China's defense industry continues its rapid growth but it's a growth almost completely driven by sales to the People's Liberation Army, (PLA), the armed forces of the Communist Party of China (CPC), and not by private sales.
Nonetheless, seven Chinese defense firms can be considered among the world's 20 biggest arms makers by revenues in 2016, said the London-based think-tank, the International Institute for Strategic Studies (IISS).
The first such survey of the world's arms makers by IISS showed all these seven Chinese defense firms to be state-owned enterprises (SOEs). It noted that each of these SOEs reported more than $5 billion in revenue in 2016, due mostly to the feverish modernization program being rushed by the PLA.
The largest Chinese defense firm is China South Industries Group (CSGC), which is ranked as the world's fifth largest. CSGC had estimated arms sales revenues of about $22 billion in 2016. This total is roughly half that of Lockheed Martin, the world's biggest weapons maker.
CSGC, however, derives more than half of its revenues from non-military sales. The company is also a major maker of cars, motorcycles, car parts, optoelectronic products, and other special products. CSGC reported total revenues of more than $44 billion and $3 billion in profits in 2017 from all sources.
Aviation Industry Corporation of China, China's main manufacturer of military aircraft, is seventh overall on the IISS list. Also in the top 20 were China North Industries Group Corporation or Norinco; China Aerospace Science and Industry Corporation; China Shipbuilding Industry Corporation, China Electronics Technology Group Corporation and China Aerospace Science and Technology Corporation.
China's defense spending over the past two decades has seen double-digit annual growth in a feverish rush to close the gap with the United States, the world's most powerful military nation. China is now the second biggest defense spender, earmarking $160 billion for its military in 2018.
This total, however, pales in comparison to military spending by the United States, which will hit a record $716 billion in 2019. The U.S. spends more on its military than the nine other top spending nations combined.
IISS reported that Chinese defense firms are large entities, but this doesn't necessarily mean they can directly compete with Western defense giants on all fronts. The Chinese still lag behind the U.S. in key military technologies and innovation.
IISS said Chinese defense firms still a long way to go before they can challenge the largest Western companies such as The Boeing Company and Lockheed Martin, by far the world's largest defense firm. China's defense industry still struggles with critical technologies despite a relentless effort at bridging the gap using legal and covert means.
