BMI View: China's establishment of an Air Defense Identification Zone (ADIZ) in November 2013 has significantly raised geopolitical tensions in the Asia Pacific region, and risks creating a major backlash against Beijing. Tensions over the disputed Diaoyu/Senkaku Islands with Japan also remain a concern.
We expect China's defence budget to reach USD133bn. For the remainder of the forecast period, up to and including 2018, we expect that China will spend up to USD187bn on average on defence annually. China's steady increase in defence spending levels is as much a reflection of the country's increasing economic confidence and security concerns as much as it is a reflection of the country's desire to modernise its military.
BMI has given China an overall security risk rating of 74 for Q314. On average, the country has scored an overall risk rating of 74 for the period January 2007 up to Q314. As the discussion below will note, China has a low risk of becoming involved in a major interstate conflict. It also has a similarly low risk of experiencing a major terrorist attack. However, the country's risk of significant criminal activity is arguably higher.
In terms of defence exports, China is heavily promoting the WMD-7 targeting pod manufactured by the China National Aero-Technology Import and Export Corporation (CATIC). Meanwhile, China's Poly Technologies signed a memorandum of understanding with SME Ordnance of Malaysia which will see the former supplying the latter with equipment to manufacture cases for 5.56mm ammunition.
Regarding defence procurement, as of June 2014, Beijing appears to be close to signing a deal with the United Aircraft Corporation of Russia for the supply of Sukhoi Su-35 multirole combat aircraft. In addition to the deal finalising the Su-35 export from Russia to China reports circulated in late-May 2014 that China was interested in obtaining the advanced Almaz-Antey S-400 medium-to-long range surface to air missile system from Russia.
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.
- 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.
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.
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.