Infographic: China increases defense budget

China's government responded to public demands for bold leadership with vows Wednesday to press long-sought market reforms, defend against terrorism after a horrific slashing attack, and heavily boost military spending amid rising tensions with Japan.

The promises delivered by Premier Li Keqiang in his first annual policy speech also included cutting official waste, combating persistent smog and pushing ahead with President Xi Jinping's signature campaign to fight the rampant graft that has undermined public faith in the ruling Communist Party.

China announced a 12.2 percent increase in military spending to $132 billion. That followed last year's 10.7 percent increase to $114 billion, making China's defense budget the second-highest in the world, behind the United States, which spent $600.4 billion on its military last year.

Increases in China's military budget have regularly exceeded both total increases in government spending and the nation's rate of economic growth. That has allowed lavish spending on new hardware and better conditions for soldiers, raising concerns about how China intends to use its new-found power amid a rise in tensions with Japan over uninhabited islands in the East China Sea.

China's Foreign Ministry said it was reasonable for the People's Liberation Army to modernize. "Nothing to get fussy about. China's PLA aren't like scouts carrying spears," spokesman Qin Gang said.

While becoming increasingly assertive in its own territorial claims, Beijing has at the same time accused Japan of renewed militarism and dwelled on Tokyo's history as an aggressor during World War II.

"We will safeguard the victory of World War II and the postwar international order, and will not allow anyone to reverse the course of history," Li said, in an obvious dig at Tokyo.

Li announced an official growth target of 7.5 percent this year, signaling that the government would not let growth dip too low — or unemployment surge — while it carries out ambitious economic reforms. Li warned that reforms are at a critical stage as he pledged to open state-dominated industries to private investment.

The Associated Press