Tag Archives: arms sales

China Makes A Bigger Bang In Arms Dealing

THESE ARE RICH times for the arms trade. The Stockholm International Peace Research Institute (SIPRI) notes that transfers of major weapons in 2012–16 reached their highest volume for any five-year period since the end of the Cold War. (SIPRI uses five-year periods to smooth out annual fluctuations which can be marked in the arms trade.)

China is a leading player in the international arms trade, and one increasingly able to decrease its dependence on imports thanks to a growing domestic arms industry.

chinas-arms-trade

This also makes China a frontline arms exporter, with estimated annual sales of just shy of $3 billion going to 44 countries, particularly to elsewhere in Asia (Pakistan, Bangladesh and Myanmar especially) and to Africa. China’s share of global arms exports rose to 6.2% from 3.8% between 2007–11 and 2012–16.

It is now firmly a top-tier supplier, in third place in the global rankings, moving ahead of France and Germany, though still a long way behind Russia and the United States, which have nearly four and more than five times the sales respectively.

China’s arms manufacturers still face significant quality issues in international markets, though that is improving at the cheaper end. However, IHS Jane’s reported two C-705 missiles failing to hit their targets during a large-scale Indonesia navy exercise in the Java Sea last September 14. In Cameroon, one of four Harbin Z-9 attack helicopters sold to it by China crashed soon after being handed over, bringing a halt to any further sales.

China is also poor at after-sales service and maintenance. Nor has it yet established a globally competitive arms brand in the same class as the US’s Lockheed Martin. China’s biggest arms maker is China North Industries Corp. (Norinco), but its strategy seems to be targeting developing economies with a sales pitch that boils down to near-Western quality but at a fraction of the price.

Chinese arms makers also remain dependent on key components, such aircraft engines, imported from abroad, notably from Russia, Ukraine and France. It also imports key weapons and large transport aircraft, helicopters, vehicles and ships.

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China’s Changing Arms Trade

THE 143% RISE in China’s arms exports in the past five years over the previous five comes as scant surprise. Defence and aerospace have been prioritized as a strategically significant national industries as Beijing seeks to lessen its dependence on foreign technologies (military and civilian) while at the same time maintaining double-digit growth in defence spending to upgrade its military.

The Stockholm International Peace Research Institute (SIPRI) tracks the numbers. It reckons that several Chinese arms-producing enterprises are now large enough to count among the world’s top 100 arms firms. However, it excludes firms like Avic, Norinco, Poly Technologies and China South Industries from its ranking because of the lack of transparency into the data. Nonetheless, the arms trade is providing a steady stream of earnings to help fund the modernisation of the People’s Liberation Army, and, no doubt, to enrich PLA-linked enterprises.

The latest annual SIPRI arms trade numbers also put the scale of China’s arms exports in to an international context. China has nosed into third place in the arms national arms-exporters rankings, and is roughly on par with France, Germany and Britain, all off whom have a 4%-5% global market share. The United States (31% global market share) and Russia (27%) still dominate the arms trade. That said, China has doubled its global market share over the past decade.

China's arms exports, 2005-2014, ($m, Constant 1990 dollars)

SIPRI looks at five-year runs of arms sales to iron out annual fluctuations. Individual arms contracts can necessarily be large. Our charts, drawing on SIPRI’s data, show annual figures to give a sense of the ebb and flow of the arms trade. For example China’s arms sales in 2014, at an estimated around $2 billion in nominal terms (SIPRIs numbers are constant 1990 dollars), were down from the previous year’s $3.7 billion. Sales in the two largest categories, aircraft, which would include drones, and armored vehicles, halved; on the five-year perspective they increased by one and a half fold and two and a half fold respectively. In the fastest growing category, air defence systems, SIPRI recorded no sales last year for the first time in four years.

China's arms exports, by category, 2010-14, $ millions, constant 1990 dollars

China’s three biggest customers for arms last year — Pakistan, Bangladesh and Venezuela — accounted for two-thirds of all sales. On a five-year view, China’s top ten customers also included Myanmar, Tanzania, Morocco, Nigeria, Indonesia, Iran, and Sudan, by SIPRI’s count. Chinese weapons have a reputation for being cheap and reliable.

China, Arms imports and exports, 2005-2014

However, the expansion of China as an arms exporter over the past five years may not be as significant as the change in the country’s arms trade balance. The expansion of the domestic arms industry has let Beijing cut its bill for arms imports by 42% between the two five-year periods. As the chart shows, import substitution is moving apace. With the exception of last year, China has been running a modest arms trade surplus since 2009. Its days as a honey pot for what are now its rival arms makers may well be over.

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Beijing Happier Than It Says About U.S. Arms Sale To Taiwan

Beijing does not come away badly from Washington’s sale of $5.3 billion-worth of arms to Taipei. Washington backed off including in the deal 66 new F16 C/D fighter jets that Taipei wanted. Taiwan will only get upgrades to its aging F16 A/B fleet, but not the 66 new F16 C/Ds it had requested. That was the price the Obama administration had to pay for keeping relations with Beijing on an even keel. Given the PLA’s modernization, Beijing will be just fine with that. Nor will it be too concerned about the rest of the deal, which includes air-to-air missiles, guided bombs, radar and training.

For all its bluster, Beijing never really thought it could scupper the whole deal. Keeping the military technology gap between the PLA and Taiwan’s armed forces as wide as possible was always its realistic goal in this case. Tick the achieved box. Similarly, possible retaliation, such as suspending military exchanges, as happened in January 2010 after Washington authorized the sale of $6.4 billion-worth of arms to Taiwan, will be hollow threats as doing so would remove the incentive for Washington to show restraint in future sales.

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Taiwan Arms Sales A Storm In A Teacup

Beijing’s response to last week’s announcement of the U.S.’s $6.5 billion arms sale to Taiwan has been prompt if largely symbolic: cancellations of military and diplomatic exchanges with the U.S.

Several planned senior level visits and military-to-military exchanges for this month have been scrapped, according to the U.S. Defense Department. The U.S. State Department says China has also pulled out of some meetings on humanitarian assistance and disaster relief.

At the weekend, state media scolded the U.S. over the sales, saying they endangered China’s national security and would have an adverse effect on Sino-U.S. relations. So all in all it looks as if this will all blow over.

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U.S. Announces $6 Billion Arms Sale To Taiwan

The White House might have thought the news would whistle by a bailout-distracted American audience, but Beijing is sure to notice.

The U.S. government said it is selling six bundles of arms worth a collective $6.5 billion to Taiwan. The bills of goods includes 30 Apache attack helicopters, 300 Patriot missiles and 32 Harpoon submarine-launched missiles. it is the first time that Taiwan has been allowed to buy those missiles, which will enhance the island’s defensive capabilities against missile attacks. Congress has 30 days to block the deals (the Pentagon’s announcement came by way of the executive branch’s notification to Congress), but lawmakers rarely take such action.

Taiwan’s defense minister Chen Chao-min has been on a low key trip to Washington this week, the first such visit since 2002. The Bush administration has been dialing down its military cooperation with Taipei to help keep the island’s relations with Beijing on an even a keel as possible. Its decision to resume arms sales after a lull of more than a year may just be a way of doing its successor a favor, in getting what would be an uncomfortable choice for a new president off the table, while making it harder for that new president to change gears on policy toward Taipei should he be so minded.

Either way, Beijing is unlikely to be pleased, and we are likely to hear so shortly.

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