By Scott Harold, Special to CNN

Editor’s note: Scott Harold is an associate political scientist for the nonprofit, nonpartisan RAND Corporation. The views expressed are his own.

China has once again announced a major expansion in its defense spending, leaving outside observers to again debate what this all could mean. Unfortunately, the planned 10.7 percent increase for 2013 posed more questions than it answered: Is it a sign of a more assertive China that wants to pursue regional dominance? Is it an indication of a country seeking to redress long-term weaknesses in its military? Or is it a sign of a domestic leadership that can’t say no to the military at a time of political transition?

The fact is that it’s a bit of all of these.

In absolute terms, the official Chinese defense budget is slated to rise from approximately $106.4 billion in 2012 to $119 billion this year. (The White House, meanwhile, proposed a $553 billion budget for the U.S. Defense department in fiscal 2012). This means that, after subtracting out expected inflationary costs, the People’s Liberation Army will have approximately $12 billion more in budget this year than last.

Since the late 19th century, Chinese nationalists have dreamt of building a powerful military to restore China to a position of pride in the international system, with some hoping to go further and achieve a dominant position in East Asia. Chinese analysts can also see that the capabilities of the U.S. military are in most ways superior to those of China, a situation they perceive as even more disturbing in light of the U.S. “rebalancing” to the Asia-Pacific.

An enhanced commitment to strengthening its military serves these internal needs while at the same sending a message to the world that China is prepared to meet any challenge that may arise from an increasingly complicated external environment. To the east and south lie maritime territories claimed or held by other states that China hopes to claim for itself. The tightening of U.S. alliance relations across East Asia poses new challenges for China’s military leaders to plan against. North Korea’s nuclear program further complicates matters.

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At the same time, China also needs to devote resources to the task of transforming a large, outmoded ground-centric force into a more mobile and networked military that is also capable of operating in the naval, air, space, electro-magnetic and cyber domains as well. The Chinese military is also being called on to prepare for new missions, such as conducting counter-piracy operations off the Horn of Africa or evacuating Chinese nationals when emergencies occur overseas, and these require additional capabilities and resource commitments.

The decision to expand defense spending also carries clues about the Party’s need to keep the military happy, the new leadership’s confidence and new President Xi Jinping’s ability to put his own stamp on policy from the start. Xi appears to be more in charge than either Hu Jintao or Jiang Zemin were at comparably early stages in their own transitions to power. At a minimum, Xi and his new leadership team appear to have felt comfortable enough in their new posts to slow the growth of defense spending, even if they continued to expand spending as a whole. Yet, the Chinese Communist Party’s heavy emphasis on nationalism as a justification for its own legitimacy has meant the leadership must continue to invest in national defense and ensure that the military remains satisfied with its budgetary support.

The details of how Beijing plans to allocate its 2013 defense outlays are unknown, but China’s neighbors are hungry for answers.

If the increased expenditures are dedicated to acquiring power projection capabilities such as research on new weapons systems, improved cyber warfare abilities, procurement of more land-attack missiles and anti-satellite weapons, acquisition of stealthy armed drones, submarine-building, or procurement of air- and sea-lift capabilities that could be used to invade Taiwan, China’s neighbors would likely be anxious. In contrast, if such funds are spent primarily on ground force modernization and air defenses – systems more defensive in nature – they would likely be less concerned. If such funds go primarily towards the construction of improved barracks housing, food, clothing, energy costs and salaries for enlisted soldiers, sailors, and aviators, the region would be less worried still.

But the reality is that foreign observers are unlikely to know how these funds are spent for some time to come, if ever. China’s political system gives little oversight of the military budget to legislators, civil society, or the media, leaving it to the top leadership of the Chinese Communist Party and the People’s Liberation Army alone to decide how defense funds are spent and to release only such information on funding allocation as they see fit. This lack of transparency and accountability also means some military funds are almost certainly siphoned off in corruption.

China is clearly committed to building a strong and modernized military, especially against a backdrop of an increasingly complex external security situation. At the same time, the budget increase serves a parallel goal – that of cementing the critical bond between the new leadership and the military.