The earnings of China’s leading arms companies have fallen drastically in the year 2024. The reason is the widespread corruption within the army, generals being removed on a large scale and arms contracts stalled due to this. A new report by the Stockholm International Peace Research Institute (SIPRI) says that while the earnings of arms companies across the world are increasing rapidly, Chinese companies are incurring losses.
How did China’s arms scam come to light?
According to SIPRI, so many scams were found in China’s arms purchases in 2024 that many big contracts were either stopped or canceled completely. Chinese President Xi Jinping had been cracking down on corruption in the army since 2012, but the fight reached a climax in 2023 when a major action was taken against the PLA’s rocket force. In October 2024, eight top generals were expelled from the party, the biggest name of which was General He Weidong, i.e. the number two person in China’s military system. It is now becoming clear that China’s military modernization machinery has slowed down due to corruption.
Which country became rich by selling arms?
The report says that there was a huge increase of 40% in Japan’s weapons industry, 36% increase in Germany and 3.8% increase in America. Whereas in China there has been a decline of 10%. This decline is so big that the Asia-Oceania region became the only region in the world where the earnings of arms companies declined. This is when China has been continuously increasing its defense budget for the last three decades and is competing with America on the basis of navy, hypersonic missiles, new aircraft carriers and drones. But the onslaught of corruption slowed down the entire machinery.
Which companies are most affected?
According to the report, the condition of China’s three largest government companies is the worst. AVIC, NORINCO and CASC. Among these, NORINCO’s earnings fell by 31% to only $14 billion. The officials sitting at the top were accused of embezzlement, bribery and wrong purchases. The result was that projects were halted, deliveries were slow and new systems were left in limbo.
Why did the problem of PLA’s rocket force increase?
China’s rocket force is the most important branch. It manufactures and deploys hypersonic and ballistic missiles. SIPRI says that due to corruption and scrutiny, many of its advanced programs may suffer delays. The PLA’s goal was to fully prepare its modern warfare capabilities by 2027, i.e. the 100th anniversary of the ‘Red Army’. Now a big question has been raised on this target.
Will China go ahead?
The report concludes that even though the programs may have slowed down, China’s defense budget is continuously increasing and the political commitment towards modernization is also very strong. Therefore, in the medium and long term, China may pick up the pace again, but delays, cost overruns and tight controls on procurement are certain.
