In 2018, China’s arms sales increased, continuing a trend that enabled China to become the world’s fastest-growing arms supplier during the past 15 years. From 2013 through 2017, China was the world’s fourth-largest arms supplier, completing more than $25 billion worth of arms sales. China sold military equipment worth more than $10 billion to the Middle East. Saudi Arabia, Iraq, and the United Arab Emirates accounted for most of China’s arms sales in the region. The Indo-Pacific region was China’s second-largest regional arms market, with more than $ 8 billion worth of arms sales, more than $5 billion of which was to Pakistan. Contracts signed within the past few years for guided rockets, ballistic missiles, armed UAVs, submarines, and surface warships sustained sales growth for Chinese arms exporters. The Aviation Industry of China (AVIC), an exporter of armed UAVs and fixed-wing aircraft, claimed in a rare public statement that it secured record profits in 2017, illustrating China’s rising profile among the world’s most prolific arms suppliers. China’s ability to remain among the world’s top five global arms suppliers largely hinges on continued strong sales to key Middle East and Indo-Pacific customers, as well as sustained demand for its armed UAVs and precision-strike weapons.
> Armed UAVs. China’s market for armed UAVs continues to grow; China now sells CAIHONG series UAVs to at least Burma, Iraq, Pakistan, Saudi Arabia, and the United Arab Emirates. China faces little competition for these sales; most armed UAV exporters have signed the Missile Technology Control Regime and/or the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies and face sales restrictions.
> Precision-Strike Weapons. Filling another niche in the global arms market, China has sold precision-guided rockets and ballistic missile systems, though it typically does not identify countries purchasing these types of arms. Industry reports in 2018 highlighted sales of Chinese-made WS-3A and WS-22 satellite-guided rockets, as well as several export variant ballistic missile systems (the M20, BP-12, and Joint Attack Rocket and Missile systems).
> Naval Combatants. China’s naval warship sales have also surged since 2015, highlighted by Pakistan’s purchase of eight YUAN variant submarines for more than $3 billion. Thailand also purchased one YUAN variant submarine in 2017 and has expressed interest in purchasing two more. To date, China has not delivered any YUAN variants, though it delivered two MING-class submarines to Bangladesh in 2016. Also, in 2017 and 2018, China sold frigates to Bangladesh (two Type 053H3s) and Pakistan (four Type 054As), and donated one unspecified frigate to Sri Lanka.
China’s arms sales operate through state-run export organizations such as AVIC and North Industries Corporation (NORINCO) that primarily seek to generate profits. Arms transfers also are a component of China’s foreign policy, used in conjunction with other types of military, economic aid, and development assistance to support broader foreign policy goals. These include securing access to natural resources and export markets, promoting political influence among host country elites, and building support in international forums.
Many of China’s arms recipients are developing countries that tend to buy Chinese arms because they are less expensive than comparable systems sold by other arms manufactures. Although Chinese arms are considered by some potential customers to be of lower quality and reliability, many Chinese systems are offered with enticements such as gifts, donations, and flexible payment options. Some Chinese systems include advanced capabilities. Chinese arms also tend to carry fewer end-use restrictions and are monitored less rigorously than competitors’ arms exports, a factor that attracts customers with less access to other sources of military equipment because of political or economic reasons.
Source: Annual Report to Congress: Military and Security Developments Involving the People’s Republic of China
