The top eight Chinese arms producers were listed on the “SIPRI Top 100 Arms Producing and Military Services Companies, 2022” report.

Six of those posted an increase in revenue last year, and three made it to the top 10.

Combined revenue for the eight companies grew by 2.7 per cent to US$108 billion, a fourth consecutive annual increase.

China’s No 2 weapons company and leading military aircraft maker Aviation Industry Corporation of China (AVIC) was at eighth spot with a 4.7 per cent revenue hike, to US$20.6 billion.

But the most rapid growth in 2022 was at China South Industries Group, which saw revenue go up by 12 per cent to US$6.5 billion, taking it to 21st spot on the SIPRI list.

Xiao Liang, a researcher with the SIPRI military expenditure and arms production programme, said that the main driver for the Chinese defence industry in 2022 and previous years had been Beijing’s modernisation programmes aimed at becoming more “self-reliant” in arms production.

“This is supported by its rising military spending, which has been on [an] uninterrupted increase since 1995,” Liang said.

“AVIC, China’s main aircraft producer, saw revenue rise for the second consecutive year, reflecting increased production of its fourth-generation combat aircraft and the fielding of fifth-generation combat aircraft, that is the J-20.”

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“[China] is one of only three countries to have a fifth-generation combat aircraft in serial production, and it is a pioneer in armed UAVs [unmanned aerial vehicles],” Liang said. “While some residual dependency on imports remains, mainly in aero engines and helicopters, it seems that China is also making rapid progress in those fields.”

Liang added that while most Chinese companies had so far primarily relied on domestic sales, many were looking to expand their export market and this could affect the scale of growth in China’s defence industry.

Apart from those in China, 22 companies from Asia and the Pacific also posted revenue gains in 2022, according to SIPRI.

“Domestic demand and reliance on local suppliers shielded Asian arms companies from supply chain disruptions in 2022,” Liang said. “Companies in China, India, Japan and Taiwan all benefited from sustained government investment in military modernisation.”

While the US still took the lead in arms revenue, this had dropped by nearly 8 per cent from 2021. Out of the 42 US companies on the top 100 list, as many as 32 posted a fall in revenue.

The report cited supply chain issues and labour shortages stemming from Russia’s war in Ukraine and the Covid-19 pandemic among major causes preventing US contractors from significantly ramping up production capacity, despite a surge in orders as Kyiv fights back against the Russian invasion.

“We are beginning to see an influx of new orders linked to the war in Ukraine and some major US companies, including Lockheed Martin and Raytheon Technologies, received new orders as a result,” SIPRI senior researcher Nan Tian said.

“However, because of these companies’ existing order backlogs and difficulties in ramping up production capacity, the revenue from these orders will probably only be reflected in company accounts in two to three years’ time.”

Due to a lack of transparency in data, only two Russian companies were included in the top 100 for 2022. Their combined arms revenue fell by 12 per cent to US$20.8 billion.

First created in 1989, SIPRI’s annual arms industry database compares and lists the top 100 global defence firms’ revenue generated from the sales of goods and services to domestic and international military customers.