(Bloomberg) -- China said its defense spending would grow by 7.2% this year — the fastest pace since 2019 amid increasing tensions with the US on a range of issues, including Taiwan. 

Military expenditure is expected to rise to 1.55 trillion yuan ($225 billion) in 2023, according to the Ministry of Finance’s annual report released Sunday at the start of the National People’s Congress in Beijing. Spending on the People’s Liberation Army has increased by at least 6.6% each year for the past three decades, keeping pace or often exceeding economic growth, although the figure is far surpassed by the US’s military expenditures.

Read: China’s GDP Goal, Defense Budget, Disorderly Capital: NPC Update

Chinese President Xi Jinping is seeking to build a “world-class force” by 2027, a deadline that coincides with the 100th anniversary of the People’s Liberation Army. General Mark Milley, chairman of the US Joint Chiefs of Staff, has said Beijing may want to be ready for an invasion of Taiwan by that year, but has also said the PLA won’t be prepared for some time.

“We in governments at all levels should give strong support to the development of national defense and the armed forces and conduct extensive activities to promote mutual support between civilian sectors and the military,” Premier Li Keqiang said in his annual work report to the legislative session.

“In doing so, we will open a new chapter of unity between the military and the government and between the military and the people,” he said.

The defense figure that China unveils every year is among the few official announcements that offer signs of progress the PLA is making in its revamp. Analysts outside the nation say the actual amount far exceeds the official sum, partly because R&D expenditures are not included.

This year’s figure “feels in part a reflection of the growing increase in military spending we see globally and regionally, while also a reflection of increased sense of threat in Beijing and a need to be prepared for eventualities,” said Raffaello Pantucci, a senior fellow at the S. Rajaratnam School of International Studies in Singapore.

“Taiwan will clearly be seen as an important focus but my view would be that Chinese preparations go farther than this and remain about building a globally competitive military.”

China also plans to increase its public security budget by 6.4% — the fastest pace in five years. That rise comes after the Asian nation experienced its most widespread protests in decades in November due to broad discontent over harsh Covid Zero rules.

See: Why Taiwan’s Status Risks Igniting a US-China Clash: QuickTake

The US spends more on its military than any other country, with a budget of $773 billion for 2023, putting China a distant second, although it has broader security commitments around the world. 

In a sign of the tensions between Washington and Beijing, the Pentagon recently said that top US and Chinese defense officials haven’t spoken since November. In early February, China rebuffed a US effort to arrange a call that Defense Secretary Lloyd Austin had sought with General Wei Fenghe to address the uproar over a balloon Washington said was spying and ordered shot down off the East Coast.

China said that move as an “overreaction,” describing the craft as a civilian device collecting weather data that was blown off course.

The incident undercut efforts by Xi and and US President Joe Biden to improve ties that got started in a meeting in Bali in November. Relations had suffered a blow in August, when Nancy Pelosi became the first sitting House speaker in 25 years to visit Taipei. Her successor, Speaker Kevin McCarthy, has signaled he intends to visit Taiwan at some point.

The PLA responded to Pelosi’s visit with unprecedented military drills that appeared to practice a blockade of Taiwan, with exercises occurring off major cities and on the east and west sides of the island that China has pledged to one day bring under its control. China also launched missiles directly over Taiwan.

The Defense Ministry in Taipei said Thursday that China sent 21 fighters into a sensitive area near Taiwan, a figure that was the highest in nearly two months. The incursions came after US approved the possible sale of $619 million worth of F-16 munitions and related equipment to Taiwan.

--With assistance from Jing Li.

(Updates with analyst comments.)

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