China’s Military Companies Face Setbacks as Corruption Crackdown Slows Progress

Post by : Saif Nasser

China’s leading military companies experienced a decline in revenues last year, bucking a global trend of growth in the arms industry, according to a recent report by the Stockholm International Peace Research Institute (SIPRI). While major arms firms around the world saw strong growth, fueled by conflicts in Ukraine and Gaza, China’s military firms faced setbacks due to a broad corruption crackdown.

The study found that allegations of corruption in arms procurement caused major contracts to be postponed or canceled in 2024. Nan Tian, director of SIPRI's Military Expenditure and Arms Production Programme, said the situation has added uncertainty to China’s ongoing military modernisation efforts, delaying the deployment of new technologies and capabilities.

China’s top military companies, including AVIC, Norinco, and CASC, all state-owned, reported revenue drops. Norinco saw the steepest decline, falling 31% to $14 billion. Personnel changes and government reviews triggered by corruption investigations slowed projects, while AVIC’s military aircraft deliveries also slowed. These declines contrast sharply with other countries, where Japan’s top military firms saw a 40% revenue increase, Germany’s rose by 36%, and U.S. firms increased 3.8%.

The crackdown, which has reached high levels of the People’s Liberation Army, targeted the Rocket Force in 2023 and led to the expulsion of eight senior generals from the Communist Party, including China’s number two general, He Weidong. Diplomats from Asia and the West are still assessing the impact of these purges on China’s military rise and operational plans.

Despite the revenue drop, China continues to invest heavily in defence. The country is deploying the world’s largest naval and coast guard fleets, developing advanced aircraft carriers, hypersonic missiles, nuclear weapons, and air and sea drones. SIPRI researcher Xiao Liang noted that the timeline for advanced systems, particularly for the Rocket Force, could be affected, adding uncertainty to the People’s Liberation Army’s readiness goals for its 100th anniversary in 2027.

Experts say that in the medium and long term, China’s defence spending and political commitment to modernisation are likely to continue. However, projects may experience delays, higher costs, and stricter procurement controls due to the corruption purge.

Overall, while China’s military ambitions remain significant, the recent setbacks show that internal challenges, particularly corruption investigations, can affect the pace of its military development.