China’s Military Firms See 10% Revenue Slump in 2024 as Corruption Purge Disrupts Arms Contracts

According to a new study released on 1 December 2025 by the Stockholm International Peace Research Institute (SIPRI), revenues at China’s major military firms fell by roughly 10 percent in 2024, as widespread corruption purges disrupted arms contracts and procurement schedules.

The revenue decline contrasts starkly with a global arms-industry boom in 2024, driven by conflicts and rising security tensions worldwide.

Background: Corruption Purge Amid Ongoing Military Modernisation

The purge targeting the defense sector is part of a broader anti-corruption campaign launched under Xi Jinping, which began in 2012 and accelerated after 2023.

As part of the crackdown, eight high-ranking officers — including some of the most senior generals in the Central Military Commission (CMC) — were expelled from the ruling Communist Party on graft charges in late 2025. Among them was He Weidong, the country’s number-two general.

That purge extended into the state-owned defense industrial complex, affecting top brass at firms like China North Industries Corporation (Norinco), Aviation Industry Corporation of China (AVIC), and China Aerospace Science and Technology Corporation (CASC).

Despite decades of rising defense budgets and an ambitious push to equip the PLA with cutting-edge hardware — from hypersonic missiles to aircraft carriers — the purges have introduced friction into procurement chains, raising questions over the timeline for delivery of new capabilities.

Details — Where the Impact is Felt

• Revenue Collapse and Firm-Level Declines

SIPRI’s research shows that while global arms-industry revenues for the top 100 firms climbed 5.9% in 2024 to a record US$679 billion, China’s defence sector bucked that trend.

Within China’s defense industrial base, Norinco was hit hardest: its revenue fell 31%, dropping to an estimated US$14 billion.

Both AVIC — the country’s largest military aircraft and aerospace producer — and CASC — key in missile and aerospace systems — also reported notable revenue drops. These declines were attributed to postponed or cancelled contracts after corruption allegations triggered internal investigations and leadership shake-ups.

• Procurement Delays and Program Disruptions

According to SIPRI’s director of Military Expenditure and Arms Production Program, Nan Tian, “a host of corruption allegations in Chinese arms procurement led to major arms contracts being postponed or cancelled in 2024.”

As a result, deliveries of military aircraft by AVIC slowed, land-systems and vehicle procurement under Norinco were delayed, and aerospace and missile programs under CASC saw schedule disruptions.

SIPRI researcher Xiao Liang warned that the timeline for deployment of advanced systems for the PLA’s PLA Rocket Force — which oversees China’s growing arsenal of ballistic, cruise, and hypersonic missiles — may now be uncertain. Cyber and aerospace-related program are also potentially delayed.

• Regional and Global Contrasts Highlight the Drop

While Asia-Oceania — spurred largely by China — was previously a region of growth for defense firms, the region posted a net decline in arms revenues in 2024, per SIPRI.

In the same period, defense firms in Japan saw revenues rise by around 40%, German firms 36%, and U.S. firms about 3.8%.

What Analysts Say — Short-Term Disruptions, Long-Term Commitment

Even as SIPRI warns of “uncertainty around the status of China’s military modernization efforts and when new capabilities will materialize,” it concludes that Beijing’s long-term investment in defense procurement remains intact.

Xiao Liang added that while some projects may face delays and higher costs due to tighter procurement controls, the political will behind modernization remains strong, meaning Chinese defense buildup is unlikely to stall entirely.

However, diplomats and regional observers interviewed by Reuters warned that the purge could have deeper ripple effects across the PLA’s command and procurement chains — potentially undermining confidence in program continuity and prompting allies and rivals to reassess timelines for China’s new capabilities.

What Happens Next — Implications for China’s Military Modernization

The short-term impact of the 2024 revenue slump and procurement freezes is already evident in delayed aircraft deliveries, delayed land-system rollouts, and possible slippages in next-generation missile and aerospace programs.

At the same time, the revenue drop — especially at giants like Norinco, AVIC, and CASC — may reduce China’s ability to capitalise on global demand for conventional arms exports, at least in the near term.

Over the longer term, Beijing faces a critical test: balancing the political imperative of anti-corruption against maintaining momentum in defence modernization. Continued high-level scrutiny and tighter control could introduce inefficiencies.

For regional security watchers — particularly in East and Southeast Asia — the delays may provide a narrow window of strategic breathing room as China recalibrates its procurement and production cycles.