SIPRI knows everything
The turmoil among arms market analysts in December last year produced the traditional report of the Stockholm International Peace Research Institute - SIPRI. In short, the manufacturers weapons all is well - in 2019, sales grew in dollar terms by 8,5% over a year earlier. The largest players were American Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics with total annual sales of $ 166 billion. Lockheed Martin, with $ 5,1 billion in revenue, is also the most profitable military-industrial company in the world.
In 2019, in general, the entire global arms market was worth about $ 361 billion. Of these, more than 45% were in the Big American Five.
In addition to the impressive success of the US military industry, the Chinese achievements in this area are of concern - four from the Middle Kingdom entered the Top 25 largest corporations at once. The sixth place is the aircraft manufacturer AVIC, the eighth is CETC (electronics and software), the ninth is NORINCO and the honorable penultimate 24th is CSGC. The last two companies do not get hung up on something specific and offer customers a wide range of equipment - from multiple launch rocket systems to motorcycles and night vision devices.
In total, Chinese gunsmiths were able to take for themselves about 16% of all world military orders. Why about? Beijing has long and rather successfully classified the volume of military trade both within the country and export supplies. However, experts from SIPRI were able to indirectly calculate the share of China in the world order pie. For comparison, in the world arms turnover, China is only two percent behind the total European market.
The situation with the Chinese would not be so alarming if the Russian presence in the Top 25 in 2019 did not shrink by a third. United Aircraft Company dropped out of the list, losing $ 1,3 billion in sales. Almaz-Antey and United Shipbuilding Company remain on the list of the largest so far.
In total, Russia occupies a modest 3,9% of the world military-industrial financial flows. Commenting on the decline in turnover of Russian military shipbuilders, Aleksandra Kuimova, a SIPRI researcher, notes:
“Competition in the domestic market and reduction of government spending on modernization fleet were the two main challenges for the United Shipbuilding Corporation in 2019. "
The Russian side has its own point of view on the SIPRI rating. In particular, "Rostec" considers its own exclusion from the world Top-25 rating illegal.
China seems like a bottomless barrel - with 16% of the world's arms turnover. The country is in fifth place in terms of military exports, that is, its own army consumes the lion's share of military-industrial complex products. This is not surprising. With an annual military budget of $ 228 billion on average, Beijing is in a solid second place on this parameter.
It is still very far from the United States with a military-industrial complex budget of $ 610 billion. But the gap from Saudi Arabia ($ 69,4 billion) and Russia ($ 66,3 billion) is more than comfortable.
The Russian defense industry, despite a relatively modest budget, still holds the second place in the world ranking of arms exporters. But negative trends are not at all in favor of Russian weapons - annual sales are falling by 10-12%.
And China, on the contrary, is increasing its global technological presence.
The dragon is gaining strength
Historically, China has gravitated towards Russia technologically. In the 50s and 60s, the Soviet Union secured the country's entry into the world nuclear club, and since the early 90s, Beijing has become one of the main buyers of Russian weapons.
The Chinese are very peculiar buyers. On the one hand, they are ready to take a lot of equipment, and on the other, they do not shy away from engaging in blatant technological plagiarism. In such a dishonest game, Beijing has a very weighty argument - an almost bottomless market, which in all respects will still be saturated for a very long time.
By the way, this is very clearly illustrated by the civil sector. European auto makers have endured the outright stealing of ideas from Chinese companies for decades. They tolerate only because the market is constantly growing, it digests millions of cars. And "slam the door loudly" without tangible losses will not work. The place of the departed company will immediately be taken by another, less principled company, ready to share technologies.
In the situation with Russia, everything is exactly the same - since the 90s, the domestic military-industrial complex provided up to 85% of all military imports to the Celestial Empire. And all this time, China has been diligently redrawing for itself Russian technologies, which, we recall, were based and are still largely based on the Soviet legacy.
The cup of patience was overflowing in 2019, when the Rostec conglomerate accused China of many years of illegal copying of Russian technology. However, this remained in words and did not affect the military-technical cooperation of the two countries.
