Corruption Crackdown Clouds Future for China's Military Firms

China's military firms faced decreased revenues due to corruption purges affecting arms contracts, despite global arms revenue rising. Corruption has led to significant delays in military modernization, targeting top military figures. The impact of these purges raises questions about China's continued military rise amid growing global tensions.

Last year, China's colossal military firms saw a slump in revenues as major corruption purges disrupted arms contracts and procurement processes. The fall, highlighted in a study by the Stockholm International Peace Research Institute, stands in stark contrast to global revenue increases for major arms companies, driven by ongoing conflicts in Ukraine and Gaza.

The People's Liberation Army has been a major focus of President Xi Jinping's broad anti-corruption campaign since 2012, with significant impacts still felt in 2023. Among the expelled top generals was He Weidong, a key figure from the Central Military Commission, showing the depth of the corruption crackdown.

The study noted that while China saw a 10% revenue decrease in its leading military firms, other countries like Japan and Germany experienced significant growth. Despite China's defence budget increases over the years, factors like postponed contracts and leadership changes, particularly at companies such as AVIC, Norinco, and CASC, have contributed to the ongoing struggles within China's defense sector.

(With inputs from agencies.)