China’s military industrial complex has quality issues. Self-reliance is some way off

Contemporary China does have select areas where it challenges the American military-technological superiority

This year’s Fact Sheet on ‘Trends in international arms transfers, 2024’ by the Stockholm International Peace Research Institute (SIPRI) contains new revelations. For instance, China’s arms imports declined by a whopping 64 per cent during 2020-24 compared to 2015-19. During the last four years, China accounted for only 1.8 per cent of global arms imports against 5.1 per cent in previous four years.

China now ranks at 16th position in SIPRI arms importers’ list. Academicians and strategic experts interpret this as China’s domestic industrial complex (MIC) coming of age. However, this seems to be a pre-mature and debatable proposition.

A comparative study of previous years’ fact sheets would reveal that Chinese arms imports were already declining for a while. For instance, in 2024 Fact Sheet, China’s import figures had come down from 4.9 per cent in 2014-18 to 2.9 per cent in 2019-23. Part of this decline was certainly because of China’s consolidation and expansion of its domestic MIC. Nevertheless, a significant portion of this decline could also be attributed to the ongoing Russia – Ukraine War, which has now exceeded three years.

Russia has been primary source of imports

Traditionally, Russia has accounted for more than three-fourth of China’s arms imports. Russia’s arms exports have declined drastically by 53 per cent in 2020-24 compared to 2015-19 due to domestic supply-chain diversion to the Ukraine front. Interestingly, Ukraine was the third largest supplier to China, accounting for 12 per cent of its imports during the same period. The ongoing war has almost destroyed Ukraine’s domestic MIC. Ukraine used to be a leading arms exporter in the world before the war. Consequent to the war, its arms exports have come down by 72 per cent. China, which used to be its largest export destination, has seen total collapse of Ukraine’s export supply-chain.

Even if the war stops, it would take years for the Russian and Ukrainian domestic MICs to come close to their old export figures to China. China does not have other reliable friends in international arms market for quality weapons supplies. France, positioned as the number two supplier to China in recent years, may no longer export with a mercantilist vigour due to moral pressures of European solidarity in the ongoing Russia–Ukraine War.

China’s dwindling share in global exports tells a tale

There is another notable China-related revelation in the Fact Sheet that is being missed out. There has been a gradual but consistent decline in Chinese weapons export over the years. For instance, China’s exports have come down from 6.2 per cent of global exports in 2015-19 to 5.9 per cent in 2020-24. Last year also, this decline was noticed, i.e., from 5.9 per cent in 2014-18 to 5.8 per cent in 2019-23.

The continuous decline over the years come in the wake of widespread issues related to qualitative aspects in Chinese weapons production. They might be slightly cheap but there are increasing trust deficit issues about field performance of Chinese weapons. Bangladesh that used to in-source much of its arms from China, has actually stopped placing bulk supplies on Chinese arms companies and has disappeared from China’s top three destinations in the recent fact sheet.

Many African countries are bitterly complaining about poor performance of Chinese weapons. The much-hyped JF-17, a joint fighter jet production between China and Pakistan, is plagued with multiple quality problems and is highly unreliable in actual performance. Saudi Arabia has just watered down any possibility of buying J-35, China’s fifth generation fighter aircraft.

If the latest SIPRI Fact Sheet is any indication, China’s export prospects are not as bright as other leading exporters. For instance, there are very few orders placed with Chinese companies for supply of combat aircraft where the US has a clear monopoly. France, South Korea, and even Russia have more orders placed in their kitty than China.

Chinese combat helicopters have no takers at all despite a variety of them commercially available off the shelf (COTS). China happens to be the largest producer of major warships in the world but the relative advantage instead lies with the United Kingdom, Germany, and France that have many times more assured orders. The only area where Chinese companies are doing better than the rest of the pack is sale of tanks and fire-support vehicles.

In December 2024, SIPRI had released a Fact Sheet on ‘top 100 arms producing and military services companies’. Accordingly, nine Chinese companies were listed in the top 100. Their combined arms revenues of $103 billion accounted for 16 per cent of the top 100 in 2023, placing China in the second position after the US. However, the 0.7 per cent year-to-year increase in combined arms revenues was the lowest annual growth rate recorded since 2019. Five of the nine companies actually recorded decreases in arms revenues. Part of the reason could be that slow economic growth in China is affecting all sectors of the economy, including its domestic MIC.

Areas where China truly challenges the US

Contemporary China does have select areas where it challenges the American military-technological superiority. For instance, China is a strong competitor in artificial intelligence (AI)–led military modernisation, drone warfare and robotic soldiering. It is churning out aircraft carriers in comparatively lesser time than others. It has apparently conducted two rounds of sixth-generation fighter aircraft proto-type technology demonstration. However, much of the information about Chinese military innovation and modernisation process is shrouded in mystery, including the so-called sixth-generation fighters.

China’s military innovation and modernisation process is probably far from complete. Its domestic MIC lacks aggressive military entrepreneurship to catapult China into a numero uno producer of military goods on a war footing. The apparent self-sufficiency in the SIPRI Fact Sheet is perhaps ephemeral; driven more by the war-propelled impact on Russian and Ukrainian export trajectory. Imports are likely to recover some ground once normalcy is restored. The protagonists, who so loudly declare Chinese domestic MIC is coming of age, would probably have to wait for quite some years.

The author is in the Indian Defence Accounts Service. Views are personal and do not represent the stand of this publication.