BMI View: Although China is currently facing headwinds to its economic growth, military expenditure as a percentage of GDP remains relatively strong. We expect this to remain the case over our forecast period, driven by heightened regional threats and continued modernisation efforts. However, we caution that the Chinese economy is staggering from overcapacity, significant debt, falling profits and an ageing population. These factors will weigh on future economic growth and in turn could prove detrimental to the substantial growth military spending has so far been experiencing.
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