Business Monitor International


China Defence & Security Report

Published 17 July 2014

  • 104 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,295.00
China Defence & Security Report

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.

Table of Contents

BMI Industry View
7
SWOT
9
China Security SWOT
9
China Defence SWOT
12
Political
15
Economic
16
Business Environment
17
Industry Forecast
18
Defence Budget
18
Table: Defence Expenditure (China 2011-2018)
18
Table: Defence Expenditure Scenario - Changing % Of GDP (China 2011-2018)
20
Armed Forces
20
Table: Armed Forces Personnel (China 2001-2011)
21
Table: Manpower Available For Military Service (aged 16-49 unless otherwise stated) (China 2011-2018)
21
Defence Trade
21
Table: Defence Exports (USDmn) (China 2011-2018)
22
Table: Defence Imports (USDmn) (China 2011-2018)
23
Table: Defence Trade Balance (USDmn) (China 2011-2018)
24
Key Risks To BMI's Forecast Scenario
24
Macroeconomic Forecasts
25
Table: China - Economic Activity
29
Industry Risk Reward Ratings
30
Asia Security Risk Ratings
30
Table: Asia Pacific Security Risk Ratings
30
Table: Asia Pacific State Vulnerability To Terrorism Index
31
China Security Risk Ratings
31
Market Overview
33
China Defence Market Overview
33
Armed Forces
33
Domestic Industries
34
Procurement
39
Weapons Of Mass Destruction
43
China Security Overview
45
Domestic Threats
46
Regional Threats
51
International Threats
58
Company Profile
69
Chengdu Aircraft Company
69
China Aviation Industry Corporation
70
China National Nuclear Corporation
71
China Shipbuilding Industry Corporation
73
China South Industries Group Corporation (CSG)
74
Regional Overview
75
North East Asia Security Overview
75
Global Industry Overview
86
Global Political Outlook
86
Methodology
92
Industry Forecast Methodology
92
Sector-Specific Methodology
93
Sources
94
Security Risk Ratings Methodology
94
Table: Indicators And Weighting
95

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).

Coverage

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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Testimonials

'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