Another strong year for China’s defence companies,

Fenella McGerty, Senior Fellow for Defence Economics

Amid considerable global turmoil in 2020, the relatively strong performance of the Chinese economy and continued commitment to defence budget growth contributed to the robust performance of Chinese defence state-owned enterprises (SOEs). While all Chinese firms in the Defense News Top 100 global defence companies list for the 2019 financial year ranked in the top 24, all seven SOEs ranked in the top 20 for 2020, suggesting a generally positive performance despite the impact of COVID-19 on China’s economy in early 2020.

The IMF estimates that Chinese real GDP had recovered by the second quarter of 2020, with annual GDP growth reaching 2.3% in 2020 compared to a 3.3% contraction in global output, while IISS figures indicate that defence spending grew by 5.2% in real terms compared to 3.9% growth in global spending. Chinese SOEs focused on the aerospace domain generally saw revenue growth slow, while more diversified companies specialising in small arms, unmanned systems and advanced weapons performed well. As global trade slowed, companies with a diversified portfolio were in a good position to benefit when domestic demand turned inward.

The combined defence revenues of the Chinese SOEs in the Top 100 came to an estimated US$96 billion in 2020, growing by 7.3% compared to 2019. This figure dwarfs the combined total of all other Asian companies included in the list, including major entities in Australia, India, Japan and South Korea, which grew by 5.7% to reach US$22bn. The Chinese total is now comparable to the total defence revenues of all European defence firms on the Top 100 list whose combined revenues grew by just 2.5% to reach US$100bn in 2020. Läs artikel