Chinese weapon makers take second biggest share of global sales as industry avoids pandemic slump

Five companies from China accounted for 13 per cent of total sales by the world’s 100 biggest arms producers last year, led by the US, according to SIPRI
Industry expanded even during Covid-19 crisis, ‘largely shielded by sustained government demand for military goods and services’, Swedish think tank says

Defence

Kristin Huang

Published: 9:43pm, 6 Dec 2021

Why you can trust SCMP

Chinese arms manufacturers again notched up the second highest global sales after US firms in 2020, as the industry remained largely unaffected by the Covid-19 pandemic.

That is according to the latest report on the world’s top 100 arms companies by the Stockholm International Peace Research Institute (SIPRI), released on Monday.

The Swedish think tank said China’s modernisation programme and push for self-reliance in defence had driven its arms producers and services companies to become more competitive.

It said the combined arms sales of the five Chinese firms in the top 100 list amounted to an estimated US$66.8 billion last year – up 1.5 per cent from 2019.

“All five Chinese arms companies ranked among the top 20, with three in the top 10,” according to the report.

Those Chinese firms accounted for 13 per cent of total sales by the world’s 100 largest arms producers – the second highest volume of aggregated arms sales in 2020 after American companies, which made up the top five, it said.

Norinco, or the China North Industries Group Corporation, was the leading Chinese weapons maker, with estimated sales of US$17.9 billion last year. That compares to the top arms producer, US firm Lockheed Martin, with US$58.2 billion in sales.

Under President Xi Jinping, China has invested heavily in military modernisation, with a focus on developing advanced weapons and equipment. That includes the first domestically built aircraft carrier, which went into service two years ago, the Type 055 guided-missile destroyer, and the JL-3 submarine-launched ballistic missile.

Beijing set out a defence budget increase of 6.8 per cent for this year, totalling US$209 billion, even though the economy grew by just 2.3 per cent in 2020 when it was hit hard by the pandemic.

In July, a US government-financed study by the Rand Corporation said China’s military had overcome numerous technological challenges to chip away at the United States’ supremacy in recent years. The US research group identified China as the “clear pacing threat” to the United States in terms of investment in military capabilities, but said much of its progress was the result of intellectual property theft, foreign acquisitions and joint ventures.

According to SIPRI, China’s five biggest arms manufacturers outpaced overall growth in arms sales by the world’s 100 biggest arms firms last year. Their combined sales rose 1.3 per cent to US$531 billion in 2020 from 2019.

The think tank said global arms sales had expanded for the past six years, with overall sales up 17 per cent last year from 2015 – even with the economic slowdown caused by the pandemic.

How China grew from buyer to major arms trade player

It said several factors had contributed to this growth, including that the arms industry had benefited from expansionary fiscal policies in the first year of the pandemic. “Military manufacturers were largely shielded by sustained government demand for military goods and services,” the report said.

It also noted that some nations had rolled out measures to mitigate the effects of lockdowns on their arms makers, “such as accelerated payments or order schedules”.

And since arms procurement contracts usually span several years, “many arms companies were able to make gains on orders placed before the outbreak of the health crisis”, the report said.

However, the think tank noted that the industry had been hit by supply chain disruptions during the pandemic.