China’s defence firms see 10% drop in revenue: How corruption halted Beijing's arms contracts | Explained

DF-5C intercontinental ballistic missiles are seen during a military parade marking the 80th anniversary of victory over Japan and the end of World War II, in Beijing's Tiananmen Square on September 3, 2025. (Photo by GREG BAKER / AFP)

China’s top military companies saw a steep drop in revenue last year, with corruption issues slowing down arms contracts and procurement, according to a new study released on Monday.

Reuters cited research by the Stockholm International Peace Research Institute (SIPRI), which found that China’s decline comes at a time when major arms and military service companies in other countries are growing because of conflicts in Ukraine and Gaza and rising global tensions.

SIPRI’s findings show that revenues of China’s leading military firms fell by 10 percent in 2024. In contrast, Japan recorded a 40 percent jump, Germany saw a 36 percent rise and military revenues in the United States increased by 3.8 percent.

“A host of corruption allegations in Chinese arms procurement led to major arms contracts being postponed or cancelled in 2024," said Nan Tian, director of SIPRI’s Military Expenditure and Arms Production Programme. “This deepens uncertainty around the status of China’s military modernisation efforts and when new capabilities will materialise."

Reuters noted that China’s military, the People’s Liberation Army (PLA), has been a key focus of a sweeping anti-corruption drive launched by President Xi Jinping in 2012. The crackdown intensified in 2023 when the powerful Rocket Force came under investigation.

In October, eight senior generals, including He Weidong, the country’s second highest ranking military officer, were expelled from the Communist Party on corruption charges. He had previously worked with Xi on the Central Military Commission, the top military decision making body.

According to the report, China’s fall in weapons revenue comes despite three decades of rising defence budgets and growing tensions with the United States, as well as disputes over Taiwan and the South China Sea.