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China’s Growth in the Global Arms Trade

by Taal Seth - 12 June, 2021, 12:00 895 Views 0 Comment

Until the dawn of the twenty-first century, the People’s Republic of China did not show up in a conversation on the trade of weapons in the global arena. Today, a number of Chinese weapon-making firms, like the Aviation Industry Corporation of China (AVIC) and the China South Industries Group Corporation (CSGC), are amongst the top 25 of their kind in the world. Over the last decade, China became the second-largest producer of weapons in the world and the fifth-largest exporter. How did this happen?

The reasons for China’s rise can be classified into two: first, the domestic defence industry and the economic policies taken to reform it; and second, the political economic pull and push factors in the international arena for Chinese conventional weapons. The latter are often strategic decisions taken by China and by the importing countries.

Conventional weapons, as defined by the Arms Trade Treaty of 2018, are: battle tanks, armoured combat vehicles, large-calibre artillery systems, combat aircraft, attack helicopters, warships, missiles and missile launchers, and small arms and light weapons. It also includes drones.

The Production of China’s Conventional Weapons

Up till the 1990s, the Chinese political economy was hit by a series of setbacks. Its long history of conservative communist politics withheld the country from developing its economic and military resources. More recently, factors like Western embargoes post the Tiananmen Square incident and the anti-China thought produced by the West came into play. It was only after this time that Deng Xiaoping focused the energies of the nation and the state on modernization of the military under his “four modernizations” plan. While the defence firms continued to be state-owned enterprises (SOEs), there was the will and effort to make the firms more independent and market-oriented. This meant that they now produced according to the demand of the People’s Liberation Army (PLA), became competitive, decreased the military-industrial complex (i.e., the vested interests of state-representatives were not taken into account anymore, at least not to the extent that it was earlier), increased focus on R&D and innovation (under the National Hi-tech Research and Development Programme, and allowed civilian surveillance and management technology to be integrated with defence technology (as articulated by Chinese leadership: “locating military potential in civilian capabilities”). The loosening of the hold of the state on the enterprises also allowed them more autonomy to negotiate their debt and sell equities in order to gain flexibility. Under the State Commission, the Assets Supervision and Administration Commission was set up to overlook the companies. Competition in the market was increased by splitting up the corporates into two and assigning them more specific products. For example, AVIC was split into AVIC I and AVIC II in 1999, with the former specified production of fighter aircraft, bombers, etc., and the latter, helicopter and attack aircraft etc.

Like the economic reforms, the defence capacity reforms were also gradualist in nature, and it took time for China to increase its weapons production. To understand the trends, one can focus on some statistics. In the early 2000s, China was importing over $2800 million (USD) worth of arms and exporting only a little over $650 million, burdening itself with a high trade deficit. However, by 2010, it was amassing an arms trade balance of $244 million, and even more by 2016: that of $1,000. It took the defence reforms to get China to a level where it could start improving on its arms production, not where it could start exporting them, and especially not to this level.

China’s pace of growth was also influenced by its technological leapfrog, combined with its low-cost labour. Technological leapfrogging in developmental economics refers to the phenomenon of a poor country quickly becoming technologically adept by adopting technological breakthroughs made in the richer countries of the world without having to go through the process (involving time, human effort, and capital) of innovating that technology themselves. An argument made by Ha-Joon Chang against the phenomenon of technological leapfrogging is that it is not easy for poor states to adopt high technology, as it needs to be fitted in the context of the former. However, Li and Matthews (2017) claim that China has the capacity to make this leap: “Technological transfer represents the most important variable within an offset package, and normally includes design, blueprints, skills and manufacturing capability. […] Technological emulation is the objective of offset, but whilst most states strive for the absorptive capacity to make offset work, China already possesses it.” For example, when Russia would export aircraft and its offsets to China, the latter would reverse-engineer the product to understand it and then emulate it, sometimes with “next-generation design modifications.” This way, it is considered a product of China’s indigenous industry, without China having to have spent a large amount of effort into it.

The Export of China’s Conventional Weapons – Supply-side

China is the fifth-largest exporter of conventional weapons in the world, but the countries it exports to are limited in number and geographical area. Between 2014 and 2018, 64% of China’s total exports were sent to Pakistan, Bangladesh, and Algeria. Other recipient countries are in Latin America, Africa, and Southeast and South Asia.

Below are engendered soft power reasons for the growth of China in the global arms trade. Soft power refers to the cultural influence a country gains by using hard power methods of economy and military. In essence, it is an influence that makes other countries of the world want what the country exerting the power wants. Noam Chomsky described soft power as the manufacturing of consent. It employs strategies like economic diplomacy.

These reasons are all interrelated and are supported by overlapping examples.

First is the intention of increasing Chinese geopolitical influence. Most of the recipient countries were or are part of the Russian market. Some countries that China has not been able to penetrate through to are India, South Korea, and Vietnam, and that is due to their military and security conflicts with China. By increasing its market in the Global South, China is increasing its reach to these areas, and establishing a network of communication. “As a means of gaining access to a market, the construction of ports is a well-tested Chinese strategy already employed in Myanmar (Sittwee), Sri Lanka (Hambantota) and Pakistan (Gwadar).” (Li and Matthews 2017) As China increases its reach and makes poor countries dependent on it for cheap weapons, it increases its importance for the recipient countries and thus makes them allies in world politics. This is a policy that China has otherwise employed in other aspects as well, like the One Belt One Road (OBOR) initiative, using the notion of debt-trap diplomacy. However, it is notable that since the OBOR has been announced, it hasn’t changed or impacted the pathway the Chinese export of arms was taking.

