Thursday that the Cabinet plans to raise spending on its increasingly formidable military 7.5 percent to $77.9 billion (532.1 billion yuan). Though experts say China's true military budget is higher, the rate of increase is the lowest since the 1980s, and analysts said that was directly tied to the new fiscal priorities."China has not fully recovered from the sluggish foreign trade and employment, and to some extent the government has financial difficulties," said Ni Lexiong of Shanghai University of Politics and Law. "The situation requires that the defense budget not have a big rise."........................................washingtonpost

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