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Both the total amount and per-serviceman share of China's defense expenditure is low compared with those of some other countries, particularly major powers, says the White Paper on China's National Defense in 2006 issued in Beijing Friday.

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According to the White Paper, in 2005, China's defense expenditure equaled 6.19 percent of that of the United States, 52.95 percent of that of the United Kingdom, 71.45 percent of that of France and 67.52 percent of that of Japan. China's defense expenses per serviceman averaged 107,607 yuan (around US$13,450), amounting to 3.74 percent of that of the United States and 7.07 percent of that of Japan.

"Pursuant to the National Defense Law and the Budget Law, and guided by the principle of coordinated development of national defense and the economy, the Chinese government decides on the size and use of defense expenditure in an appropriate way to meet the demands of national defense in keeping with China's economic development," the White Paper said.

China's defense expenditure mainly comprises expenses for personnel, training and maintenance, and equipment, the White Paper adds.

The White Paper notes that since the early 1990s, to safeguard its sovereignty, security and unity, and to keep pace with the global revolution in military affairs, China has gradually increased its defense expenditure on the basis of its economic development. This increase, however, is compensatory in nature, and is designed to enhance the originally weak defense foundation. It is a moderate increase in step with China's national economic development.

In the 1980s, the White Paper says, China began to shift the focus of its work to economic development. At that time, it was decided that national defense should be both subordinated to and serve the country's overall economic development. As a result, national defense received a low input, and was in a state of self-preservation.

According to the White Paper, from 1979 to 1989, the average annual increase of defense expenditure was 1.23 percent. However, the defense expenditure actually registered an average annual decrease of 5.83 percent, given the 7.49 percent average annual increase of the consumer price index in the same period. From 1990 to 2005, the average annual increase in defense expenditure was 15.36 percent. As the average annual increase of the consumer price index during the same period was 5.22 percent, the actual average increase in defense expenditure was 9.64 percent.

"The increased part of China's defense expenditure is primarily used for purposes such as increasing salaries and allowances of military personnel and improving their living conditions, increasing investment in weaponry and equipment and infrastructure, supporting the training of military personnel, compensating for price rise, and increasing expenses for international cooperation in non-traditional security fields.

The White Paper stresses that China practices a strict system of financial appropriation of defense funds. The PLA's budgeting is based on the defense development strategy, military building objectives and annual military tasks set by the state. Budgeting units at each level carry out studies to decide on their budget items, make calculations of their requests for funds and then report to the next-higher authorities.

"China practices a strict system of financial appropriation of defense funds," the White Paper says.

Financial departments are instituted at the General Logistics Department, military area commands, Navy, Air Force and Second Artillery Force, and units at the levels of corps, division (brigade) and regiment. These departments are responsible for the appropriation, management and supervision of the defense funds. The auditing offices of the state and the PLA conduct strict supervision of the defense budget, says the White Paper.

The White Paper says that China's defense expenditure in 2004 and 2005 was 220.001 billion yuan (around US$27.5 billion) and 247.496 billion yuan (around US$30 billion), respectively, with growth rates of 15.31 percent and 12.50 percent.

In the past two years, the share of China's annual defense expenditure in its GDP and in the state financial expenditure in the same period has decreased, being 1.40 percent and 7.74 percent respectively in 2003, 1.38 percent and 7.72 percent in 2004, and 1.35 percent and 7.29 percent in 2005. Its defense budget for 2006 is 283.829 billion yuan (around US$35 billion), the White Paper said.