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.

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.