Chinese global arms cos put peaceniks on pins and needles

Sankar Ray

Aviation Industry Corporation of China (AVIC), China’s aircraft manufacturer; China Aerospace Science and Industry Corporation (CASIC), missile and space systems producer; China Electronics Technology Group Corporation (CETC), leading producer of electronics and components for military goods ( radars, software); China North Industries Group Corporation (NORINCO) and China South Industries Group Corporation (CSGC), top manufacturer of land systems in arms industry,  China Shipbuilding Industry Corporation (CSIC) and China State Shipbuilding Corporation (CSSC) have in the recent years have entered the league of the 20 topmost arms exporters and four of them – AVIC, NORINCO, CETC and CSGC are among the top ten bracket as also the topmost non-US arms exporters. All these revelations are encapsulated in a study, ‘Estimating the Arms sales of Chinese Companies by two researchers of Chinese research scholars, Nan Tian and Fei Su, associated with the Stockholm International Peace Research Institute.

Anti-war activists are worried, while official communist parties all over the world are deceptively silent. Importantly, in contrast to a downtrend in arms sales of US giants, Boeing, Northrop Grumman, Raytheon and BAE Systems between 2015 and 2017, turnover of Chinese counterparts – all state-owned- are upward. AVIC, for instance, had a 34 per cent growth.  

However, unearthing of financial details of China is next to impossible as the totalitarian regime – officially communist – keeps most things under wraps. This leads possibly to underestimates.  “The combined estimated arms sales of the four Chinese arms companies totalled $54.1 billion in 2017. While this is already $16.4 billion more than the total for the 10 Russian companies in the Top 100 for 2017 and $18.4 billion more than the total for the 7 British companies in the Top 100, it is most likely still an underestimate. Based on this estimate, which accounts for the arms sales of just four companies, China would have the second-largest national share of the total arms sales of the Top 100 companies. It is safe to conclude that China is the second-largest arms producing country in the world, behind the USA,” the authors state.

AVIC’s arms sales estimated to have reached yuan (¥) 136.1 billion ($20.1 billion) in 2017(even though an underestimate as the omitted value of the military subsystems might be greater than the value of the civilian aircraft. CETC’s main business amounts to 99 per cent of the company’s total revenue and is divided into military and civilian sales. Income from CETC’s main business in the same year was yuan (¥)203.9 billion ($30.0 billion) - yuan (¥)119.6 billion ($17.9 billion) was civilian. The remaining yuan (¥) 84.3 billion ($12.2 billion) was then the estimated arms sales. NORINCO’s total sales touched yuan (¥) 27.6 billion ($64.3 billion) in 2017, of which the ‘other’ category, or arms sales, accounted for around 27 per cent or yuan (¥) 116.2 billion ($17.2 billion). This estimate of the arms sales of NORINCO is likely to be a slight underestimate as it excludes sales from electrical optics for military purposes. Outside military-related production, CSGC’s total sales was yuan (¥) 302.7 billion ($44.5 billion). If one subtracts civilian sales of yuan (¥) 271.4 billion ($39.9 billion) leaves arms sales of yuan (¥) 31.3 billion ($4.6 billion)

Doubtless, arms sales of these companies are still largely unknown or based on unreliable estimates. So, the SIPRI Top 100—an annual list of the worlds’ 100 largest arms-producing and military services companies—excludes Chinese companies. Previous research studies on the Chinese arms industry were predominantly qualitative. ‘Only a few studies have tried to quantify company arms sales and their financial value. Most of the focus has remained on weapon types, the challenges faced by China in the global arms market, its military-industrial strategies over time, and the link between its military modernization and arms industry reform ;However, the amount of available data has increased, making it possible to develop reasonably reliable estimates of the value of arms sales by the major Chinese arms companies. This has provided a new incentive in the research and policy communities to improve understanding of the Chinese arms industry’ There has been massive defence spending growth by China as the Chinese government looks forward to a more efficient and innovative defence-industrial policy for more ‘bang for their buck.’

At the same time, Beijing’s principal aim is profit and almost profit and neither politics nor diplomacy in arms trade and that means arms business is not a part of a construct of ‘geopolitical rivalry’, bur a mission-oriented approach towards inscription of ‘soft military footprints’. Which is why its focus primarily is the African or more pointedly Middle-East regions that fetch substantially higher margins. In another study, published two years ago, ‘China’s Soft Military Presence in the Middle East’, by Sun Degang, stated, “China’s military relations with the countries of the Middle East have become increasingly close in recent years. To protect its commercial interests and contribute towards international security, China has built up a soft military presence of various forms in the Middle East. Such overseas military forces are deployed either within the framework of the United Nations Peacekeeping Operations (UNPKO) or independently, and carry out military as well as civilian missions, especially in areas such as the evacuation of nationals, humanitarian relief, search and rescue, protecting expatriates, escorting, logistics supply, peacekeeping, and conflict prevention.”

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Feb 14, 2019

Sankar Ray

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