China is estimated to be the world’s second largest arms maker after US

Catherine Wong

New research suggests China is now the world’s second largest arms producer – after the United States and ahead of Russia – and it is becoming less dependent on foreign weapons and military technology.

In a report released on Monday, the Stockholm International Peace Research Institute (SIPRI) estimated total sales by China’s arms industry had reached US$70 billion to US$80 billion in 2017.

That compares to US$226.6 billion for the United States and US$37.7 billion for Russia, according to the Sweden-based think tank’s Top 100 list of the world’s largest arms companies for that year.

The annual list has not included Chinese companies in the past because of a lack of transparency. But newly available data on some Chinese firms meant four of them made the list and were ranked among the 20 biggest arms and military services companies in 2017, the report said.

Under President Xi Jinping, China has expanded its arms industry and restructured the military as Beijing seeks to modernise its armed forces by 2035 so that they are “world class” by 2049.

SIPRI estimated that China’s military spending reached US$228 billion in 2017 – far more than the official defence budget of US$151 billion.

That was because the think tank included spending excluded from the official budget such as an estimated US$30 billion for the People’s Armed Police, which is under military control, US$23 billion for extra military research and development, and US$15 billion for soldiers’ demobilisation and retirement payments.

The four arms companies in the top 20 had estimated combined arms sales of US$54.1 billion – accounting for 24 per cent of China’s military spending in 2017, according to the report.

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Those companies were Aviation Industry Corporation of China (AVIC), the country’s largest aircraft producer; China Electronics Technology Group Corporation (CETC), the leading electronics and components maker for military products such as radars and software; China North Industries Group Corporation (NORINCO), which makes land systems; and armoured vehicle producer China South Industries Group Corporation (CSGC).

Estimated sales by China’s largest arms company, AVIC, reached US$20.1 billion in 2017 – comparable to those of Boeing, Northrop Grumman, Raytheon and BAE Systems and more than double the total of Russia’s biggest arms maker Almaz-Antey. AVIC was ranked sixth biggest arms producer in the world.

NORINCO was eighth on the global list for 2017, with sales of US$17.2 billion, making it China’s second biggest arms company.

The report also noted that China had reduced its reliance on buying foreign arms as its own industry expanded.

“China is becoming less dependent on imports of foreign weapons and military technology, and its industry has developed to a point where there is an increased demand for its weapons overseas,” it said.

Between the five-year periods of 1999-2003 and 2014-18, China’s imports of major arms fell by 50 per cent, while its exports rose by 208 per cent, according to the report. China has also become the world’s fifth largest supplier of major conventional weapons in that time.

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But the think tank also said that although more data was available on Chinese arms companies, there was still a lack of transparency that made it difficult to accurately assess the country’s weapons industry.

“Unlike many Western counterparts, the Chinese government limits access to information about all arms companies in the interest of national security,” it said.

“As a result, military-related sales are not directly mentioned in any of the publicly available documents cited in this paper. All arms sales figures for Chinese companies remain estimates with a range of uncertainty.”

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