Relationship Between Chinese Defense Spending And Economic Growth

In recent years, the field of international security boundaries become increasinglyblurred, there has been a more complicated situation China is facing a turbulentinternational security situation, national defense construction is particularlynecessary. China is currently the world’s nuclear bomb countries surrounded bycountries with the largest Meanwhile, China and territorial disputes in the countrywith the largest nuclear states. How to maximize on the basis of the protection ofnational security, promote economic development, defense spending and theeconomy to a more coordinated development is a major issue facing our country.The paper departs from China’s national conditions, to study the relationship of therelationship between defense spending and economic growth from1978to2010.Extended to the relationship between private sector and public sector investment,defense spending else. The paper researches from both qualitative and quantitativeperspective. In qualitative research, the paper is mainly based on the basic principlesof economics combined with the actual situation, analysis of the interaction betweendefense spending and the national economy; In quantitative research, the paper usesvector regression model and ECM ways the various effects of defense spending andeconomic analysis, through the study found from1978~2010, China’s defensespending, whether to GDP or the private sector and public sector investment willgenerate positive promotion effect, and did not produce the "squeeze out effect."Finally, according to the results of the study, propound some measures andsuggestions for increasing Chinese defense spending to promote economicdevelopment.