A dramatic shift away from the world’s largest weapons manufacturing region is occurring, with China and, to a lesser extent, India making notable achievements.
In 2021, countries in the Asia-Oceania area significantly increased their weaponry exports worldwide. Despite supply difficulties caused by the Covid-19 outbreak, gun sales by the world’s 100 largest weapons manufacturers reached $592 billion in 2021, a rise of 1.9% from 2020.
According to the Stockholm International Peace Research Institute (SIPRI), global arms sales from Asia and Oceania climbed by 5.8 percent to $136 billion in 2012, surpassing European arms sales by a significant $13 billion. This constitutes a dramatic change away from a major weapons manufacturing zone, which has historically been dominated by defence industrial power centres, particularly in Europe, but to a lesser extent in North America (which includes the United States and Canada).
While the United States remains ahead of all other major arms producing nations and regions — despite a 0.9% decline in weapons sales from 40 of its leading weapons manufacturers to $299 billion in 2021 — the surge in Chinese weapons sales is a sign of things to come. The People’s Republic of China (PRC) alone contributed to slightly more than 80 percent of the weapons sales in the Asia and Oceania area for the entire year, with eight of its biggest businesses producing combined sales of $109 billion, an increase of 6.3% compared to 2020. Japan came in a distant second, followed by South Korea and India.
Consequently, the Chinese defence sector will be the primary beneficiary of this expansion in weapon sales in 2021. It highlights China’s rise as a major weapons exporter, which is playing a greater role in the global defence market, commensurate with the size of its $17 trillion economy. Several variables explain China’s performance, but two stand out: Beijing’s dedication to self-reliance in defence technology and the concentration of important companies within the Chinese defence sector. Since 1949 and 1950, when China became a Communist state, self-sufficiency has been achieved by consistent investments. China is currently reaping the benefits of these early investments. A combination of elements, including technological espionage, substantial spending in weapons Research and Development (R&D), and reverse engineering, has enabled the PRC to indigenise capabilities ranging from tanks, artillery, munitions, and aircraft engines to warships. In addition, the Chinese defence industry can mass-produce weapons systems for various clients, including the People’s Liberation Army (PLA) and all of its service arms and foreign consumers.
According to the most recent report by the Stockholm International Peace Research Institute (SIPRI), Beijing made significant changes to its defence industry, including the merger of China Shipbuilding Industry Corporation and China State Shipbuilding Corporation (CSSC) into a single entity, which was a reversal of earlier practises aimed at enhancing productivity and competitiveness. In 2021, the CSSC was the largest shipbuilder in the world, with sales exceeding $11.1 billion, ranking it as the fourteenth largest weapons vendor in the world. However, the SIPRI report did not provide a breakdown of the PRC’s remarkable weapons sales to determine whether the PLA, PLA Navy and PLA Air Force were the principal purchasers of Chinese weapon systems or whether the majority of the cash was generated through exports. Historically, the Chinese military has been a significant investment in China’s defence sector, so it would not be remarkable if its armed services were the leading purchaser of Chinese weaponry for the year. Despite this, the PRC is a major exporter of weapons, and exports would account for a significant portion of the country’s weapon sales.
In 2021, India also saw an increase in its weaponry exports. Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited, who placed 42nd and 63rd for arms sales, saw their sales increase by 6.7% and 20%, respectively, even though their primary clientele in the past were the Indian armed services. As with the People’s Republic of China, the SIPRI data do not reveal the particular mix of military sales to specific clients. The Ordnance Factories appeared on the list of the top 100 weapon manufacturers in 2020, despite their past lack of competitiveness and productivity. However, restructuring into seven smaller corporations in October 2021 led to its departure from the top 100.
The challenge will be whether India can move toward a completely privatised defence industry along the lines of the United States or proceed towards a PRC-style defence industrial complex. Regardless of China’s expansion in the global armaments business, the United States remains the world’s leading manufacturer and exporter of weapons. However, China must catch up and become an even more formidable adversary to the United States. While HAL and BEL made tremendous improvements in 2021 for India, the government might split up HAL and BEL, which are state-run monopolies, to increase productivity and competitiveness, and then, over time, imitate the Chinese and consolidate them into a single corporation.