At the opening of China's rubber-stamp parliament on Sunday, outgoing Premier Li Keqiang announced an increase to the nation's military spending, pointing to "escalating" security threats from abroad.   

Beijing now plans to spend about 1.55 trillion yuan ($225 billion, €213 billion) on its military for the year, marking a 7.2% rise and the quickest rate of increase since 2019.

The military must "devote greater energy to training under combat conditions, and... strengthen military work in all directions and domains," Li said. 

China's defense spending still pales in comparison with the United States, which has allocated over $800 billion for its military this year.

But Western analysts believe Beijing spends much more on defense than the officially announced sums.

"China has embarked on a long-term, comprehensive military modernization and expansion program since 2000," said Drew Thompson, a China expert at the Lee Kuan Yew School of Public Policy at the National University of Singapore. "I think the most recent budget increase for the PLA is very consistent with what we've seen over the last 22 years.”

Tzu-Yun Su, an analyst at the Institute for National Defense and Security Research in Taiwan, said that China's defense spending plans reflect Beijing's intention to transform itself from being a land power to a naval power.

"The Taiwan Strait, the South China Sea and the East China Sea will be the areas covered by the first stage of Beijing's military expansion," he said.

"Then China will set its eyes on expanding to the 'second island chain,' where it wants to influence the rebalance of power," he added. The second island chain consists of the islands of Japan stretching to Guam and the islands of Micronesia.

Increased threat perception

The boost to defense spending comes amid rising geopolitical tensions in the Indo-Pacific.

A number of countries, from Japan and South Korea to the Philippines, have been increasingly wary of Beijing's growing assertiveness and influence in the region.

Their perceptions of increased threat to the regional security landscape have prompted them to focus on their own defense preparedness and hike military spending.

Japan, for instance, announced record military spending of 6.82 trillion yen ($51.7 billion, €49 billion) for the coming year, an increase of around 26% from the previous year.

Prime Minister Fumio Kishida's government also unveiled the nation's biggest military build-up since World War II, marking a dramatic shift away from seven decades of pacifism.

The military reform plan will see Tokyo double defense spending to 2% of GDP and procure missiles that can strike ships or land-based targets 1,000 kilometers (600 miles) away.

Balancing ties between US and China

South Korea is also increasingly worried about China's military might, but Seoul's most immediate and pressing security challenge revolves around North Korea.

Pyongyang has dramatically stepped up its aggressive maneuvers in recent months, with a record number of missile launches last year.

"South Korea has to be more sensitive about the threat posed by China because of the situation on the Korean Peninsula, where China could intervene on the North's side in the event of a contingency, but Seoul is also reluctant to get involved in 'great power competition' between Beijing and Washington," said Ryo Hinata-Yamaguchi, a project assistant professor at the Research Centre for Advanced Science and Technology at the University of Tokyo.    

South Korea shares deep security ties with the US, but China is its most important trade partner — a situation that forces Seoul to walk a diplomatic tightrope to ensure good relations with both Washington and Beijing.

While President Yoon Suk-yeol's administration has announced plans to increase military spending, most of the new equipment will be deployed to face the threats posed by North Korea.

To counter China, Seoul is seeking to strengthen its security alliances. South Korea this week agreed to end a long-running dispute with Japan over grievances linked to Tokyo's brutal rule of Korea from 1910 to 1945 — a decision widely seen as a trade-off for better defense ties.

"China's foreign policy assertiveness and increasing military spending are among the drivers of South Korea and Japan strategically improving relations," said Leif-Eric Easley, an associate professor of international studies at Ewha Womans University in Seoul. 

"The Yoon administration's new understanding with the Japanese government of Prime Minister Fumio Kishida reflects a will to advance reconciliation and ensure that urgent cooperation for regional security is not held hostage to history.  

"Washington supports its allies in Asia in the interest of trilateral efforts to deal with various challenges posed by North Korea and China," he added. "But a key question is whether leaders in Seoul and Tokyo will be able to complete the domestic political homework to make their international coordination sustainable." 

A source of anxiety in Taiwan

Beijing's increasing military capabilities have also been a source of anxiety in Taiwan, which China views as its own territory and has vowed to bring under its control.

Top American officials have repeatedly warned that China may invade the democratic self-ruled island in the coming years, pointing to Beijing's increasingly assertive military moves in the Taiwan Strait.

According to the analyst Tzu-Yun Su, China's 2023 military spending is over 11 times that of Taiwan's, putting a lot of pressure on the territory's finances.

"But since China has five combat zones, its defense resources will be more spread out," he pointed out.

He called on Taiwan to fully adopt "asymmetric warfare," something that even US officials have urged Taipei to do.

"If Taiwan prioritizes investment in anti-ship missiles and air defense missiles, it will have a high chance of offsetting China's numerical advantage in its ammunition and military personnel," Su stressed.  

Strengthening US security alliances

Tensions between China and the Philippines have also been on the rise in recent months.

The Philippines has filed dozens of complaints against China's activities in the South China Sea, including accusing a Chinese vessel of using a "military-grade laser" against a Philippine patrol boat in the disputed waters.

While China claims almost complete sovereignty over the sea, the Philippines, Vietnam, Malaysia and Brunei all have overlapping claims to parts of the water body.

Philippines President Ferdinand Marcos Jr. has vowed that his country "will not lose one inch" of territory. His administration has strengthened the military alliance between Manila and Washington, granting US troops access to four more military bases in the Southeast Asian country and resuming joint patrols in the South China Sea.

INDSR expert Su said shared concern over China's growing aggressiveness and assertiveness might prompt countries in the region to consider the possibility of setting up something like a "maritime NATO."

"Security cooperation in the Indo-Pacific region is centered around the US, and in recent months, we've seen Washington strengthening bilateral military cooperation with countries like Japan, South Korea and the Philippines," he noted. "These are important efforts to balance the power dynamics in the region and stop the expansion of China's maritime power."

Edited by: Srinivas Mazumdaru