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China hiking spending for military, poor

BEIJING -- China today unveiled an 11.6 percent increase in its military budget for 2004 even as it announced heavy new spending on what the government says is its highest-priority domestic issue -- improving life for millions in its vast, poor countryside.

The budget increase for the world's largest military was announced amid tensions with rival Taiwan. And despite official promises to focus on fighting rural poverty and improving public health, the military budget increase was even bigger than last year's.

Overall, the government plans to increase spending by 7 percent over last year's levels, Finance Minister Jin Renqing said. Amid mounting alarm over growing deficits and China's government debt, he said this year's budget shortfall would hold steady at the 2003 level.

The planned military budget represents a bigger increase than last year as the People's Liberation Army races to make itself competitive and adapt to a high-tech world.

The figures were released in a budget report prepared for delivery by Jin at the National People's Congress, the country's nominal Legislature.

Jin did not give a total for military spending but said outlays this year would increase by $2.6 billion. Last year's announced figure was $22.4 billion, although the actual figure is thought to be higher.

This year's increase was allotted "to improve the defensive combat readiness of the armed forces under high-tech conditions and to raise the salaries of army personnel and the pensions for ex-servicemen," according to Jin's remarks.

The announcement puts China back into double-digit defense increases, a pattern it had adhered to for 13 straight years until last year's 9.6 percent increase.

The PLA, with 2.5 million members, is the world's largest military. Its chief concern now is the question of Taiwan, the island that the Beijing leadership regards as sovereign territory and has pledged to take by force if necessary.

But China also has begun using the influence of its military for diplomatic purposes. Relations between the American and Chinese militaries, which hit a low point in 2001 after the midair collision of a US spy plane and a Chinese fighter jet off China's southern coast, are on the mend as well.

Also today, China announced plans to boost spending for its two highest-profile issues -- the countryside and public health.

The total revenue for the central budget will be $157 billion, an increase of 7 percent or $10.9 billion, Jin said. The country's deficit was the same as 2002's -- $38.7 billion.

Yesterday, Premier Wen Jiabao, the country's top economic official, said more resources would be allotted to the countryside to make sure farmers do not get left behind in China's economic revolution.

"Rural incomes have grown too slowly," Wen said in his state-of-the-nation speech to China's 2,904-member Legislature. "Solving problems facing agriculture, rural areas, and farmers is a top priority in all our work."

Wen's remarks signaled a a narrowing of the new leadership's transition slogan of a "well-off society" where economic reform leaves no one behind.

Wen said farm taxes would be reduced immediately and eliminated within five years, a remark that elicited hearty applause. He said the government would subsidize grain producers, at a cost of $1.2 billion this year.

By showcasing farmers, Wen sent the clear message that the strategy of former President Jiang Zemin -- suit-and-tie moneymakers first, everyone else second -- had been reconfigured by a regime whose leaders take pains in public to show solidarity with the masses.

The disparity between town and country is vast. Highlighting the differences are the echoes of communist China's socialist past, a different world where the "iron rice bowl" of state industry promised jobs for life.

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