Beijing will increase its defense budget 7.2% this year

China said yesterdayy it will increase its defense budget 7.2% this year, as it continues its campaign to build a larger, more modern military to assert its territorial claims and challenge the U.S. defense lead in Asia.

China’s military spending remains the second largest behind the U.S. and it already has the world’s largest navy.

The budget, which adds up to about $245 billion, was announced at the National People’s Congress, the annual meeting of China’s legislature.

The boost is the same percentage as last year, far below the double-digit percentage increases of previous years and reflecting an overall slowdown in the economy. The nation’s leaders have set a target of around 5% growth for this year.

Tensions with the U.S., Taiwan, Japan and neighbors who have overlapping claims to the crucial South China Sea are seen as driving spending on increasingly high-tech military technologies. Those include stealth fighters, the country’s three — soon to be four — aircraft carriers, and a broad expansion of its nuclear arsenal.

China generally ascribes the budget increases to exercises and maintenance and improving the lives of its two million service people.

The People’s Liberation Army has build bases on artificial islands in the South China Sea but its China sent a relatively small contingent of just five planes and seven into territory near Taiwan on Wednesday, just days after sending dozens of aircraft. Such missions are intended to demoralize and wear down Taiwan’s defenses, which have been bolstered by upgraded U.S. F-16s, tanks and missiles, along with domestically developed armaments.

In his comments at the Congress, Premier Li Qiang told the nearly 3,000 party loyalists that China still preferred a peaceful solution to the Taiwan issue, but “resolutely opposes” those pushing for Taiwan’s formal independence and their foreign supporters.

“We will firmly advance the cause of China’s reunification and work with our fellow Chinese in Taiwan to realize the glorious cause of the rejuvenation of the Chinese nation,” Li said.

Faced with slower growth, China will likely prioritize key strategic goals over social and economic reforms, said Antonia Hmaidi, a senior analyst with the Mercator Institute for China Studies.

Chinese President Xi Jinping, who oversees the armed forces, has attempted to force through major reforms and removed senior military leaders including two former defense ministers and the head of the missile corps.