By Focus | 2025-12-02

China's largest defense contractors are seeing their arms revenues slide even as global weapons sales hit record highs, undercutting Beijing's push to build a world-class military industry.

The downturn made Asia and Oceania the only region where the world's top arms makers collectively lost ground last year.

In a report released on December 1, the Stockholm International Peace Research Institute (SIPRI) said total arms revenues for the 23 Asia- and Oceania-based companies in its latest Top 100 ranking fell 1.2% to $130 billion in 2024.

China's arms makers lose ground

SIPRI attributed the drop "almost entirely" to the slump of Chinese manufacturers. The eight Chinese firms in the Top 100 saw their combined arms revenues plummet 10% to $88.3 billion in 2024, the sharpest percentage decline of any country on the list. Six of the eight Chinese companies recorded lower arms revenues amid multiple corruption allegations in the procurement process, which led to delays in new orders and reviews of existing contracts, SIPRI said.

Aviation giant AVIC, ranked eighth, remained China's largest arms producer, but its arms revenues slipped as deliveries of warplanes slowed, according to SIPRI. Land-system producer NORINCO, ranked 11th, reported the steepest drop in the entire Top 100 as its arms revenues fell 31% to $14.0 billion after authorities reviewed or forced the postponement of major contracts following the removal of its board chair and military division chief on corruption accusations.

"A host of corruption allegations in Chinese arms procurement led to major arms contracts being postponed or cancelled in 2024," Nan Tian, director of the SIPRI Military Expenditure and Arms Production Program, said in a SIPRI statement.

"This deepens uncertainty around the status of China's military modernization efforts and when new capabilities will materialize," he added.

Anti-graft purge hits procurement

The pressure on China's defense industry is closely tied to President Xi Jinping's sweeping and long-term anti-graft campaign, according to Reuters.

The People's Liberation Army (PLA) has been one of the main targets of the purge. In 2023, Xi's investigators turned their sights on the PLA's vaunted Rocket Force.

In October, the Chinese Communist Party expelled nine top generals over corruption charges, including He Weidong, the country's second-highest-ranking general. SIPRI has linked these continual political upheavals directly to the business performance of major arms makers.

Aerospace and missile manufacturer CASC, ranked 17th, saw its arms revenues drop largely because China postponed military satellite and launch-vehicle projects after the firing of CASC's president in late 2023 on corruption charges, according to SIPRI. CASC arms revenues plunged 16% to $10.2 billion.

By contrast, shipbuilder CSSC, ranked 14th, was one of only two Chinese arms companies in the Top 100 to post growth. Its arms revenues rose 8.7%.

Japan, South Korea and India gain

While China's arms producers are squeezed, regional peers are accelerating.

The four South Korean companies in the Top 100 increased their arms revenues by 31% to $14.1 billion in 2024. Hanwha Group, ranked 21st, boosted its arms revenues by 42% to $8.0 billion on the back of rising exports and domestic deliveries of weapon systems. For the first time, it earned more from exports than from its home market, SIPRI said.

The five Japanese companies in the Top 100 recorded combined arms revenues of $13.3 billion in 2024, a 40% increase from 2023. All five posted double-digit growth driven by strong domestic demand. Mitsubishi Heavy Industries, ranked 32nd, lifted its arms revenues by 37%, mostly from sales of aircraft and missile systems, according to SIPRI.

India, by comparison, is growing more steadily. The three Indian firms in the Top 100 saw their combined arms revenues rise 8.2% to $7.5 billion in 2024, the institute said.

Global arms sales hit new high

Every other region besides Asia and Oceania posted gains. Global combined arms sales by the Top 100 companies grew 5.9% in 2024 to a record $679 billion, as producers capitalized on high demand driven in part by the wars in Ukraine and Gaza and rising regional tensions, according to SIPRI.

US arms companies kept the largest share of the market, with combined revenues rising 3.8% to $334 billion. Europe, excluding Russia, saw aggregate revenues grow 13% to $151 billion, while the two Russian companies in the Top 100 increased their combined arms revenues by 23% to $31.2 billion, SIPRI said.