Post-2015 military spending and economic growth in China

China’s economy experienced a significant slowdown in 2015, and its medium-term outlook has been revised downwards and remains so. While the official Chinese position on the downturn is that their economy is entering a phase of “new normal” — that is, a shift from export-driven manufacturing to services and domestic consumption — key uncertainties remain, including domestic debt. If China continues to falter, the Communist Party of China would almost certainly take drastic steps to prop up the domestic economy. One such step could be the adoption of military Keynesianism: an economic strategy in which military spending acts as a public stimulus to economic growth. This paper examines military Keynesianism as an option for China, by looking at the economics, politics, and history of the strategy and contextualising it in the current Chinese scenario. The strategic consequences of such an economic pathway are probed, and ways to detect observable signatures of Chinese military Keynesianism are identified.

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Abhijnan Rej