“The enemy is within.” This expression suffices to summarize the analysis of the Swedish Peace Research Institute (SIPRI) on the People’s Liberation Army of China, in the context of a more general report on the state of the world’s military industry. This is because the report in question – which paints a picture of unprecedented growth for the sector – links the drop in revenue for Chinese companies to widespread corruption.
The data
In particular, the report, which records the activities of the 100 largest companies in the field of weapons systems production for the year 2024, confirms that the space is enjoying golden days, with total revenues amounting to approximately 679 billion US dollars (or 586 billion euros). “Last year global revenues from armaments programs reached the highest level since SIPRI records began, as producers capitalized on high demand,” noted Lorenzo Scarazzato, a researcher at the institute.
Economic activity is as expected increasing for all companies, of all nationalities and for every geographical zone, with one single exception. This concerns the Asia-Oceania continental zone and is solely due to the downward trend recorded by China’s military industry (on the contrary, the revenues of Japanese and South Korean companies are recording an increase). A decrease of 1.2% compared to the previous year, but capable of dragging down the total revenue. Case in point is Norinco, a major producer of ground systems for Beijing, which saw its revenue drop by 31%. But the missile systems manufacturer CASC also recorded a 16% drop.
Why such a retreat? The report points to corruption, which is endemic in the upper echelons of the country’s companies that operate in defense systems technologies. “A series of accusations of financing and corruption have led to the postponement or even cancellation of major orders for weapons systems in 2024,” said Nan Tian, director of SIPRI’s military spending program.
The problems
SIPRI’s assessment does not come as a thunderbolt to those familiar with Beijing’s chronic corruption problems. The latest episode in the war that Xi Jinping’s leadership has launched against related phenomena is the dismissal of nine generals, with the Ministry of Defense stating in an official statement that all high-ranking officers – several of whom were also members of the Central Committee – are suspected of serious financial crimes. It was only a year ago, moreover, that Defense Minister Dong Jun was under investigation for connection to a corruption scandal affecting the highest echelons of the People’s Liberation Army. He was the third serving or former defense minister to be investigated for bribery.
Understandably, beyond the short-term economic losses, the news raises doubts about the real capabilities of the Asian giant, whose declared goal is to modernize its arsenal and, by extension, consolidate China as a military superpower. But there is also the political interpretation behind the events. In this sense, the Chinese president takes care through mass purges to ensure the stability of the regime, subordinating military goals to political interest.
“At the beginning of his administration, Xi warned that the Soviet Union collapsed when it lost control of its military, while at the same time there was no one to step forward and take the reins of the situation,” emphasizes American University professor of international relations, Council on International Relations (cfr) fellow and researcher of the Chinese Communist Party’s relations with the military, Joseph Torigian, speaking to New York Times newspaper. And he calls us to pay special attention to the reception of corruption, as that weak link that, according to Xi, prevents the rapid progress of the country and, consequently, of its war industry. All this at the same time that a number of analysts describe China’s armed forces as a “puzzle”, expressing their concerns about the scope of political interventions, while referring to Beijing’s firm commitment to targeted investments.
