Preparing for new leadership, China on Thursday proposed its lowest military spending hike in 14 years, simultaneously earmarking funds for major social security measures to provide succour to millions of unemployed and low-income farmers. The national budget, released on the second day of the National People's Congress, appears in line with the priorities identified by a government trying to improve the living standards of its people - and thus maintain legitimacy as it completes a leadership transition. On Wednesday, outgoing Premier Zhu Rongji warned the Chinese legislature of the growing social divide, saying that urban and rural frustrations could threaten the country's economic future.