By Lukas Fiala
The label ‘Made in China’ has long epitomized China’s prominence in global manufacturing. From primary materials to advanced consumer goods, China’s rapid economic rise has been undergirded by the country’s insertion into global value chains since the 1980s and 90s. Yet, over the last two decades, China’s economic growth has increasingly yielded dividends for the country’s defense industry, rendering ‘Made in China’ an increasingly attractive choice in the global arms market.
Just this Wednesday, the South China Morning Post reported about talks between China, Egypt and Saudi Arabia for the acquisition of some of China’s most advanced equipment on offer. While Saudi Arabia is negotiating the acquisition of reconnaissance drones and air defense systems with China’s state-owned defense major NORINCO, Egypt is said to be interested in acquiring J-10C fighter jets from state-owned aeronautics firm AVIC. The J-10 is a capable 4th generation fighter that can be equipped with Chinese missiles and has long been the backbone of the People’s Liberation Army Airforce. The deal will reportedly be discussed at the Langkawi International Maritime and Aerospace Exhibition in Malaysia this week.
Exporting the J-10 could be an inflection point for China’s posture in the global arms market. According to the Stockholm International Peace Research Institute’s (SIPRI) arms transfer database, China has so far only exported the J-10 to Pakistan. This transfer was agreed on in 2021 and reportedly consists of 36 J-10s worth $US 1.4 billion.
Broadly speaking, China’s arms sales strategy has evolved in four periods. The first was the provision of small arms and basic equipment to anti-colonial struggles during the revolutionary period under Mao Zedong. The second saw events including the Iran-Iraq war of the 1980s during which revenue from arms sales substituted for declining defense spending during Reform and Opening Up. The third witnessed a slump in overall exports during the 1990s and early- to mid-2000s, reflecting how Chinese systems were generally a generation or two behind comparable Western and Russian equipment. The infamous ‘arms for oil’ approach reflected a specific modality of engagement during the early days of the ‘Go Out’ period.
During the fourth period, over the last 15 years, China has made headway in accessing the higher echelons of the international arms market – with strategic implications for governments across the Global South as well as for the US and their allies. Take Argentina, for instance, which has been trying to modernize its air force through the acquisition of new fighter jets for several years. As a UK arms embargo has so far frustrated these efforts, China has emerged as an attractive provider of last resort.
In March, Argentina and China once more revived the possibility of transferring JF-17s, which AVIC co-produces with Pakistan, effectively enabling Buenos Aires to sidestep the embargo. In April, a high-level U.S. military delegation traveled to Argentina, likely to prevent the deal from going ahead. While Argentina has long eyed the JF-17 without making a definitive move, the episode demonstrates the potential strategic gain for Beijing when stepping into the gap at the right time.
If faced with no other option, it would be in London’s interest to have Argentina procure F-16s rather than JF-17s as the former come with usage restrictions that can be enforced through maintenance, repair, and overhaul ties, while the latter offers no such leverage to the US and its allies.
Going forward, the key question is to what extent arms exports and defense-industrial offset arrangements will become institutionalized in China’s bilateral and regional partnership frameworks across the Global South.
Lukas Fiala is the project coordinator for the China Foresight initiative at LSE IDEAS.