Second is the geo-strategic importance of Chinese exports. China’s allyship with and export of weapons to Pakistan causes India great discomfort. Moreover, penetrating Russian markets, it makes the Russian economy weaker. In these ways and more, China chooses the countries it attempts to export to.

Furthermore, China’s intentions to be a regional power in southern Asia have been implied in several articulations by its leadership, and this trade takes a step forward in that direction. India creates a big hindrance to this dream being realised, and China’s large exports to the South Asian countries of Pakistan, Bangladesh, Myanmar and Sri Lanka decrease India’s influence in these areas and clear the way for China: “From a security perspective, Chinese arms exports strengthen client-state relationships, and bolster Beijing’s influence, particularly amongst contiguous states. It is no accident that China’s arms sales to Pakistan, Sri Lanka, Bangladesh, and Myanmar have carried the additional impact of containing the emerging threat of Asia’s other mega-power, India.” (Li and Matthews 2017) Similarly, its influence in Southeast Asian countries is to the same effect. While India is not a notable country in terms of its arms exports, the defence spending has been increased to secure its strategic interests. “India’s plans to increase its defence footprint in countries such as Bangladesh, Afghanistan, Maldives, Seychelles, Mauritius, Vietnam, the Philippines and Indonesia, among others, as it puts greater focus on securing the maritime domain, amid China’s growing military adventurism not just in the Himalayas but also in the seas.”

Third is the new discourse attempted by China. A rhetoric constantly put forth by China while talking about its global ambitions is one where the world order does not support the hegemony of the United States and is multipolar, or at least bipolar. “[China’s] Constitution envisions a world ‘without hegemonism and power politics’ – a phrase widely viewed as referring to Beijing’s desire to curb overwhelming US power globally, but especially in Asia.” Employing this discourse, China offers a new source of arms and other resources to poor countries, and in turn, increases its influence and its chances of achieving this dream, which is a step forward from regional hegemony in the Asia-Pacific.

The Export of China’s Conventional Weapons – Demand-side

Several news reports recount words by experts and statesmen that while China offers arms that are up to the level of their Russian and American competitive counterparts, their arms are often not up to the par in quality and can be unreliable. There are recounts of events wherein hand-held grenades have not exploded, or have exploded prematurely. But still, the countries of the Global South continue to import from China. There can be several reasons for this, as engendered below.

Firstly, and most ostensibly, China offers products of cheaper cost and technological prowess to countries that can only afford this, and they overlook small problems here and there as long as their larger demands are met. An example is that of these Middle Eastern countries: “The Chinese are also keen to export their Pterodactyl drone to the United Arab Emirates, Saudi Arabia and Uzbekistan. All three countries are oil exporters, and the collapse of the international oil price means that China’s unmanned aircraft are particularly attractive.” (Li and Matthews 2017). China is also ready to make deals and negotiations with its buyers, like allowing states to partially pay for the weapons in terms like oil.

Second is China’s non-interference policy. China follows the following principles in its conduct of arms exports: “i) conducive to the legitimate self-defence capability of the recipient country; i) not undermine peace, security and stability of the region concerned and the world as a whole; iii) non-interference in the internal affairs of the recipient country.” The non-interference policy essentially means that a state could employ Chinese imported weapons for any reason and China would not impose sanctions or ask questions. It has however reiterated that it doesn’t sell weapons to non-state actors. Li and Matthews (2017) call this approach a “‘no-questions asked’ approach to arms sales […] The reality on the ground is that the non-interference policy is welcomed. Good numbers of African countries as well as pariah states, such as Iran and North Korea, turn to China as an arms supplier of last resort.” This approach implies that China sells cheap weapons to poor countries with authoritarian rule, like Myanmar and African states like South Sudan.

Thirdly, it is possible that this idea of the unreliability of Chinese products is a narrative propagated by the bigger suppliers like the US and Russia in order to decrease competition as well as China’s influence, since it doesn’t seem to impact the countries’ decisions to buy them. This is a pattern visible in other Western tendencies as well. The Peterson Institute of International Economics claims: “With respect to Zimbabwe, China appears to be living up to its ‘rogue aid’ reputation as a partner of last resort for a pariah regime. However, the rest of the list hardly reads like a ‘who’s who’ of international norm flouters: Ghana, Namibia, and the Seychelles are among the continent’s most stable democracies. More in-depth analyses of arms transfers to Africa find little support for the rogue aid hypothesis,” going ahead to say that it is often the US more than China that supplies to non-democratic countries that do not meet its political standards.

Lastly, it is also true that countries of the Global South are attracted to China’s discourse of anti-US hegemony, appreciate its attempt to destabilise the world order and question the unipolar authority of the US. By using the notion of “an enemy of my enemy is my friend,” China strategically approaches and intends to increase its reach in countries that are forced to employ Chinese resources in their favour. For example, Pakistani import of Chinese weapons is driven by an understanding between the two of the problem India poses, as well as its easy, cheap sale.

Conclusion

China’s rapid rise in the global arms trade took its very first steps in the early 1990’s with Deng Xiaoping’s economic reforms. The loosening of defence enterprises allowed them to be autonomous in their decision-making and made their manufacturing capacity more efficient. China began to offer cheaper conventional weapons to countries of the Global South as an alternative to weapons exported by the US, Russia, France, and Germany. This trade was supported by Chinese intentions to increase their geopolitical reach, secure their geo-strategic interests (including that of regional supremacy), and create a new rhetoric for the world order. The demand for Chinese arms exports is increasing due to the low costs of their products, their non-interference policy, and support for their intent to create a new global order.

Taal Seth
Taal Seth
Author is a 20-year-old BA (research) student at Shiv Nadar University, majoring in International Relations with a minor in Sociology and Communication. She looks forward to pursuing a career in the field of journalism and/or International Relations research.
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