The new agency will consolidate a range of functions currently distributed across the civil affairs and human resources ministries, and the political works and logistics support departments of the Central Military Commission (CMC).

A senior army officer and delegate at the ongoing National People’s Congress in Beijing said he welcomed the news about the government agency.

“We definitely support the creation of a Veterans Affairs Ministry and will carefully study it,” Lieutenant General Wang Jun, deputy commander of the Central Theatre Command, said on the sidelines of the legislative meeting. “Our party and country should treat veterans better, especially those with disabilities.”

Other officials from the PLA and Armed Police delegation at the NPC said they also welcomed the new ministry and hoped it would provide not only welfare support, but also practical training to help former military personnel find new jobs and integrate back into society.

“It’s common in the international community to have a veterans’ affairs department, which also serves to boost the morale of active servicemen and women,” said Major General Zhou Wugang, the political commissar of the PLA’s garrison in Macau.

The increase to military pay scales, which will apply also to pensions and retrenchment compensation, is the second since President Xi Jinping, who heads the CMC, in September 2015 announced plans to cut 300,000 troops to create a more nimble fighting force. The last pay rises came in August 2016.

According to a document seen by the South China Morning Post, the new payments will appear in bank accounts this month.

No reason was given for the increases but a military source said the backdated rises were in part an attempt to placate officers who are due to be retrenched and whose compensation packages are determined by their exit salary.

The increases vary but average about 6 per cent, with a major general taking home 1,250 yuan (US$197) more a month and a corporal 400 yuan, according to the document. After the rises, a major general will be paid about 23,000 yuan a month and a corporal more than 13,000 yuan.

Every retrenched officer, ranging from a lieutenant to a senior colonel, is entitled to a one-off payment of about 1 million yuan, as well as a pension of at least 70 per cent of their exit salary every month for the rest of their life, according to PLA policy.

The payments will be funded by an expanding defence budget, which Beijing said would grow by 8.1 per cent to 1.1 trillion yuan this year.

In his annual report to the National People’s Congress on March 5, Premier Li Keqiang said the military had “basically reached” its target to shed about 10 per cent of its personnel.

But some military sources said the final cuts would not be made until next year.

“It’s a very complicated process because their cases need to be carefully handled according to military regulations to prevent any unrest,” a retired senior colonel said.

Another military source said the final retrenchment figure could be higher than 300,000, with deeper cuts to non-combat units like hospitals and military academies.  

“For example, the permanent staff at the headquarters of the PLA Air Force has been pared from the original 5,000 personnel to just 300,” the source said.

Beijing-based military observer Zhou Chenming said all sections had to submit their cutback plans to the CMC by the end of last year.

“The CMC strictly controls the number of military personnel at every level in the ongoing overhaul. The decisions have left many retrenched senior officials very unhappy because they are losing benefits,” Zhou said.

The CMC set up offices in all regional military units in early 2016 to help retrenched troops make the transition. Those who have been told to go have three options: retirement, a transfer to a non-military department, or finding a job on their own. 

One retrenched officer who has already found another job said many of his colleagues were still waiting to see what would happen next.

“Some very good officers with a good education and valuable military expertise all found jobs paying more than 1 million yuan a year,” he said. “It will take a bit more time for those who are still holding out for better terms.”

China has had 11 rounds of troop cuts in the last seven decades, resulting in millions of military veterans, according to PLA Daily.

A lack of legal protection for veterans’ rights and Beijing’s hands-off approach to their welfare has left many clinging precariously to the bottom rung of the socio-economic ladder, prompting thousands to take to the streets in protest in recent years to demand better treatment.

In October at the party congress, Xi promised the PLA that the government would set up an administrative body similar to the United States’ Department of Veterans Affairs to provide for former military men and women.

“Improving remuneration to servicemen and women and the creation of a Ministry of Veterans Affairs are good measures that recognise all veterans’ contributions to our country, and as such will make our servicemen and women more devoted to the motherland,” General Han Weiguo, the PLA’s ground force chief, said on Tuesday on the sidelines of the NPC session.

Additional reporting by Choi Chi-yuk