By Greg Torode and Ben Blanchard
HONG KONG/TAIPEI, March 5 (Reuters) - China will boost defence spending by 7% in 2026, it said on Thursday, the lowest rate in five years but still outpacing wider economic growth targets and the rest of Asia at a time of growing regional tension, including over Taiwan.
Security analysts and regional military attaches are watching China's budget closely as it scrambles to modernise the military by 2035, while stepping up deployments across East Asia and purging the top brass to tackle graft.
China will improve combat readiness and accelerate the development of "advanced combat capabilities", Premier Li Qiang said at the opening of parliament's annual meeting, while unveiling a broader GDP growth forecast of 4.5% to 5%.
"All these steps will boost our strategic capacity to safeguard China's sovereignty, security and development interests," Li said in his work report, adding that President Xi Jinping held ultimate command responsibility.
The figure of 7%, which follows three years of annual rises of 7.2% and is the lowest since 6.8% in 2021, is part of a spending campaign in which China's military has developed new advanced missiles, ships, submarines and surveillance methods.
It comes amid the highest-profile purge of upper military ranks in decades, with the two most senior generals ensnared in disciplinary investigations.
Zhang Youxia, a veteran military ally of Xi, was placed under investigation in January, while another, He Weidong, was expelled in October last year.
The purge leaves just two members of the usual seven on the supreme Central Military Commission, Xi himself as its chair, and a newly promoted vice chairman, Zhang Shengmin.
The government remains committed to the ruling Communist Party's "absolute leadership over the armed forces", Li added.
"Guided by the principle of ensuring political loyalty in the military, we will continue to improve military political conduct and make major strides towards the centenary goals of the People's Liberation Army."
Some regional analysts believe the founding anniversary, which falls next year will bring further increases in military drills and deployments around Taiwan, the democratically-governed island that Beijing views as its territory.
'REUNIFICATION' WITH TAIWAN
China would "resolutely fight against separatist forces aimed at 'Taiwan independence' and oppose external interference", Li vowed in comments broadly similar to last year's.
This would "promote the peaceful development of cross-Strait relations and advance the cause of national reunification", he added.
Taiwan's government, which offered no immediate reaction to Li's remarks, says only the island's people can decide their future.
While the graft crackdown left gaps in the PLA's command structure and dented short-term readiness, it was expected to keep improving its capabilities and broader modernisation, the International Institute of Strategic Studies said.
In a report last month, the London-based IISS added that growth in Chinese military spending was consistently outpacing the rest of Asia amid a global surge in defence budgets.
China's share of the total military expenditure in Asia grew to almost 44% in 2025, up from an average of 37% between 2010 and 2020, it said.
(Reporting by Greg Torode and Ben Blanchard; Additional reporting by Beijing newsroom; Editing by Christopher Cushing, Michael Perry and Clarence Fernandez)
