China Defence & Security Report

Published 11 May 2015

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China Defence & Security Report

BMI View: China has continued its assertion of dominance in the South China Sea over several incidents in the past year. This has raised tensions between its Asian neighbours as well as the U.S. and has even caused a standoff between militaries. Although China has begun to make political moves, deals and visits to ease these tensions, many speculate that these are more for show rather than sincere negotiations. Again, little is truly known about China's domestic situation due to its blockade against news leaving the country.

China's defensive position and plans are difficult to fully confirm due to China's secrecy on such matters. Like many aspects of its defence posture, China keeps its annual defence budget secret, nevertheless, it is possible to make an accurate estimate regarding what the country spends annually on defence. China is one of the worlds largest spenders on defence but its significant rivals, the U.S., claim that China still has the disadvantage in terms of size and quality of equipment.

As we enter 2015, China has had a tempestuous year with several incidents causing tensions and aggressive responses in regards to not only the South China Sea but China's alleged cyber attacks against American security firms.

China has reassessed and reasserted its friendship with Russia as they have agreed to perform naval exercises in the Mediterranean Sea. This goes hand in hand with reports that China's naval strength (in terms of numbers) could overtake that of the U.S. by 2020. The tension between China and the U.S. has become increasingly tense over the past few years and this agreement with Russia has done nothing but add fuel to that fire. The agreement shows a joint venture that could further include military equipment from Russia and general production from China being exchanged; thereby helping to more extensively arm the two countries in the process, a worry that these arms will be used in China's sovereignty disputes.

In regards to other...

Table of Contents

BMI Industry View
China Security SWOT
China Defence SWOT
Business Environment
Industry Forecast
Defence Budget
Table: Defence Expenditure (China 2011-2018)
Table: Defence Expenditure Scenario - Changing % Of GDP (China 2011-2018)
Armed Forces
Table: Armed Forces Personnel (China 2004-2011)
Table: Manpower Available For Military Service (China 2011-2018)
Defence Trade
Table: Defence Exports (China 2011-2018)
Table: Defence Imports (China 2011-2018)
Table: Defence Trade Balance (China 2011-2018)
Macroeconomic Forecasts
Economic Analysis
More Cities To Witness Price Declines
Government, PBoC Likely To Tweak Policies
Economic Reforms Another Headwind
Table: Economic Activity (China 2009-2018)
Industry Risk Reward Ratings
Asia Security Risk Ratings
Table: Asia Security Risk Ratings
Table: Asia State Vulnerability To Terrorism Index
China Security Risk Ratings
Market Overview
China Defence Market Overview
Armed Forces
Domestic Industries
Weapons Of Mass Destruction
China Security Overview
Domestic Threats
Regional Threats
International Threats
Company Profile
Chengdu Aircraft Company
China Aviation Industry Corporation
China National Nuclear Corporation
China Shipbuilding Industry Corporation
China South Industries Group Corporation (CSG)
Regional Overview
North East Asia Security Overview
Global Industry Overview
Political Risk Analysis
Industry Forecast Methodology
Sector-Specific Methodology
Security Risk Ratings Methodology
Table: Indicators And Weighting

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.

BMI's China Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Chinese defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on China to test other views - a key input for successful budgetary and strategic business planning in the Chinese defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).


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.

SWOT Analysis

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.

Competitive Landscape

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.

Company Profiles*

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.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc