The Determinants of Defense Expenditure in China’s Peaceful Rise

Abstract

The determinants of defense expenditure demand are mainly military activities, economic factors, political environment, and other related factors. Based on this, this paper analyzes and tests the characteristics of China's defense expenditure demand from 1952 to 2016.The empirical analysis is based on the autoregressive distributed lag model-Bound Test, to analyze the long-term co-integration relationship between defense expenditure demand and its determinants. Meanwhile, the results show that the long-term elasticity of China's defense expenditure demand is higher than the short-term elasticity.