Sino-U.S. Relations and the Demand for Military Expenditure in the Indo-Pacific Region

Na Hou and Zhipei Chi

Defence and Peace Economics, 2022, vol. 33, issue 6, 751-766

Abstract: This paper examines the demand for military expenditure in eighteen selected Indo-Pacific countries for the years 1993–2018. As the dominant powers, the U.S. and China characterize the geopolitical structure of the Indo-Pacific region. Sino-U.S. relations are newly quantified by measuring the number of cooperative and conflict events between China and the United States based on the Global Database of Events, Language, and Tone (GDELT). After incorporating Sino-U.S. relation variables into neoclassical demand models, the panel data estimating results reveal that the increasing number of confrontations from the United States toward China has lead to increases in non-U.S. allies’ military expenditure while the rise in China confronting the United States has not. U.S. allies in the Indo-Pacific region have tended to increase military expenditure when the United States increases its pressure on China. The empirical results provide evidence that Sino-U.S. relations affect the level of military expenditure in the Indo-Pacific Region.

Date: 2022
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DOI: 10.1080/10242694.2021.1904358

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