China's Defense Budget Grows by 7% in 2026: The Strategic Logic Behind the Acceleration of PLA Modernization

On March 10, 2026, during the fourth session of the 14th National People's Congress, Zhang Xiaogang, spokesperson for the delegation of the People's Liberation Army (PLA) and the Armed Police Force, announced that the national general public budget defense expenditure for 2026 is set at 1.94 trillion yuan (approximately 282 billion USD), an increase of 6.9% compared to the previous year's execution figure, with central defense expenditure at 1.91 trillion yuan, a growth rate of 7%. This figure not only surpasses China's annual GDP growth target (4.5% to 5%) but also continues the trend of the PLA maintaining single-digit growth for the 11th consecutive year.

In absolute terms, China's defense budget for 2026 accounts for about 44% of total military expenditure in the Asia-Pacific region, establishing a significant regional dominance. However, Western analysts generally believe that the official figures do not cover all military-related expenses, and the actual defense spending may be 20% to 30% higher than the announced figures. An analysis report by the Foundation for Defense of Democracies (FDD) in early March pointed out that Beijing continues to expand its military despite a slowdown in economic growth, indicating that the leadership has prioritized military modernization over short-term economic stability.

Zhang Xiaogang clarified four major expenditure directions: promoting the integrated development of mechanization, informationization, and intelligentization; optimizing the joint combat system; accelerating the research and development of advanced weaponry; and deepening realistic military training. These four directives essentially outline the current construction profile of the PLA—transforming from a traditional mechanized army to an intelligent and systematized combat force.

In terms of naval power, the PLA Navy has become the largest navy in the world by number of vessels, with over 370 active combat ships, expected to expand to 435 ships by 2030. The commissioning of the electromagnetic catapult aircraft carrier Fujian (Type 003) marks a historic leap in technology, while the Type 076 amphibious assault ship is positioned as a drone carrier, providing unprecedented distributed combat capabilities. Recent exercises in the Western Pacific and around Australia have confirmed the accelerated realization of long-range strategic intentions.

Air power is rapidly expanding, with the PLA Air Force currently equipped with over 3,200 various types of combat aircraft, and the J-20 stealth fighter has been mass-produced. The development of the H-20 long-range stealth bomber has been prioritized, and once operational, it will enable China to possess long-range strike capabilities with both nuclear and conventional capabilities. The induction of the Y-20U aerial refueling aircraft further enhances long-range delivery effectiveness.

In terms of missile and nuclear capabilities, the International Institute for Strategic Studies estimates that China has surpassed 600 nuclear warheads, with analyses suggesting that this number could expand to 1,500 by 2035. The Dongfeng series of ballistic missiles and hypersonic glide vehicles are continuously being improved, with substantial enhancements in range, accuracy, and penetration capabilities.

The space and cyber domains are also important areas of investment. In 2024, the Central Military Commission completed the reorganization of the Strategic Support Force, establishing an independent space and cyber warfare capability system, with military satellites in orbit covering reconnaissance, communication, navigation, and maritime surveillance functions, while the development of anti-satellite systems is accelerating in parallel.

From a strategic perspective, Zhang Xiaogang clearly stated that the PLA will resolutely crush any attempts at Taiwan independence and external interference. Considering the overall budget scale, investment directions, and political context, the focus of China's military construction has shifted from capability catch-up to the formation of strategic deterrence—forcing potential adversaries to adjust their strategic calculations through the establishment of comprehensive combat capabilities. For Washington and Tokyo, maintaining credible deterrence in the context of accelerated Chinese military modernization will be the most challenging strategic issue in the coming years.