China's rapid economic development has facilitated a dramatic increase in its military capacity and international security presence. But there is considerable disagreement over how large its economy and military capacity is. Underlying the debate is the fact that market and PPP exchange rate comparisons give very different pictures of China's relative economic size, and neither is the appropriate price deflator with which to compare relative military capacities. We address this issue by deriving a relative military cost (RMC) exchange rate for China which converts RMB to US dollar expenditures in terms of real military services. This shows that both market and PPP exchange rate comparisons of China's real GDP understate its relative military capacity. Nevertheless we also show that the real expansion of China's military capacity over the last decade has been much smaller than its GDP growth, due to the rapidly growing wage costs faced by China's military.
China's rapid economic development has facilitated a dramatic increase in its military capacity and international security presence. But there is considerable disagreement over how large its economy and military capacity is. Underlying the debate is the fact that market and PPP exchange rate comparisons give very different pictures of China's relative economic size, and neither is the appropriate price deflator with which to compare relative military capacities. We address this issue by deriving a relative military cost (RMC) exchange rate for China which converts RMB to US dollar expenditures in terms of real military services. This shows that both market and PPP exchange rate comparisons of China's real GDP understate its relative military capacity. Nevertheless we also show that the real expansion of China's military capacity over the last decade has been much smaller than its GDP growth, due to the rapidly growing wage costs faced by China's military.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.