China's 2026 Two Sessions: Defense Spending Surge, Military Purges, and Strategic Recalibration Under Dual Pressure

# China's 2026 Two Sessions: Defense Spending Surge, Military Purges, and Strategic Recalibration Under Dual Pressure

**Author:** Li Minghui, Defense Analyst, hiwars.com
**Date:** March 6, 2026
**Classification:** Open Source Intelligence (OSINT)
**Region:** Asia-Pacific
**Severity:** High

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## 1. Overview

China's annual "Two Sessions" — the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) — convened in Beijing in early March 2026, representing the most politically significant legislative gathering of Xi Jinping's consolidated third term. Opening formally on March 5, the NPC serves as the country's rubber-stamp legislature but functions as a critical barometer of Beijing's strategic priorities, resource allocation decisions, and ideological signaling.

The 2026 edition carried particular weight for several reasons: it launched the 15th Five-Year Plan (2026–2030), set economic targets amid growing domestic headwinds and external technology pressure, and occurred against the backdrop of continued military purges that have reshaped the People's Liberation Army (PLA) command structure since 2023. Taken together, the outputs of this year's Two Sessions paint a picture of a leadership navigating acute internal-external pressures while doubling down on long-term military modernization.

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## 2. Economic Targets: The Significance of Sub-5% Growth

Perhaps the most politically sensitive announcement from the 2026 Two Sessions was the GDP growth target of **4.5–5%** — the first time Beijing has set a target below 5% in the Xi era under normal (non-pandemic) conditions. This downward revision from last year's target signals several converging pressures:

- **Structural deceleration:** China's property sector crisis, demographic contraction, and declining export demand are constraining growth potential in ways that are increasingly difficult to offset through fiscal stimulus.
- **Fiscal stress:** The fiscal deficit rate was maintained at a historically high ~4%, indicating continued reliance on government spending to prop up activity. Of China's 31 provincial-level administrations, only 1 raised its local GDP target, 12 kept targets flat, and 18 lowered theirs — a systemic downward revision that reflects both economic reality and managed expectation-setting.
- **Resource trade-offs:** A lower headline GDP target theoretically constrains the fiscal envelope, yet defense spending was still authorized at 7% growth. This means the defense budget is again outpacing economic growth — a trend with long-term structural implications for civil-military resource allocation.

For defense analysts, the sub-5% GDP target is not merely an economic statistic. It signals that Beijing is prepared to accept slower growth rather than sacrifice defense investment — a deliberate prioritization that reflects the strategic logic of the Xi era: security first, growth second when the two come into tension.

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## 3. Defense Budget: 7% Growth and the 2035 Modernization Imperative

The approved defense budget of **1.91 trillion RMB (approximately $276.9 billion USD)**, representing a **7% year-on-year increase**, continues a streak that has now lasted five consecutive years without falling below this threshold. Key analytical points:

**Scale and trajectory:** At $276.9 billion, China's declared defense budget remains nominally far below the U.S. defense budget (~$850+ billion), but purchasing power parity, undeclared military expenditures (R&D through civilian agencies, paramilitary, strategic forces not fully disclosed), and lower personnel costs mean real military capacity is higher than the headline figure suggests.

**"Improving Combat Readiness":** Premier Li Qiang's explicit use of the phrase "improving combat readiness" (*提升战备状态*) in the Government Work Report is a notable escalation in public rhetoric. This language, previously used primarily in internal military documents and Xi's speeches to the PLA, is now embedded in the official legislative report — signaling a deliberate effort to normalize the concept of active military preparedness in public discourse.

**"Major Defense Projects":** The budget authorization specifically references implementation of "major defense projects" and enhancement of "advanced combat capabilities." This language aligns with known PLA modernization programs including: next-generation carrier aviation, hypersonic strike systems, space and cyber domain expansion, and nuclear force modernization under the PLA Rocket Force (PLARF) — notably, despite the PLARF corruption scandal.

**2035 Modernization Milestone:** The 2035 deadline for full military modernization — a key Xi Jinping strategic objective first articulated at the 19th Party Congress — was reaffirmed. With nine years remaining, the pace and scope of PLA transformation is now entering its most intensive phase, requiring sustained double-digit or near-double-digit defense investment growth relative to capability gaps.

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## 4. 15th Five-Year Plan: Technology Sovereignty as Strategic Warfare

The formal launch of the **15th Five-Year Plan (2026–2030)** at this year's Two Sessions elevates technological self-reliance to a defining national security priority. The plan's core focus areas — **artificial intelligence, quantum computing, indigenous semiconductor development, and new energy** — are not merely economic policy choices. They represent China's strategic response to U.S.-led technology decoupling and export controls.

**AI as dual-use imperative:** China's AI development strategy has explicit military applications: autonomous systems, intelligence fusion, electronic warfare, and decision-support for command-and-control. The 15th FYP's AI emphasis accelerates civil-military fusion in these domains.

**Quantum computing:** China has invested heavily in quantum key distribution (QKD) and quantum radar research. The 15th FYP's quantum focus suggests continued prioritization of quantum-secure communications and potential quantum sensing applications for anti-submarine warfare and missile defense penetration.

