Russia vs. China: The Race to Dominate the Defense Market

In the long run, who will have the upper hand?

China’s defense industry has long stood in the shadow of its Russian counterpart. Early in the Cold War, Soviet industry provided the foundations for the Chinese military-industrial complex through the licensing of technology, the transfer of assembly kits and the provision of advisors. Later, after the Sino-Soviet split, the Chinese struggled to keep pace, assembling usually inferior knock-offs of state-of-the-art Soviet equipment. After the end of the Cold War, Russian technology exports helped jump-start China’s defense industry, which had remained moribund for much of the Deng Xiaoping era.

Chinese industry can still learn much from Russia, but in many areas it has caught up with its model. The vibrancy of China’s tech sector suggests that Chinese military technology will leap ahead of Russian tech in the next decade. Historically, China’s military exports have occupied a different, lesser tier than Russian. Within the next decade, however, we should expect that Russia and China will fight hard for market share in the following five areas:

Fighter Aircraft

If Shenyang’s plans develop as expected, the J-31 will become the second fifth-generation stealth fighter to enter the international export market. Initial reports on the J-31 suggest that it will resemble the U.S. F-35 more than the Russian PAK-FA, although the J-31 does carry two engines, and probably won’t have a suite of electronics comparable to the Joint Strike Fighter.

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On the low end, the JF-17 “Thunder,” a joint Sino-Pakistani project based on the MiG-21, has enjoyed some sales success over the last year. The J-31 and the JF-17 could provide China with a high-low export “punch” either for different customers, or for countries interested in diversifying their fighter fleets.

Russia, on the other hand, continues to enjoy enormous success with the Flanker family, exporting variants to numerous customers in Southeast Asia. Other exports have slowed, however, especially as quality-control issues have afflicted MiG-29 sales. And Russia doesn’t have much on the horizon beyond the PAK-FA, which continues to struggle. The high-profile conflicts over the aircraft between India and Russia should serve as a warning for any other customers interested in the aircraft.

Submarines

Over the past several months, China has dove into the diesel-electric submarine export business head first. China has successfully negotiated deals with both Thailand and Pakistan for the construction and transfer of submarines, entering the undersea market for the first time.

The primary victim of China’s success will undoubtedly be Russia, which produces very similar boats. Indeed, Russian shipbuilders have long worried that the transfer of Kilo-class submarines to China in the 1990s and 2000s would work to their long-term disadvantage, as the technology acquired by China would allow it to produce more-effective boats. It seems that this eventuality has come to pass.

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To be sure, Russia’s submarine-building industry has remained more vital than most of the rest of its shipbuilding sector. Moreover, China has very limited experience with the transfer of such large, advanced naval vessels (a problem that also afflicts Japan). Consequently, Russia still has some advantages. However, these advantages will dissipate over time.

Tank

The design team of the Russian Armata family of armored vehicles has made very clear that it does not wish to see the tank exported to China. The Russians have good reason to exclude one of the world’s most important arms importers from enjoying the Armata; China’s relaxed attitude toward Russian intellectual property has caused problems with Su-27 Flanker sales, among others.

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But it turns out that won’t be so much of a problem. China is working on its own family of armored vehicles (VT-4 or MBT3000), which will undoubtedly compete with Russia’s offerings. Chinese analysts argue (from a hardly unbiased perspective, of course) that their vehicles will exceed the capabilities of the Armata. If the Chinese tanks prove at all competitive with their Russian counterparts, Russia may struggle to sell as many Armatas as it would like.

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