Defense Expenditures

Pursuant to the National Defense Law, the Chinese Government follows the guiding principle of coordinating military and economic development. Based on the economic development and revenue growth, it has continued to increase its defense expenditures moderately.

China's Defense Expenditures in 1978-2005    Unit: million yuan

Year	Defense expenditures	State financial expenditures	Percentage
1978	16784	112209	14.96
1980	19384	122883	15.77
1985	19153	200425	9.56
1989	25147	282378	9.05
1990	29031	308359	9.41
1991	33031	338662	9.75
1992	37786	374220	10.1
1993	42580	464230	9.17
1994	55071	579262	9.51
1995	63672	682372	9.33
1996	72006	793755	9.07
1997	81257	923356	8.8
1998	93470	1079818	8.66
1999	107640	1318767	8.16
2000	120754	1588650	7.6
2001	144204	1890258	7.63
2002	170778	2205315	7.74
2003	190787	2464995	7.74
2004	220001	2848689	7.72
2005	241600	3370812	7.34

The increased part of China's defense expenditures has primarily been used for the following purposes: increase of the salaries and allowances of the military personnel, further improvement of the social insurance system for servicemen and women, support for the structural and organizational reform of the military, increased investment in the development of high-caliber talents in the military to ensure the achievement of the PLA's Strategic Project for Talented People and moderate increase of equipment expenses aimed at stepping up defense capabilities.

In the past few years, the percentages of China's annual defense expenditures to its gross domestic product (GDP) and to the state financial expenditures in the same period have remained basically stable. In most of those years, the growth rate of China's defense expenditures has been lower than that of the state financial expenditures.

The absolute amount of China's defense expenditures has long been lower than those of some major Western countries, and the proportion to the GDP and state financial expenditures has also been relatively low.