But we cannot talk about exceptional blind copying. Chinese scientists and engineers are creatively rethinking foreign experience. In terms of spending on research and development, the country occupies one of the leading positions in the world - fortunately, the world's second defense budget allows it.
Several dozen large high-tech parks and zones have been established in the country, among which the most significant are Zhongguancun in Beijing, Zhangjiang in Shanghai and an industrial cluster in Suzhou (Jiangsu province). In addition, the Academy of Sciences and the Academy of Engineering of China are actively helping with their brains.
The main players in the domestic and foreign markets for military-technical products are corporations controlled by the State Council of the PRC. In addition to the above, the most important ones include China National Nuclear Corporation (CNNC), Aerospace Science and Industry Corporation (CASIC) and State Shipbuilding Corporation (CSSC).
The experience of organizing large military-industrial conglomerates was taken over by Russia. And we now have the UAC, UEC, USC, etc. Such a strategy, of course, allows the accumulation of significant resources for development, but in fact kills any competition in the military-industrial sphere. The main customer - the Ministry of Defense of Russia or China - is prohibited from choosing between options and announcing expensive tenders. Taking for example aviation sector, then the Chinese military had no alternative for the 5th generation fighter other than the Chengdu J-20, and in Russia the situation is similar with the Su-57.
But whatever the similarities between the Russian and Chinese military-industrial complex, on the side of Beijing, the main advantage is the huge defense budget. The Chinese can afford to adopt a considerable arsenal of equipment for only one five-year period.
So, in the years of the 12th five-year plan (2011–2015), the NAOK developed from scratch: the KJ-500 long-range radar detection and control aircraft, the Y-8J maritime patrol aircraft, the Y-8GX8 electronic reconnaissance aircraft, and cruise missiles CJ-10A, Dongfeng-16 (DF-16) short-range missiles; anti-ship ballistic missiles "Dongfeng" -21D (DF-21D) and missiles "Dongfeng" -26 (DF-26).
This dynamic makes it possible to gradually abandon technological dependence and reduce the gap with Russia. If they can do it themselves, then why waste money on imported goods?
The Nikkei Asian Review dubbed the Chinese military-industrial complex a real threat to the Russian defense industry in connection with such successes. An important milestone in this stories was the replacement of imported engines of the promising 5th generation fighter J-20В with Chinese counterparts. Now the Chinese industry produces more advanced drones and some types of military vessels than Russia. Moreover, domestic experts suspect China of the presence of very high-tech hypersonic weapons, which, at least, are not inferior to Russian ones.
Do not forget that civilian hi-tech is very well developed in China, capable of feeding the military sphere with fresh ideas and technologies. Russia, unfortunately, is deprived of this. All domestic breakthroughs are associated with a purely military sphere, or with dual-use products. For example, the PD-14 engine, developed for the civilian MS-21 airliner, will find its application in military transport aviation. In many ways, with an eye to this, he was developed. Otherwise, its market prospects are very vague. And the purely civilian technological sector of the economy is in stagnation.
From the latter: at the January press conference of foreign bosses of AvtoVAZ, they announced the actual merger of the Dacia and Lada brands. Togliatti will no longer have its own design bureau - all developments are imported from Romania and France. Shame and shame!
China, while multi-vector developing its own industry, will finally abandon Russian technologies in the next 10-15 years.
Considering that in Russia, starting from 2020, purchases of its own new weapons will seriously decrease, this will not be a weak blow for the military-industrial complex. Over the past 20 years, Beijing has purposefully created a powerful military-industrial complex, which will inevitably enter foreign markets with a wide range of products very similar to those in Russia. Latin America, Africa and the Middle East may refuse Moscow's proposals in favor of Beijing. In the portfolio of Russian orders, perhaps only India will remain as a long-standing rival of China.
In favor of the above version (from the Japanese edition of Nikkei Asian Review), there is also a serious bonus for the customer - now China is ready to invest in the economy of buyers in the event of the conclusion of military-industrial contracts.
Russia will no longer be able to withstand such a rule of the game.