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China’s defense spending has been hitherto perceived in two dimensions—international academic opinion on the transparency of China’s defense expenditure and the reasons for its growth, and domestic researchers’ analysis of the relationship between public expenditure and economic development in China. There is no consensus on the impact of the changes in the 20th century global military landscape on China’s defense expenditure requirements. This study combines Smith’s (1989, 1995) neoclassical defense expenditure demand and Schelling’s (1960, 1966) deterrence models for an econometric analysis of the factors influencing China’s defense expenditure demand between 1978 and 2018. The results show that China’s defense spending during this period is mainly affected by its military expenditure in the previous period, the relative changes in defense expenditure of the military superpowers, namely, the USA and the Soviet Union (Russia), as well as China’s economic development. At present, the dominance of the USA, which ranks first in the world in terms of military expenditure, and the lack of comparable military superpowers may be an important source of China’s external threat perception. This study sheds light on the reasons for the changes in China’s military expenditure over the past 40 years and empirically establishes the relevance of Schelling’s deterrence theory for modern strategic military analyses.

In order to prevent and fight terrorism, a new research area has developed called terrorist financing. An important aspect is the financing of terrorism by Non-Profit Organization (NPO), through transfer funds, terrorist alliances, abuse of NPOs, terrorist recruitment, and false NPOs and agents. Therefore, the NPO counter-terrorist financing strategy was established, considering four major aspects: warning information indicators, internal management mechanisms, international cooperation and information sharing, and counter-terrorist Financing legislation. This paper provides a new way to supervise the terrorist financing of NPOs. First, actual cases should be collected, and viable warning indicators for regulatory agencies and NPOs should be established. Second, internal management mechanisms should be strengthened to actively prevent terrorist activities within NPOs. Third, given the global activity of NPOs and terrorist organizations, information-led international cooperation must be emphasized. Fourth, from the angle of independent counter-terrorist Financing legislation, the gap should be filled in NPO counter-terrorist Financing legislation.

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Sustainable growth of military enterprises is key to developing the national defense industry. Therefore, we selected the financial data of 90 military enterprises listed in China. Using the factor analysis method, we obtained the growth evaluation index from the four dimensions of profitability, debt repayment, operation, and R&D (research and development). The results show that R&D is the critical factor for the growth of military enterprises, and profitability is a short board. In the industrial field, the growth of military shipbuilding enterprises is better than that of other fields, mainly because of the high attention paid to R&D. Regarding the conversion of military-oriented enterprises to civilian production, this study emphasizes the importance of improving profitability and ensuring scientific research incentives. The results of this study are also consistent with the stock market performance of military-listed enterprises, which means that the higher the growth score, the better is the market performance. At the same time, the growth evaluation results of military enterprises have guiding significance for enterprises and market investors.