Economic Factors Shaping China's Defense Spending: Historical Trends and Recent Developments

摘要

Much of the academic literature on the relationship between defense spending and economic growth focuses on addressing a single question: How does an increase or decrease in defense spending affect growth of the overall economy. While this is certainly an important question, given the potential opportunity cost of diverting vast resources from the civilian economy into defense, comparatively little attention has been dedicated to the reverse question of economic growth as a driver of military spending. Nowhere is this interaction potentially more significant than in China-a nation that has coupled unprecedented economic growth with sizeable annual increases in military spending. In an effort to address the gap in the academic literature and better understand how the economy affects defense spending and priorities, this study examines two central questions on economic growth as a driver of Chinese military spending: (1) How have economic conditions in China shaped past patterns of investment in military capabilities-to include science and technology (S&T), military industry, and strategic capabilities. Can discontinuities (e.g., change) in investment based on economic factors be discerned; (2) To what degree is China revising earlier forecasts for economic growth based on recent developments in the global economy. How may this affect strategic military programs.