Anna Hartz
Many countries are expanding their defense industries as global tensions rise.
Governments are buying more weapons, updating old equipment, and increasing military budgets. This shift has created strong growth for many arms manufacturers around the world. Yet one of the largest players, China, is facing a very different trend.
Falling Revenues
A new study released by the Stockholm International Peace Research Institute shows that revenues at China’s major military companies fell last year, according to Reuters.
The think tank found that corruption investigations inside China’s defense sector slowed down contracts and delayed procurement. This happened while large firms in other regions saw rapid growth driven by the wars in Ukraine and Gaza and by wider security concerns.
SIPRI researcher Nan Tian said that corruption cases in China’s arms procurement system forced many contracts to be postponed or cancelled in 2024. He said this situation has created uncertainty about China’s long-term military modernization and when new systems will actually reach the People’s Liberation Army.
The anti-corruption campaign began in 2012 under President Xi Jinping. It reached new levels in 2023 when the country’s elite Rocket Force came under investigation. In October, eight senior generals were expelled from the Communist Party, including He Weidong, the second-highest ranking officer in China. Diplomats in Asia and the West say they are still trying to understand how far these investigations spread and what effect they may have on the command structure.
10 Percent Drop
SIPRI’s data shows that revenues of China’s top military firms fell by 10 percent last year. In contrast, Japan’s rose by 40 percent. Germany’s jumped by 36 percent. U.S. companies saw a smaller increase of 3.8 percent. Overall, the world’s 100 largest arms firms reached a record total of $679 billion in revenue. China’s decline made Asia-Oceania the only region where top companies posted a drop.
This fall comes despite China’s three decades of growing defense spending and its effort to challenge the United States in Asia. The country has built the world’s largest naval and coast guard fleets and is developing new missile systems and drones. Still, revenues dropped at AVIC, Norinco, and CASC, all major state-owned manufacturers. Norinco had the sharpest fall at 31 percent.
SIPRI researcher Xiao Liang said corruption-related personnel changes have slowed projects and could affect the timeline for several advanced systems. He noted that China will likely continue investing heavily in defense over the medium and long term, even if the process becomes slower, more expensive, and more tightly controlled.
Sources: Reuters
