- The Washington Times - Monday, March 18, 2013

China has grown its weapons sales by 162 percent over the last five years, allowing it to crack the top five list of arms exporters for the first time and fueling concerns of an arms race in Asia, a new report shows.

There is also some evidence that Chinese industries are using arms sales “as a lever” to open new markets for more lucrative, non-military contracts, according to the report by the Stockholm International Peace Research Institute.

For huge state-owned industries like China’s North Industries Corp., known as Norinco, “the arms trade represents only a fraction of their overall revenue,” said Paul Holtom, the report’s lead author.

“They are competing with the big boys now,” said Mr. Holtom, director of the institute’s Arms Transfer Program.

The report shows that the United States remains the top arms exporter, with 30 percent of the global market — followed by Russia, with 26 percent; Germany, 7 percent; France, 6 percent; and China, supplanting Britain, with 5 percent of the market. It’s the first time since the survey began in the 1950s that China entered the top-tier of exporters.

China defended its arms trade Monday, saying its weapons sales to foreign countries adhere to U.N. guidelines and domestic restrictions.

China always takes a responsible and cautious attitude toward arms exports,” Foreign Affairs Ministry spokesman Hong Lei said at a news conference. He added that Beijing’s arms sales must be justified by the legitimate needs of the buyer and must not harm the peace or security of the buyer’s region.

A Pentagon official authorized to speak only anonymously said the Defense Department “closely monitors” Chinese foreign military sales.

“We believe that China is likely to continue to modestly increase exports as its domestic defense industry improves,” the official said in an e-mail. “We welcome the emergence of a prosperous and successful China as a positive contributor to Asian stability and member of the community of nations.”

According to the report, China also remains the world’s second-largest importer of arms — mainly from Russia.

In fact, the top five importers — India, China, Pakistan, South Korea and Singapore — are in Asia.

Some scholars fear a regional arms race fueled by concerns about an increasingly aggressive China and worries that the political or budgetary problems will stymie the U.S. pivot to the Pacific, eroding the security umbrella they can offer their allies across the vast ocean.

The news comes as a major U.N. conference meets in New York with the aim of producing an international treaty to regulate the arms trade.

The traditional Chinese customer base, said Richard Fisher, a scholar at the International Assessment and Strategy Center, a think tank in Alexandria, Va., were “poor countries, especially dictatorships” that either could not afford or were barred by arms controls from Western markets.

The change to higher end sales “reflects a considerable effort over the past 20 years by Beijing to bolster their arms industry,” Mr. Fisher said. “They can now compete at the higher end.”

Ten years ago, Chinese plans for a major arms sales push in Latin America would have been “unrealistic,” but not now, he said.

“Both China’s rising influence, and the increased attractiveness of its more modern weapons systems have contributed” to that change, Mr. Fisher said.

He gave as an example of a new high end system the Chinese are selling, the Chengdu FC-1, also known as the JF-17, a jet fighter that he said is competitive with the U.S.-produced F-16 Falcon.

“My own estimate is that the FC-1 offers 85 to 90 percent of the F-16’s performance, for about 25 percent of the cost,” he said, adding that existing F-16 customers like Egypt and former purchasers like Venezuela are reportedly considering switching to the FC-1.

David Finkelstein, a retired Army officer and director of China studies at the Center for Naval Analyses in Alexandria, said the Chinese often offer special reductions on their already low costs — the so-called “friendship price” — or arranged favorable loan terms to new customers.

“Arms sales, for China, as for the United States and any other exporter, are a tool in the defense and foreign policy toolbox,” Mr. Finkelstein said.

Mr. Holtom, the lead author of the arms report, said China has been on a “rapid learning curve” with high-tech weaponry over the past two decades.

“They’re not just importing finished [weapons] systems any more,” he said, “Increasingly they are looking for a role for their own industry,” either assembling aircraft or other systems bought as kits, or importing components for integration into domestically built weapons.

“India and South Korea are doing the same” he said, following the Chinese example as a way to build up the skills and expertise of their own defense industrial base, and helping fuel a boom in arms buying across Asia.

That growth also has been driven by regional tensions, which have run high over the past two years as China has begun to flex its new military muscle in support of extensive, and hotly contested, maritime territorial claims in the South and East China Sea.

“It’s all driven by fear of China,” Mr. Fisher said, describing the regional situation as being “somewhere between an arms trot and an arms race.”

“This is going to intensify and will get worse if the [security] assurances the United States offers its allies are undermined by political or budgetary factors,” he said, noting that no U.S. ally in the region “has the capability or the resources to deter China with conventional weapons alone.”

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