China’s leading defense companies saw revenues decline in 2024, standing in sharp contrast to robust global growth in the arms industry, according to the Stockholm International Peace Research Institute (SIPRI).
The downturn underscores how political turmoil and corruption investigations have disrupted China’s state-owned defense sector despite rising worldwide demand for weapons.
Globally, sales by the 100 largest arms-producing companies rose by nearly 6% in 2024 to about $679 billion. SIPRI attributed the increase to the wars in Ukraine and the Middle East, intensifying geopolitical tensions and higher military spending.
Defense firms across the Indo-Pacific benefited from these trends, with revenues surging roughly 40% in Japan, 31% in South Korea and 8% in India. In the United States, 39 companies in the top 100 recorded a combined revenue increase of 3.8% to $334 billion. Indonesia also entered the ranking for the first time, as state-owned Defend ID posted a strong rise in sales.
The eight Chinese companies included in SIPRI’s top 100 reported a combined revenue decline of around 10%, totaling $88.3 billion. Some of the country’s largest defense manufacturers were particularly affected. Norinco, China’s primary producer of land-based weapons, saw revenue fall by more than 30%.
Sales also dropped at Aviation Industry Corporation of China (AVIC), the nation’s largest arms maker, and at China Aerospace Science and Technology Corporation (CASC), a key supplier of missile and aerospace systems.
SIPRI linked the slump to corruption probes and leadership changes that disrupted arms procurement and slowed project approvals. Investigations into defense contracting led to reviews, delays and the postponement or cancellation of major orders, creating uncertainty across the industry.
The problems facing China’s arms firms mirror a broader political crackdown under President Xi Jinping, who has intensified efforts to root out corruption within the Communist Party and the People’s Liberation Army.
Analysts warn that ongoing disruptions could hinder China’s military modernization plans as it seeks to field advanced capabilities by the PLA’s centenary in 2027.
