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China’s first priority in post-war state building: A wealthy state, or a strong army?

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  • King, Cheng
  • Du, Jane

Abstract

This analysis examined causal links in China’s defence–growth nexus in 1960–2016. The results show that better growth significantly reduces military-civilian ratio and propels military reforms. The unidirectional threshold causality from growth to defence shows that the military impact on a positive change in China’s growth is little in the long term. Conversely, the growth impact of a positive change in defence has accelerated after it reaches the threshold year in 1987. This finding explains why Chinese economy stagnated when defence was prioritised and why China has risen dramatically in the Far East after three decades of fast economic growth.

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  • King, Cheng & Du, Jane, 2018. "China’s first priority in post-war state building: A wealthy state, or a strong army?," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 851-872.
    • Handle: RePEc:eee:jpolmo:v:40:y:2018:i:5:p:851-872
    DOI: 10.1016/j.jpolmod.2018.07.001
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    1. Budsaratragoon, Pornanong & Jitmaneeroj, Boonlert, 2021. "Reform priorities for prosperity of nations: The Legatum Index," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 657-672.

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    More about this item

    Keywords

    Defence spending; Economic growth; Threshold ADL cointegration; China’s military reform;
    All these keywords.

    JEL classification:

    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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