The Two Sessions Are About to Begin: The Deep Strategic Logic Behind the 7.2% Growth in Defense Budget

The Two Sessions Are About to Open: The Deep Strategic Logic Behind the 7.2% Growth in Defense Budget

Li Minghui | hiwars.com Chinese Military Defense Commentator | March 4, 2026

On March 4, the Chinese People's Political Consultative Conference (CPPCC) officially opened in Beijing, marking the beginning of the 2026 Two Sessions. Tomorrow (March 5), the Fourth Session of the 14th National People's Congress will follow closely, at which time core topics such as the defense budget, five-year plan, and military construction will come to the forefront. However, the large-scale military purge that occurred in the lead-up to this year's Two Sessions has cast a unique shadow over this annual political event.

Military Purge: Unprecedented Shockwaves

In the weeks leading up to the Two Sessions, the Chinese military's high command has faced the most intense wave of purges since Xi Jinping took office. On February 26, the Standing Committee of the National People's Congress announced the revocation of the National People's Congress representative qualifications of 10 senior PLA generals; a few days later, the CPPCC added the revocation of the committee qualifications of 3 generals—including PLA Army Commander Li Qiaoming and former Navy Commander Shen Jinlong, both of whom were removed from their key positions.

Since 2022, over a hundred senior PLA generals have been investigated or dismissed, with the purge spanning the Strategic Missile Forces, Navy, Air Force, and military-industrial system. Tan Ruishong, the former chairman of the Aviation Industry Corporation of China (AVIC), was also recently dismissed for suspected corruption, indicating that corruption issues have deeply infiltrated the military procurement chain.

The political signal of this wave of purges is very clear: Xi Jinping is using the platforms of the National People's Congress and the CPPCC to complete a systematic political reorganization of the military high command before the Two Sessions. The officers who remain are all survivors who have undergone political scrutiny. Analysts point out that there are very few active-duty senior officers left in the PLA, and the new leadership will complete a comprehensive overhaul in the coming years.

7.2%: The Strategic Code Behind the Budget Number

This year's Two Sessions is expected to approve a defense budget increase of about 7.2%, continuing the trend of recent years of growth exceeding GDP growth targets. In 2025, China's general public budget allocates defense spending of 1.81 trillion yuan, accounting for 44% of the total military expenditure in the Asia-Pacific region. If this increase is realized as expected, China's defense spending will further widen the gap with regional neighbors.

On the surface, 7.2% is a robust number—it is lower than external expectations of an aggressive arms race, yet sufficient to maintain the established pace of military modernization. Helena Legarda, an analyst at the Mercator Institute for China Studies (MERICS), points out that, considering international image management, Beijing tends to maintain a single-digit growth narrative to avoid being labeled as a military threat. However, this narrative does not change the reality: China's military expenditure growth rate has significantly exceeded GDP growth for several consecutive years, and the proportion of military investment in fiscal resources continues to rise.

The deeper logic is that the 7.2% growth is not just a budget number, but also a fiscal anchor point for Xi Jinping's narrative of combat capability. In recent years, Xi has repeatedly emphasized the core readiness requirement for the military to be able to fight and win in a series of speeches, and has clearly proposed the goal of building the military by 2027—namely, to have credible military options regarding the Taiwan issue. The continuous growth of the defense budget is the material foundation for transforming this political goal into actual combat capability.

The U.S.-Iran War: China's Strategic Opportunities and Risks

The current international situation provides China with a complex strategic backdrop. The U.S. military strikes against Iran in the Middle East are influencing China's strategic calculations in multiple dimensions.

From an opportunity perspective, the U.S.-Iran conflict provides the PLA with a rare window for real combat intelligence: the U.S. military's suppression actions against Iran's air defense systems reveal the response patterns of sensors to low-frequency radars; the scale of munitions consumed in long-range precision strikes provides a reference for assessing the U.S. military's sustained war capabilities; the joint operational coordination mechanisms of allied forces have also become important samples for PLA strategic researchers. The Italian think tank Special Eurasia points out that this war allows China to observe the rhythm of U.S. war consumption, which has direct value for scenario planning regarding the Taiwan Strait conflict.

However, the risks cannot be ignored. Analysts believe that the U.S. strikes against Iran contain strategic intentions to deter China—by destroying China's strategic foothold in the Middle East that restrains the U.S., it narrows the strategic window available to Beijing. If the PLA takes military action against Taiwan, preventing the rapid deployment of U.S. forces will be a key variable for success or failure—and the Iran war provides China with a real reference for observing this capability boundary.

The 14th Five-Year Plan: A New Starting Point for Military-Civil Fusion

Another important topic at this year's Two Sessions is the deployment of the 14th Five-Year Plan (2026-2030). In the military field, the plan is expected to further deepen the military-civil fusion strategy, focusing on advancing the systematic construction of unmanned systems, AI-assisted command, hypersonic weapons, and space combat capabilities.

The rectification of the military procurement system will also continue. Corruption scandals involving military giants like AVIC have raised external doubts about the actual combat readiness of weapon systems. After the purge, whether the new leadership can efficiently convert the budget into combat capabilities will be a key indicator for assessing the effectiveness of Xi Jinping's military reforms.

The Taiwan Strait and South China Sea: Geopolitical Pressure Points for the Two Sessions

The situation in the Taiwan Strait and dynamics in the South China Sea constitute the geopolitical pressure background for military policy discussions during the Two Sessions. Japan's deployment of missile systems on Yonaguni Island and the strengthening of U.S.-Japan alliance deployments in Okinawa directly confront China's operational freedom in the Miyako Strait and the Philippine Sea. Chinese Coast Guard vessels continue to confront Philippine ships in the Spratly and Paracel Islands, becoming a normalized frontline in the U.S.-China competition in the First Island Chain.

During the Two Sessions, the routine statements from the spokespersons of the PLA and armed police delegations—that the world is not peaceful and peace needs to be defended—will once again serve as a strategic signal that Beijing conveys to the outside world.

Conclusion: After the Purge, Capability is King

At the 2026 Two Sessions, while the defense budget figures are certainly eye-catching, the real strategic core lies in: after an unprecedented military purge, is the actual combat capability of the Chinese military improving or in turmoil?

Xi Jinping's intentions are clear: the purge is to rebuild the trust chain, the budget is to solidify the material foundation, and the political goal of building the military by 2027 is the time pressure driving all of this. For Taiwan, the U.S., and its allies, understanding the deeper logic behind the Two Sessions defense budget may be more important than the budget figures themselves.

Li Minghui, hiwars.com Chinese Military Defense Commentator, focusing on PLA modernization, Chinese military strategy, and security dynamics in the Indo-Pacific region.