In the 1980s Chinese statistics indicated that defense spending represented a decreasing percentage of government expenditures, falling from 16 percent in 1980 to 8.3 percent of the state budget in 1987. However, United States Department of Defense studies suggested that the published budget figures uÍÍÍÍnderstated defense spending by about one-half. With the growth of the Chinese economy under the modernization program, defense spending also represented a smaller percentage of the gross national product (GNP) than previously. United States Central Intelligence Agency analysts estimated that defense expenditures in 1978 absorbed 8 to 10 percent of GNP in 1986 United States Department of Defense analysts estimated that China's military expenses fell within the range of 6 to 8 percent of GNP. Comparison of indices of defense procurement spending and industrial production from 1971 to 1983 revealed that the former increased by 15 percent, whereas the latter rose by 170 percent. These studies indicated that Chinese leaders have indeed subordinated military modernization to economic development.

United States Department of Defense officials in 1986 estimated Chinese defense spending by resources and force categories for the 1967 to 1983 period. Roughly 50 percent of defense expenditures were for weapons, equipment, and new facilities 35 percent for operating costs and 15 percent for research, development, and testing and evaluation. By service, these costs broke down to 25 percent for the ground forces 15 percent for the Navy 15 percent for strategic air defenses 5 percent for ballistic missile forces 5 percent for tactical air forces and about 35 percent for command, logistics, personnel, intelligence, medical care, administration, research, development, testing and evaluation, and other support. Beginning in the late 1970s, China devoted more resources to its Strategic Missile Force, indicating an effort to increase its strategic security while modernizing the economy, and to national command and support activities, reflecting an emphasis on modernization of the defense structure.

Data as of July 1987