China's military expenditures are of great concern to many. Although numerous articles have been written on this subject, little empirical work has been conducted to identify the determinants of China's military expenditures. This article fills this void by empirically showing that China's GNP, its rivals' military expenditures, its border wars with neighboring countries, and its leadership's preferences are likely determinants of China's military expenditures. Specifically, using the ACDA data, this study indicates that China's military expenditures are positively influenced by China's GNP, its rivals' military expenditures, and China's lagged military expenditures during the period 1965-93. In addition, the change in the Chinese leadership's top priority from preparing for war to economic development after 1979 has a negative impact on China's military expenditures, but the border wars with the Soviet Union and Vietnam do not have a significant impact. Similar results are obtained by using official Chinese data. This suggests that the difference between the official Chinese data and the ACDA data may be systematic so that the relationship between China's military expenditures and their determinants are qualitatively the same regardless of which dataset is used.
Yu, Qiao & Qian Sun (1999) Determinants of China's Military Expenditures: 1965-1993, Journal of Peace Research 36 (1): 23–33.