Military Spending and Economic Growth in China, 1953–2007: A Note on Econometric Analysis by Using Eviews

This study especially concerns the causal relationship between official defense expenditure and economic development for mainland China from 1953 to 2007 by employing a combination of VAR models and the Granger Causality Test. The final conclusions are diverse in varied time periods where no evidence showing the Chinese economy had an effect on its military development or the reverse. Nevertheless, military spending benefited the economy after 1989 when the development of defense was running on a new path. This study also includes a proxy series of Western estimated data, say SIPRI, which has a result that resembles Chinese official data over the period 1989–2007.