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China set to raise defense budget as Taiwan prepares for polls

RIA Novosti

04/03/2008 14:19 (Changes headline, recasts throughout, adds U.S. concerns)

BEIJING, March 4 (RIA Novosti) - China may raise its defense spending by almost 20% to $58.7 billion in 2008, a National People's Congress (NPC) spokesman said on Tuesday as Taiwan prepared for a crucial vote on its future.

"China's State Council will submit a proposal to a NPC session to consider the approval of 417.8 billion yuan in defense spending for the country in 2008," Jiang Enzhu told a news briefing ahead of a NPC legislative session due to start on Wednesday.

Enzhu said the funds would pay for increases in fuel procurements and wages for service personnel, as well as military training.

The proposed increase in defense spending would be a 17.6% rise from 2006, and comes as China's breakaway island of Taiwan prepares for crucial presidential polls and a vital referendum on its UN status.

Beijing has vowed to bring Taiwan, which split from the mainland in 1949 during the Chinese Civil War, to mainland rule.

Taiwan is set to hold presidential elections on March 22, along with a referendum on United Nations membership under the name of Taiwan rather than its formal title of the Republic of China.

Such a move would likely be seen by Beijing as a step towards sovereignty by Taiwan. China has long threatened a military invasion if the island announces its full independence, with Jiang Enzhu stating on Tuesday that the island would "pay a dear price" if it continues down its "stubborn path."

The NPC spokesman also said that "China's sovereignty and territorial integrity tolerate no division."

On September 30, 2007, Taiwan's ruling Democratic Progressive Party approved a resolution asserting a separate identity from China. However, the opposition Kuomintang party, which favors closer ties with China, recently won a landslide victory in parliamentary polls and many political analysts suggest the pro-independence movement may now have had its day.

Current Taiwanese President Chen Shui-bian, who has long pushed for independence for Taiwan, is due to step down after eight years in office.

In an annual report to Congress, published on Monday, the Pentagon highlighted concerns about China's growing military expenditure and what it called a major 'under-reporting' of military spending.

"China's expanding and improving military capabilities are changing East Asian military balances; improvements in China's strategic capabilities have implications beyond the Asia-Pacific region," the report said.

"China's published defense budget does not include large categories of expenditure, such as expenses for strategic forces, foreign acquisitions, military-related research and development, and China's paramilitary forces," the Pentagon said.

The U.S. Defense Department estimated China's total military-related spending in 2007 at between $97 billion and $139 billion, according to the report.

Experts disagree about the exact amount of military expenditure in China, but most believe Beijing significantly under-reports its defense spending.

Last August, China said it would begin submitting annual reports to the UN on its military expenditure, following years of pressure from the U.S. and other countries, the Pentagon report said.

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