**Semiconductor self-sufficiency:** This remains Beijing's most urgent vulnerability. The 15th FYP's emphasis on indigenous chip development is a direct response to U.S. and allied export controls targeting advanced node semiconductors. Progress here will be a key limiting factor for PLA AI-enabled warfare capabilities through 2030.

**New energy:** Beyond civilian applications, energy security has direct military logistics implications. China's dominance in EV, battery, and solar supply chains creates strategic leverage and reduces energy import dependencies that complicate military planning.

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## 5. Taiwan Rhetoric: Escalation in Textual Signaling

The Government Work Report's treatment of Taiwan in 2026 has drawn attention from regional analysts. According to BBC reporting, the language around Taiwan and unification was **notably strengthened** compared to previous years, with enhanced emphasis on "reunification" commitments.

While Beijing has consistently included Taiwan formulations in the annual Government Work Report, changes in specific phrasing — the addition of more assertive verbs, the removal of softer qualifications, or explicit linkage to military readiness — carry operational significance. These textual signals are read carefully in Taipei, Washington, Tokyo, and Canberra as indicators of Beijing's near-term posture.

Critically, the upgraded Taiwan rhetoric occurs simultaneously with: (1) explicit combat readiness language, (2) increased defense spending, and (3) reaffirmation of the 2035 modernization timeline. This convergence suggests that the Two Sessions was used to institutionalize and publicly ratify a harder line on Taiwan — laying political groundwork for potential future action while maintaining official deniability of any specific timeline or trigger.

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## 6. Military Purges: 19 Deputies Removed, PLA Integrity Under Scrutiny

One of the most operationally significant developments surrounding the 2026 Two Sessions was the **revocation of credentials for 19 NPC deputies** by the NPC Standing Committee, including **9 military representatives** — of whom **5 held general-officer rank**. Additionally, the CPPCC revoked the credentials of **3 retired generals**.

This is not merely a political housekeeping exercise. Consider the implications:

**Scale of the purge:** Removing 9 active military NPC deputies — an institution that meets annually to ostensibly ratify leadership decisions — represents a public acknowledgment of systemic corruption at the senior command level. The involvement of general-officers implicates major command structures.

**PLARF shadow:** While not all dismissed officers have been publicly identified with specific branches, the Rocket Force corruption scandal (which led to the removal of commanders Wei Fenghe-era appointees in 2023–2024) continues to cast a long shadow. Ongoing investigations appear to be producing new accountability actions.

**Combat effectiveness implications:** Serial purges of senior officers — even if justified on anti-corruption grounds — carry real costs for institutional knowledge, command cohesion, and operational planning continuity. Analysts at IISS and RAND have noted that frequent leadership turnover in the PLARF and theater commands may be degrading near-term combat effectiveness even as hardware capabilities improve.

**Political consolidation:** Xi Jinping's use of the anti-corruption campaign as a tool of political consolidation is well-documented. The Two Sessions purges serve dual purposes: eliminating genuine graft, and ensuring that the officer corps is populated with Xi loyalists ahead of any potential high-stakes military contingency.

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## 7. Strategic Assessment

The 2026 Two Sessions, viewed in totality, reveals a Chinese leadership navigating a complex strategic environment with a distinctive set of calculated trade-offs:

**Internal-external balancing:** Beijing is simultaneously managing economic deceleration, sustaining a multi-year military purge, funding accelerated defense modernization, and positioning for a critical diplomatic interaction with the Trump administration (scheduled Beijing summit, March 31). The Two Sessions outputs suggest Xi has chosen to absorb economic pain rather than compromise on security investment or political consolidation.

**Deliberate ambiguity on Taiwan:** The upgraded Taiwan rhetoric, absent a specific operational timeline, appears designed to serve multiple audiences: domestic nationalists (demonstrate resolve), military planners (normalize preparedness language), and external actors (signal cost-imposition without triggering immediate countermeasures). This calibrated ambiguity will persist through the 2026–2027 period barring a triggering event.

**Technology war as the defining contest:** The 15th FYP's emphasis on AI, quantum, and semiconductor sovereignty indicates that Beijing views the technology competition with the United States as the decisive strategic variable for the decade. Military modernization cannot proceed at the intended pace without indigenous semiconductor access — making chip self-sufficiency a national security priority above all others.

**Middle East opportunism:** The ongoing U.S.-Israeli military operation against Iran (Operation Epic Fury) creates strategic bandwidth constraints for Washington and potential opportunities for Beijing: diplomatic positioning as a mediator, arms supply chain monitoring, and assessment of U.S. military logistics and readiness under sustained operational pressure.

**Assessment:** The 2026 Two Sessions institutionalizes a strategy of sustained military growth under economic constraint, political consolidation through anti-corruption enforcement, and technological competition as the primary arena of great-power rivalry. Beijing is preparing the institutional, financial, and ideological architecture for a high-intensity strategic environment — while maintaining the appearance of measured, rules-based governance.

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*Sources: Chinese Government Work Report (March 2026), NPC Standing Committee announcements, BBC, Reuters, SCMP, open-source defense analysis.*
*Author: Li Minghui | hiwars.com Defense Analysis Desk*