Guns–butter tradeoff in contemporary China

This study offers an investigation of the relationship between defense and social spending in the People's Republic of China. In particular, three consecutive questions are answered here. Does a warfare–welfare tradeoff exist in China's budgetary allocation? Is it positive or negative? What is the causal direction involved? By applying a vector autoregression analysis for the period of 1952–2006, this study finds a unidirectional crowd-out effect going from defense to social spending.