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The BBC's Sean Fanning
"China sees Taiwan as a renegade province"
 real 28k

The BBC's Duncan Hewitt reports from Beijing
"As Taiwan's election draws nearer, so China's rhetoric becomes increasingly harsh"
 real 28k

Monday, 6 March, 2000, 10:43 GMT
China ups military spending
Chinese missile in Tiananmen Square
Chinese military spending is taking off
China has increased military spending to record levels, as it steps up warnings to Taiwan not to pursue independence.

2000 Budget
Total deficit to rise more than 25% to $28bn
Economy to grow at 7%
Social security safety net created
Military spending up 13% to $14.6bn
Investment up 10%
Finance Minister Xiang Huaicheng said the defence budget would rise 12.7% to 120.5bn yuan ($14.6bn) for the year 2000.

He said around a third was to compensate the 2.5m-strong army after the government ordered it to end commercial operations in 1998.

In addition, the money will cover troops' salary raises, and the cost of a garrison for the former Portuguese colony of Macao, which returned to Chinese rule last December.

Prime Minister Zhu Rongji also made it clear on Sunday that upgrading military technology was a key task.

Expanding capacity

Analysts said China was expanding its naval and air capability to enable it to project its power over Taiwan and, farther afield, the Spratly Islands in the South China Sea.


Soldier mending bicycle
China wants to improve the professional standing of its army
The Spratlys are a cluster of isles, reefs and rocky outcrops claimed partly or wholly by China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei.

Last month, China took delivery of a new Russian-built missile destroyer which passed through the Taiwan Strait on its way to the mainland.

However, despite recent arms purchases, analysts said China would not be capable of invading Taiwan until the end of the decade.

Beijing says its defence expenditure is significantly less than that of many developed nations.

However, analysts say the real level could be three to 10 times higher than the public figure.

"What they show is what they want you to know," said one Beijing-based Asian diplomat.

"They're buying ships, they're buying electronics," he said.

Deficit widens

Outlining the rest of the 2000 budget, Mr Xiang announced an increase in overall spending to stimulate an economy which has seen two years of deflation.

He said a significant amount would go on moves to create a national social security safety net.

Investment in new infrastructure projects and other fixed assets would rise by around 10%.

The total budget deficit is predicted to grow by more than 25% to $28bn.

Mr Xiang said the growing deficit was a price worth paying to ensure social stability and raise living standards.

He predicted overall economic growth at just below the 7.1% recorded last year.

'Beautiful words'

The budget increases came as China's army newspaper restated Beijing's warning last month that it would not rule out using force if Taiwan indefinitely delayed negotiations on reunification.

Taiwanese destroyer
Taiwan's US-built destroyer remains on normal alert
"We will adopt all measures to firmly crush any attempts to divide China and will realise the complete reunification of the motherland," Liberation Army Daily said.

The newspaper also attacked Chen Shui-Bian, the Taiwanese opposition Democratic Progressive Party's candidate in the presidential elections.

"Recently, the leader of the group who have always advocated Taiwan independence has used beautiful words to deceive the Taiwan people," the editorial said, warning voters not to be "deceived" by the promises.

'Disaster'

Taiwanese Vice-President Lien Chan, the ruling Nationalist Party's candidate, launched a new attack on Mr Chen's position on Monday.

Zhu Rongji
Zhu Rongji criticised the 'arrogance' of Taiwan
"The Taiwan independence platform will bring nothing but disaster to this country," he said.

Mr Lien nonetheless said he stood by President Lee Teng-hui's controversial call for "special state-to-state" relations with China if he were elected.

"President Lee's policy is the policy of this country. It's not a personal policy, but a national policy," Mr Lien said.

China's Prime Minister, Zhu Rongji has denounced the policy, implying that the very idea was seen by China as cause for action - a clear warning to President Lee's successor to abandon the policy.

On Saturday, Chinese President Jiang Zemin gave his first full endorsement of the white paper which set out China's threat of force.

"If the Taiwan authorities refuse for an unlimited period to agree to a peaceful settlement of cross-straits reunification through negotiations, then the Chinese Government will be forced to adopt all drastic measures possible," he said.

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See also:

24 Feb 00 | Asia-Pacific
Analysis: The trouble with Taiwan
20 Jul 99 | Asia-Pacific
China's military might
29 Feb 00 | Asia-Pacific
China renews Taiwan threat
22 Feb 00 | Asia-Pacific
Taiwan rejects Chinese threats
12 Feb 00 | From Our Own Correspondent
Taiwan's politicians - and their wives
05 Mar 00 | Asia-Pacific
China casts shadow over Taiwan poll
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