Since the Chinese economic reform was implemented in 1978, it has been obvious to notice that People’s Republic of China is evolving and growing stably. Not only the economy-based change, but the armament construction of PRC also keeps developing actively towards high-technology and modernization. According to the statistical data from National Bureau of Statistics of PRC, the PRC’s defense budget has continued to rise. To further understand the growth in the defense budget of PRC, this study investigates the correlation between the economic development and the defense budget of PRC. In addition, Stepwise Regression Analysis method is used to construct an effective prediction model of defense budget for PRC. Besides quantitative analysis, in order to make it more perfect for the research of PRC’s defense budget, this study also use the model to predict defense budget for PRC in the next decade. In sum, this study discovers that economic development are indispensable factors in PRC’s defense budget prediction. Furthermore, the model based on economic variables have good predictive ability.