Amid the continuous decline of the Chinese economy, the financial situation of the Chinese Communist Party (CCP) is precarious, with various party and government agencies frequently stressing the need to “tighten belts.” Recently, even the CCP’s military has echoed the call to “tighten belts.” Analysts believe that while the military has used this slogan before, the current context of the call indicates a genuine lack of funds. To ensure military funding, the CCP may have to cut back on military procurement and training expenses.
The CCP’s military newspaper reported on June 20th that the Central Military Commission of the CCP had issued a document regarding “frugal building of the military,” emphasizing the need to “deeply instill the mindset of tightening belts and meticulous expenditure,” aiming to “enhance the operational efficiency of the military system and the cost-effectiveness of national defense resources.”
Commentator Zhong Yuan told Epoch Times that slogans like “frugal building of the military” or having the military “tighten belts” have been mentioned by the CCP in recent years. However, openly calling for tightening belts now under different circumstances suggests that the military is indeed facing financial constraints.
The CCP’s severe “zero-COVID” policy from 2020 to 2022 depleted local finances, while the wave of salary cuts for civil servants since the latter half of 2021 affected almost all provinces in China, with allowances and bonuses being canceled or reduced. Even after the end of the zero-COVID policy at the end of 2022, the Chinese economy continues to decline, posing challenges for recovery.
In recent years, CCP government departments have frequently emphasized the need to “tighten belts.” The Government Work Report presented during the CCP’s Two Sessions in March reiterated the need for all levels of government to “get used to tightening belts.” Subsequently, various regions have strictly controlled public expenses and reduced general expenditures.
At the end of last year, informed individuals informed Epoch Times that subsidies from local governments to the military had also been reduced or eliminated.
Mr. Hua, a mainland Chinese who served in the military, told Epoch Times, “Many of my comrades in the military no longer receive many of the subsidies they used to. It has been six months now, and those subsidies haven’t been paid out for half a year.”
However, Zhong Yuan believes that while local subsidies may have been reduced, the CCP’s top priorities should still be to safeguard military funding, which is a significant expenditure for maintaining stability. This is followed by usual social stability expenses, and then ensuring civil servants’ salary and benefits.
According to the budget report draft released during the annual session of the CCP’s National People’s Congress in March, China’s defense budget for this year is expected to increase by 7.2%. However, retired Adm. John C. Aquilino, former head of the U.S. Indo-Pacific Command, indicated in April that despite economic downturns, China’s military spending may exceed the officially stated 7.2% growth.
Zhong Yuan noted, “In the eyes of most people, the CCP’s military spending seems like a bottomless pit, but it cannot grow indefinitely. With the economy declining and finances falling short, military funding will inevitably be impacted. For example, constructing another Fujian-class aircraft carrier not only entails the carrier’s costs but also requires a substantial expenditure on different types of carrier-based aircraft, escort destroyers, submarines, as well as corresponding facilities for ports and support, along with the costs of training, maintenance, and upkeep for thousands of crew members. Additionally, the CCP would prioritize guaranteeing the salaries of military officers and non-commissioned officers.”
From June 17th to 19th, the CCP held a military political work conference in Yan’an. CCP leader Xi Jinping, in a rare move, remarked at the conference that “currently, the world situation, national conditions, party conditions, and military conditions are undergoing complex and profound changes, and our military faces complex political tests.”
Zhong Yuan believes that during this CCP military political work conference, Xi Jinping emphasized the need to ensure the implementation of policies and systems related to military personnel benefits, enhancing the sense of gain and belonging for officers and soldiers. This indicates that the CCP leader is concerned about potential turmoil within the military due to issues related to benefits.
Xi Jinping has been increasing investments in the military in recent years, significantly raising military salaries in 2014, 2018, and 2021. Since October 15, 2023, authorities have officially implemented the “Interim Regulations on Ensuring Benefits for Civilian Personnel in the Military,” further improving benefits for civilian personnel in the military.
Meanwhile, as geopolitical tensions involving China have escalated in recent years, with China continually causing tensions in the South China Sea and Taiwan Strait, the Chinese military has frequently emphasized readiness for combat.
If salaries and benefits cannot be reduced, the expenses for equipment and training are likely to be cut, with CCP military cost control and the concept of frugal building of the military expected to soon reflect in the procurement of new military equipment and training during peacetime. With China significantly increasing its nuclear arsenal, which is a costly endeavor, the funds allocated for conventional weapons could be squeezed, suggesting that the cycle of updating conventional military equipment of the CCP’s military may reach a tipping point, further widening the gap with the United States.
“At this point in time, openly calling for tightening belts within the military should be seen as another key signal of the CCP’s further decline,” Zhong Yuan stated.