BMI View: China's defence industry and military are currently undergoing substantial changes on the back of President Xi Jingping's sweeping reform and modernisation agenda. The promotion of greater civil-military integration will spur military industrial innovation and expand the technological capabilities of the domestic defence sector ; however, we note that this process will be slow, and that the country will continue to look to import more technologically advanced equipment throughout our forecast period. Owing to rising regional tensions emanating from the South and East China s ea s disputes, we expect defence expenditure levels to remain high on a global comparison in 2016 and beyond - with spending being directed mainly to wards the country ' s cyberwarfare, naval and air forces - despite an overall slowdown in the country ' s economic growth. In 2016, we expect defence spending to stand at 1.9% of GDP , reaching USD216.4 bn (CNY1.44trn) .
|e/f = BMI estimate/forecast. Source: ADB, World Bank, BMI|
|Defence expenditure, % of GDP||1.9||1.9||2.0||2.0||2.0||2.0|
|Defence expenditure, USDmn||207,337.3||216,428.6||231,201.9||252,287.5||277,360.1||304,632.3|
|Defence expenditure, USD, % y-o-y||5.7||4.4||6.8||9.1||9.9||9.8|
Structural reforms to China's Central Military Commission (CMC) were announced on January 11 2016 that will see the disbandment of the CMC's four previous 'General Departments' and their replacement with 15 new 'Functional Department's. The move is aimed at consolidating the CMC's authority and centralising the structure of the People's Liberation Army (PLA).
On December 31 2015, China's Ministry for National Defense confirmed that the country is constructing its second aircraft carrier. The carrier will be the first domestically designed and developed vessel, and will be a 50,000 tonne, conventionally-powered build.
Over December 2015 and early January 2016, the country commissioned six new naval vessels and the launch of two more into the PLA Navy.
In mid-December 2015, Uruguay's Defense Senate Committee met with delegates from the China Shipbuilding & Offshore International Company to discuss an updated offer for the latter to provide three offshore patrol vessels to the Uruguayan navy.
In November 2015, Beijing and Phnom Penh agreed to expand military ties through the assistance and transfer of Chinese defence platforms and technologies to Cambodia.
Also in November, China agreed to buy 24 Russian-made Sukhoi Su-35 combat aircraft.
On October 28 2015, the PLA Navy exercised snap air and naval drills in the South China Sea in alleged retaliation of a US Navy freedom of navigation operation near the Spratly Islands the day before.
In September 2015, China's State Administration for Science, Technology and Industry for National Defense eased licensing regulations on numerous military components.
The China Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.
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Global and Regional Political Outlooks
A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.
Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.
BMI Industry Forecast Scenario
Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
- Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
- Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
- Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).
Political Risk Assessment
Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.
Security Risk Analysis
BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.
Armed Forces Spending/ Expenditure
The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.
The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
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