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China Defence and Security Report 2016

China Defence and Security Report 2016

BMI View: China's defence industry and military are currently undergoing substantial changes on the back of President Xi Jingping's sweeping reform and modernisation agenda. The promotion of greater civilmilitary integration will spur military industrial innovation and expand the technological capabilities of the domestic defence sector; however, we note that this process will be slow, and that the country will continue to look to import more technologically advanced equipment throughout our forecast period. Owing to rising regional tensions emanating from the South and East China seas disputes, we expect defence expenditure levels to remain high on a global comparison in 2016 and beyond - with spending being directed mainly towards the country's cyberwarfare, naval and air forces - despite an overall slowdown in the country's economic growth. In 2016, we expect defence spending to stand at 1.9% of GDP, reaching USD216.4bn (CNY1.44trn).

Latest Updates

Structural reforms to China's Central Military Commission (CMC) were announced on January 11 2016 that will see the disbandment of the CMC's four previous 'General Departments' and their replacement with 15 new 'Functional Department's. The move is aimed at consolidating the CMC's authority and centralising the structure of the People's Liberation Army (PLA).

On December 31 2015, China's Ministry for National Defense confirmed that the country is constructing its second aircraft carrier. The carrier will be the first domestically designed and developed vessel, and will be a 50,000 tonne, conventionally-powered build.

Over December 2015 and early January 2016, the country commissioned six new naval vessels and the launch of two more into the PLA Navy.

In mid-December 2015, Uruguay's Defense Senate Committee met with delegates from the China Shipbuilding & Offshore International Company to discuss an updated offer for the latter to provide three offshore patrol vessels to the Uruguayan navy.

In November 2015, Beijing and Phnom Penh agreed to expand military ties through the assistance and transfer of Chinese defence platforms and technologies to Cambodia.


BMI Industry View
Table: Headline Defence Expenditure (China 2015-2020)
SWOT
Industry Forecast
Defence Expenditure
Table: Defence Expenditure (China 2014-2019)
Table: Defence Expenditure (China 2020-2025)
Defence Trade
Key Risks To Outlook
Industry Risk Reward Index
Defence Industry Risk Reward Index
Table: Asia Pacific - Defence Industry Risk Reward Index
Rewards
Risks
Market Overview
Defence Market Overview
Domestic Defence Sector
Domestic Defence Market
Armed Forces Overview
Armed Forces
Table: Armed Forces Personnel (China 2006-2013)
Security Overview
Domestic Threats
Regional Threats
International Threats
Cyberspace
Company Profile
China Aviation Industry Corporation
Table: 2015 Company Transactions
China National Nuclear Corporation
China Shipbuilding Industry Corporation
Table: 2015 Company Transactions
China South Industries Group Corporation (CSG)
Table: 2015 Company Transactions
China State Shipbuilding Corporation (CSSC)
Methodology
Risk/Reward Index Methodology
Sector-Specific Methodology
Table: Defence Risk/Reward Index Indicators
Weighting
Table: Weighting of Defence Risk Reward Index

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