Business Monitor International

China Defence & Security Report

Published 03 October 2014

  • 104 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
China Defence & Security Report

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. To this end, we expect China's defence budget to reach USD132bn in 2014. By 2018, we expect China's defence budget to reach USD187bn.

We have given China an overall security risk rating of 74 for Q414. On average, the country has scored an overall security risk rating at the same level for the period January 2009 until Q414. We believe China faces a low risk of becoming involved in a major interstate conflict. Similarly, it faces a low risk of experiencing a major terrorist attack, although its susceptibility to criminal activity remains high.

China's occasionally tempestuous relationship with India was tested once again in mid-August 2014 when Chinese troops entered territory claimed by India. The move follows similar incursions which occurred in 2013 and, once again, took place in an unpopulated area close to the northern Indian city of Ladakh.

Much as relations with India have been strained during Q314, China's difficult relationship with Taiwan has once again been tested, via a series of cyber attacks which Taipei has blamed on Beijing. Additionally, Taiwan scrambled two fighter aircraft to intercept two Chinese surveillance aircraft which had entered the country's air defence zone in late August 2014.

Throughout Q314, Japan's plans to redraft the 'Article 9' of its constitution which bars the country from deploying military forces abroad has raised China's ire. Beijing has been harshly critical of a move which it sees as returning Japan to an era of militarism. Meanwhile, reports in mid-July 2014 spoke of China constructing an airstrip on the Fiery Cross Reef in the South China Sea; the latest in a series of moves which China has undertaken to demonstrate its control over an area of ocean which it considers its own.

Chinese relations with the United States continue...

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 2001-2011)
Table: Manpower Available For Military Service (aged 16-49 unless otherwise stated) (China 2011-2018)
Defence Trade
Table: Defence Exports (USDmn) (China 2011-2018)
Table: Defence Imports (USDmn) (China 2011-2018)
Table: Defence Trade Balance (USDmn) (China 2011-2018)
Key Risks To BMI's Forecast Scenario
Macroeconomic Forecasts
Table: China - Economic Activity
Industry Risk Reward Ratings
Asia Security Risk Ratings
Table: Asia Pacific Security Risk Ratings
Table: Asia Pacific 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
Global Political Outlook
Industry Forecast Methodology
Sector-Specific Methodology
Security Risk Ratings Methodology
Table: Indicators And Weighting

The China Defence & Security Report features Business Monitor International (BMI)'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'.

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 Rankings provide 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.

Domestic Security Overview

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.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2018 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

Budgets & Expenditure: Defence expenditure (local currency and US$bn); defence expenditure (% of total budget); defence expenditure (% of GDP); defence expenditure per capita, US$; defence budget (local currency and US$bn).

Employment: Employment in arms production (`000s); employment in arms production (% of labour force).

Macroeconomic: BMI's forecasts and analysis of all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt.

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.

Domestic Security Overview

The reports also provide a regional overview which details specific issues and flashpoints affecting , along with potential risks in the coming year.

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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