China’s military companies are facing a significant slowdown as the government’s anti-corruption crackdown hits arms contracts. A recent study revealed that the revenues of China’s top military firms fell sharply last year, even as the global arms industry continued to grow and set new records.
The decline highlights the impact of corruption investigations on some of China’s most critical defence projects, raising questions about the timing and delivery of new military equipment and programs. Last year, revenues of the country’s leading military companies fell by about 10%, a rare reversal compared to the worldwide surge in arms sales driven by ongoing conflicts and regional tensions.
The drop affected China’s largest state-owned defence firms, including AVIC, Norinco, and CASC. Norinco, which produces land-based military systems, experienced the steepest decline, with revenue falling 31% to $14 billion. AVIC, responsible for military aircraft, and CASC, a major aerospace and missile manufacturer, also faced delays and reduced income.
This slowdown is closely linked to government reviews triggered by corruption allegations. Top personnel changes within these companies caused projects to stall, and several major arms deals were postponed or cancelled, adding pressure to China’s military production and procurement schedules.
Corruption Crackdown Shakes the Military Sector
China has been conducting a broad anti-corruption campaign in the military for years. The crackdown has reached even the highest levels of the armed forces. Investigations and disciplinary actions against top officials created uncertainty in arms procurement, slowing down contracts and deliveries.
The revenue fall shows how deeply corruption investigations can affect even large, state-run enterprises. The delays are not limited to a single company but affect multiple sectors, including missile systems, aircraft, and other defence technologies.
Experts say that this crackdown is part of a wider effort to clean up the military, ensuring transparency and tighter control over spending. However, it has caused immediate financial setbacks for companies that supply the army.
The slowdown comes as China’s People’s Liberation Army (PLA) continues to expand its capabilities, including hypersonic missiles, drones, and naval fleets. While the long-term plans remain in place, short-term revenue losses at key companies show the direct impact of personnel changes and project reviews.
Global Arms Industry Continues Growth
While China’s military companies struggled, arms firms in other countries recorded significant revenue growth. Japanese military firms saw a 40% increase, Germany’s top companies grew 36%, and U.S. firms had a 3.8% rise.
Worldwide, the top 100 arms companies achieved a record revenue of $679 billion in 2024, up nearly 6% from the previous year. This growth was largely driven by global and regional conflicts, which increased demand for military equipment and services.
China’s decline contrasts sharply with this global trend. The drop was significant enough to make Asia-Oceania the only region among the world’s top arms producers to show a revenue decrease.
This shows that while Chinese firms face internal issues, companies in other countries are benefiting from rising military budgets and ongoing international tensions. The contrast highlights the impact that internal audits and corruption investigations can have on large defence enterprises.
Effects on Military Modernisation Projects
The revenue decline has also affected the timeline of major Chinese defence projects. Delays were seen in military aircraft deliveries and missile system programs. This slowdown could influence the development of new technologies in areas such as hypersonic missiles, drones, and cyber capabilities.
Even though China continues to expand its naval and coast guard fleets, including potential new aircraft carriers, the corruption investigations have created temporary uncertainty in several programs. The revenue drop at leading firms shows that procurement and production can be slowed by management changes and internal reviews.
In particular, companies like Norinco and CASC faced project delays due to personnel reshuffles and government inspections. AVIC’s aircraft production schedules were also slowed, affecting deliveries for the armed forces.
The study emphasizes that while long-term plans for military modernisation continue, current contracts and projects are facing immediate disruptions. This makes the financial results of Chinese defence firms noticeably weaker compared to their international peers.