Richard Sanders, Taipei
China’s ambitious initiative to enhance its high-tech military capabilities faces significant challenges due to a growing corruption crisis, which raises concerns about the nation’s true military strength. The Stockholm International Peace Research Institute (SIPRI) recently reported that major state-owned defense companies in China experienced the steepest decline among the world’s top arms producers in 2024, attributing this downturn to corruption scandals disrupting procurement processes.
The report indicates that the combined arms revenues of eight prominent Chinese firms fell by 10%, totaling $88.3 billion, marking the sharpest decline globally and negatively impacting regional performance. SIPRI analysts noted that six of these firms recorded revenue losses as high-profile corruption investigations led to the postponement, cancellation, and review of crucial military contracts.
Notably, the China North Industries Group Corporation (NORINCO), the world’s largest land-systems manufacturer, suffered a staggering 31% drop in sales after the government dismissed its chairman and military division head over corruption allegations, causing delays in important projects. Similarly, the China Aerospace Science and Technology Corporation (CASC) reported a 16% decline in revenues due to delays in satellite and launch vehicle programs following the corruption-related ousting of its president. The Aviation Industry Corporation of China (AVIC), the largest defense producer, also faced a 1.3% revenue dip amid slower aircraft deliveries.
SIPRI pointed out that while other Asian defense manufacturers generally saw growth, China’s downturn was particularly alarming, suggesting systemic misconduct within procurement channels was hindering its military modernization efforts. These industrial setbacks highlight deeper structural issues within the Chinese military system, influenced significantly by the political dynamics surrounding President Xi Jinping’s consolidation of power.
As corruption hampers China’s defense industry, it intertwines with Xi’s overarching objective of power centralization, which is redefining incentives within the People’s Liberation Army (PLA) and exacerbating vulnerabilities that challenge military effectiveness.
Recent reports indicate that Xi’s extensive purging of nine senior PLA generals, framed as an anti-corruption initiative, primarily served to reinforce his control over the military. Some analysts argue that this tightening grip is part of a broader political strategy aimed at securing “regime security” and centralizing authority in policymaking.
Despite Xi’s anti-corruption campaign spanning over a decade, systemic issues persist, including fraud and bribery within weapons development and promotions. The reliance on political alignment over merit for advancement has entrenched corruption and halted the growth of professionalism within the PLA.
Critics point to historical examples, such as the Russian military’s shortcomings during the Ukraine War, where corruption significantly weakened operational capability. Observers warn that unless China addresses the systemic issues privileging loyalty over competence, it risks experiencing similar vulnerabilities, especially concerning its strategic ambitions regarding Taiwan.
The U.S. Department of Defense has highlighted that Xi’s purges have disrupted essential modernization programs, including key missile systems, raising doubts about weapon reliability and readiness. Experts contend that the detrimental effects of corruption extend beyond procurement failures, negatively impacting the PLA’s internal culture and operational effectiveness.
The dual challenges of corruption and centralized political control reveal significant obstacles to China’s military modernization goals. Without decisive reforms to address these issues, China may find itself mirroring the structural failures that impeded other authoritarian militaries, with serious implications for any future high-intensity conflicts.
