As global rivals ramp up their defense spending, questions arise about China’s ability to maintain its aggressive military posture amidst a drop in arms revenue.

By Probe International

In a year marked by escalating geopolitical tensions and ongoing conflicts, the global arms industry reached unprecedented heights, yet China’s defense sector lost ground to internal pressures.

According to the Stockholm International Peace Research Institute (SIPRI), revenues from the world’s 100 largest arms-producing companies surged by 5.9% in 2024, totaling a record $679 billion—the highest ever recorded by SIPRI. This boom was propelled by heightened demand from wars in Ukraine and Gaza, as well as broader rivalries, with all five top arms firms posting gains for the first time since 2018.

The United States led the charge, with arms revenues climbing to $334 billion, even as production delays and budget overruns plagued major programs. European companies fared even better, enjoying a 13% revenue spike thanks to the war in Ukraine, while Russian firms defied sanctions with a robust 23% increase.

In Asia and Oceania, however, the picture was less buoyant: the region saw an overall decline in arms revenues, driven almost entirely by turmoil in China’s defense industry. China’s sector contracted by a shocking 10% last year, a stark outlier amid the global upswing. President Xi Jinping’s sweeping anti-corruption campaign has been the culprit, resulting in the ouster of dozens of top military and defense officials. This purge has delayed contracts and stalled projects essential for modernization, reflecting disruptions in procurement execution (e.g., delayed deliveries) and lower realized sales.

Powerhouses like Norinco (down 31%) and the China Aerospace Science and Technology Corporation (CASC, down 16%) exemplify the fallout, as postponed deals erode revenue streams and undermine readiness. Compounding the irony, global peers are accelerating: Japan, Germany, and South Korea each boosted defense spending by up to 40%.

As Xi escalates rhetoric over Taiwan and asserts dominance in the South China Sea, these internal fractures raise doubts about Beijing’s ability to sustain its aggressive posture, at least in the short-term.

The U.K.’s Telegraph highlights the cost to China’s preparedness, despite having the largest army in the world. The president’s anti-corruption campaign, it said, had “decimated branches of China’s military and political wings,” with purges impacting officials across the country’s navy, ground force, rocket force and air force. It cites SIPRI researcher Xiao Liang who suggests the timeline for advanced systems within the People’s Liberation Army (PLA) Rocket Force—responsible for managing its expanding arsenal of ballistic, hypersonic, and cruise missiles—may be jeopardized, along with developments in aerospace and cyber programs.

Analysts say they expect to see “key capabilities” to nevertheless materialize in support of the PLA centennial in 2027 but success hinges on navigating internal disruptions amid external pressures.