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Evaluation on Chinese Defense Expenditures from
1978-2009—From View of International Comparison
Ling Li, Yu Wang, and Sheng Zhou
Department of Military Finance, Military Economics Academy
Luojiadun No.122, 430035, Wuhan, China
stonelee9@yahoo.com.cn
Abstract. This paper attempts to measure the burden of Chinese defense ex-
penditures. We design a system of indexes from three angles, which are macro-
economy, public finance, and the governmental preference. A conclusion is
drew that although the nominal defense expenditures mounted up at high speed
from 1989, their real relative scale just began rising in 1997, and converted into
decreasing tendency in 2003. In addition, the paper deduces that in the future
Chinese government should give more priority to the development of education
and healthcare, not the enhancement of military power.
Keywords: China, defense expenditures.
1 Introduction
Chinese defense expenditures began to rapidly increase from 1989.The growth rate is
more than 10% each year in name except 2010, which is 7.5% because of the influence
of global finance crisis. However, Chinese defense expenditures reached 532.1 billion
CNY in 2010, which was 21.8 billion CNY in 1988. The fast growth rate of Chinese
defense expenditures intensified the opinion of China's Threat, and the dispute about
China's peaceful rise. However, China hasn't realized the modernization of defense.
For China, it is meaningful to evaluate the level of her defense expenditures for the
future decision.
The studies on the evaluation of China's defense expenditures have experienced
three periods. The first period began in the early 1980s. Those literatures emphasized
that defense should be in obedience to and serve the development of national economy,
so the defense expenditures should be cut down. The second period started in 1990s.
After several years of defense expenditures being cut, the gap between the defense
demand and the effective supply was exposed obviously. The reasons of the gap and its
influence attracted many researchers (Sun Xiude & Huang Chenglin, 1997[1]; Wan
Gongcheng[2], 1998; Liu Liegui, 2000[3]). The third period began in the 21st century,
researchers began to pay more attention to the economic effect of rapid growth of Chi-
nese defense expenditures, and discuss the appropriate level of defense expenditures
(Huang Ruixing, 2007[4]).
With respect of the methods to evaluate the level of defense expenditures, there are
two main methods. One method is the ratios comparison (Li Guoting, 2004[5]), the
 
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