Revenues at China’s giant military firms fell last year, as corruption purges slowed arms contracts and procurement, a study released yesterday by a leading conflict think tank said.
The Chinese declines contrast with strong revenue growth globally for big arms and military-services companies, fueled by wars in Ukraine and Gaza, and global and regional tensions, the research by the Stockholm International Peace Research Institute (SIPRI) found.
“A host of corruption allegations in Chinese arms procurement led to major arms contracts being postponed or canceled in 2024,” said Nan Tian, director of SIPRI’s Military Expenditure and Arms Production Programme.
Photo: Reuters
“This deepens uncertainty around the status of China’s military modernization efforts and when new capabilities will materialise,” the report said.
The Chinese People’s Liberation Army (PLA) was one of the main targets of a broader corruption crackdown ordered by Chinese President Xi Jinping (習近平) in 2012, reaching the upper levels of the military in 2023, when the PLA’s Rocket Force was targeted.
Eight top generals were expelled from the Chinese Communist Party on graft charges in October, including the nation’s No. 2 general, He Weidong (何衛東). Asian and Western diplomats said they are still trying to gauge the impact of the crackdown on China’s ongoing military rise and how far down it reaches through the command chain.
Revenues of China’s top military firms fell 10 percent last year, while those in Japan surged 40 percent, Germany 36 percent and the US 3.8 percent, SIPRI data showed.
Revenues of the world’s 100 largest arms firms rose 5.9 percent to a record US$679 billion, the report said, while China’s fall was enough to make Asia-Oceania the only region to post a revenue decline among its top arms firms.
China’s weapons revenue declined, despite three decades of rising defense budgets in Beijing’s growing strategic rivalry with the US, and tensions over Taiwan and the hotly disputed South China Sea.
The buildup is bearing fruit, as China deploys the world’s largest naval and coast guard fleets — including a potentially advanced new aircraft carrier — a host of new hypersonic missiles, nuclear weapons, and air and sea drones.
Revenue fell at Aviation Industry Corp of China (AVIC, 中國航空工業集團), the nation’s largest arms maker, land-systems producer China North Industries Corp (Norinco, 中國兵器工業集團), and aerospace and missile manufacturer China Aerospace Science and Technology Corp (CASC, 中國航天科技集團), all state-owned, the report said.
Norinco experienced the steepest revenue decline, falling 31 percent to US$14 billion.
Corruption-related personnel changes at the top of Norinco and CASC sparked government reviews and project delays, while deliveries of AVIC’s military aircraft slowed, the research found.
The Chinese Ministry of National Defense and the three firms did not immediately respond to requests for comments.
The timeline of advanced systems for the PLA’s Rocket Force, which handles its growing arsenal of ballistic, hypersonic and cruise missiles, could be exposed, along with aerospace and cyber programs, SIPRI researcher Xiao Liang said.
This adds to uncertainties over the PLA’s target of getting key capabilities and war-fighting readiness in place for its 100th anniversary, Liang said.
“However, in the medium and longer term, sustained investment in defence budgets and political commitment behind modernisation will continue, albeit with some programme delays, higher costs and tighter control of procurement,” Liang said.
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