China on Wednesday increased its defense spending by 7.2% this year, the same growth rate as in the prior two years, as Beijing seeks to “firmly safeguard” its national security.

In an official government report due to be released in parliament, China proposed a national defense budget of 1.78 trillion yuan ($244.99 billion) for the 2025 fiscal year.

The increased defense budget, well above China’s economic growth target for this year of roughly 5%, comes as Western governments seek to ratchet up military spending to bolster their own security.

The European Union announced Tuesday that it could mobilize as much as 800 billion euros ($841 billion) to shore up support for Ukraine amid Russia’s full-scale invasion. The move followed reports that the U.S. had abruptly paused military aid to Ukraine.

China budgeted a 7.2% increase in defense spending to 1.67 trillion yuan last year, the same growth rate as in the prior year. Beijing had increased spending by 7.1% in 2022 and 6.8% in 2021, according to official data.

When asked on Tuesday about China’s defense spending, Lou Qinjian, spokesperson for the third session of the 14th National People’s Congress, told reporters that “peace needs to be safeguarded with strength.”

That’s according to an official translation of his Mandarin-language remarks.

China’s defense expenditure as share of GDP has been held under 1.5% for many years, Lou said, adding that this rate of spending is lower than the global average.

China remains the world’s second largest military spender behind the U.S. which has set the military budget for 2025 at $850 billion.

Separately, expenditures earmarked for public security this year was raised by 7.3%, the official statement showed, a sharp increase compared with the 1.4% rise last year.

— CNBC’s Sam Meredith contributed to this report.

BEIJING — China on Wednesday announced plans to raise its fiscal deficit to “around 4%” of gross domestic product, a rare increase that marks a meaningful shift in policy.

The target was confirmed in an official government report for review in parliament on Wednesday.

The new deficit plan, which is up from 3% last year, comes amid an escalating trade war with U.S. President Donald Trump’s administration.

An increase to 4% of GDP had been widely expected. It marks the highest fiscal deficit on record going back to 2010, according to data accessed via Wind Information. The prior high was 3.6% in 2020, the data showed.

In October, Chinese Minister of Finance Lan Fo’an said the space for a deficit increase is “rather large.”

China in November had announced a support package of 10 trillion yuan ($1.4 trillion) over five years — primarily to tackle local government debt problems.

The country’s real estate market slump has cut into a significant source of revenue for local governments, many of which struggled financially even before needing to spend on Covid-19 measures. Meanwhile, lackluster consumption and slow growth overall have multiplied calls for more fiscal stimulus.

China was also expected to triple the quota for special sovereign bond sales to 3 trillion yuan ($410 billion) this year, from 1 trillion yuan in 2024, and increase the year’s quota for special local government bond issuance to 4.5 trillion yuan from 3.9 trillion yuan previously, according to estimates from Macquarie’s Chief China Economist Larry Hu.