Chinese defence industry expenditure to reach US$174.9 billion by 2017

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China is the world’s second-largest defence spender, and is expected to spend US$174.9 billion on defence per year by 2017, according to a new report.

China’s military industrial complex is the largest in Asia, notes the new document from Reportlinker entitled ‘The Chinese Defence Industry Market: Opportunities and Entry Strategies, Analysis and Forecasts to 2017′. In addition, the country’s large annual defence budget, which is valued at US$104.62 billion in 2012, makes it the second-largest defence spender in the world.

The country’s defence expenditure registered a strong growth throughout the last decade, and achieved a compound annual growth rate (CAGR) of 11.5% during the review period. It is expected to record a CAGR of 8.49% and reach US$174.9 billion by 2017.

The main reason for this increased expenditure is to enable China to achieve its goal of becoming a major military and economic superpower that can rival the United States.

In addition, China has instigated a military modernisation program, which focuses on developing its navy, air defence systems, missile defence systems, C4I (command, control, communications, computers and intelligence) capabilities and surveillance equipment.

China is expected to spend US$722.4 billion in the fulfilment of its defence requirements over the next five years. Factors such as Sino-US relations, asymmetric warfare and the threat from Taiwan to its territorial integrity are expected to stimulate defence expenditure. China’s emphasis on the import of technology rather than in the import of finished equipment will continue to lead the development of domestic defence firms, notes the report.



Aircraft and armoured vehicles were the main categories in defence exports by China. In 2011, China exports defence products to 36 countries with a total value of US$1.35 billion.