Evaluation on Chinese Defense Expenditures from 1978–2009—From View of International Comparison - Advanced Research on Computer Education, Simulation and Modeling - page 276

Index with regard to Governmental Preference:
Index 5:

Defense Expenditur es

DEEHR =

(7)

Public Expenditur es in Education , Healtherca re , R & D

DEG is a widely-used traditional index. A kind government pursues not only the
strong defense but also the improvement of standard of people's living, therefore the
rest of GDP minus the necessary demand of people's living is more appropriate for
standing for the resources for defense.
We also analyze two indexes with public finance: one is the ratio of defense expen-
ditures to public expenditures, and the other is the ratio of defense expenditures to
central governmental expenditures. Because the governmental system is generally of
multilevel and the defense is provided by the central government, the ratio of defense
expenditures to central public expenditures is more suitable to reflect the defense
spending from government.
The last but not the least, the ratio of defense expenditures to public expenditures in
education and health care and R&D reflects the priority of government's objects.
We analyze China's defense spending from two points of view. One is the historical
analysis in time series. The other is the comparison between China and other countries.
The comparison between China and other countries is helpful to forecast the highest
limits of China's defense expenditures, and the structural hinder to the rise of Chinese
defense expenditures.
According to international politics and military relationship, we choose 8 nations as
the objects compared with China, which are the U.S.A., the U.K., France, Germany,
Russia, Japan, Korea and India.

2.3 Data

We studies the data of China from 1978-2009. There are two reasons for that. The
first reason is that China has been focusing on economy growth since 1978. The sec-
ond reason is that the peace has been lasting since 1978 on the whole in China, al-
though armed conflicts broke out from 1978 to 1988 between China and Vietnam.
That consistence of peace and economic development makes the ratios comparability.

3 Positive Analysis of China's Defense Expenditures

3.1 Indexes with Regard to GDP

Tendency of China
Having a close relationship with macro-economy, China's defense expenditures saw
three periods. The first period is from1978 to 1996 when the defense expenditures con-
tinued falling until DEG reached the least level of 10.6% in 1996. The second period is
from 1997 to 2002, this ratio began to rise. However, DEG in China has been falling
again from 2003, yet still beyond the level of 1996. Thus, it is from 1997 that the real
relative scale of defense activities expanded, not from 1989 when the absolute scale
defense expenditures raised at the speed of morn than 10%. But this rising period is