June 3, 2025: Since the late 1990s, Chinese arms exports have been growing substantially each year. By 2024 China was the third largest exporter, ahead of Germany but still behind America, France and Russia. The Ukraine War halted most Russian arms exports because the Russians needed all they could produce for their forces in Ukraine. That fight also brought on increasingly burdensome economic sanctions. The U.S., France and Germany accounted for 72 percent of all arms exports, a 20 percent increase over the previous five years. Since the 1940s the Americans have been the largest arms exporters on the planet. China plans to change that, first by becoming number two and then by displacing the United States in the number one spot.

The Americans want to stifle Chinese arms exports but are finding that difficult to do without some major changes in how U.S. arms exporters do business. The United States often puts restrictions on how its weapons exports can be used. The Chinese do not. If you can pay, preferably in advance, China will get you the weapons no matter where you are. The U.S. no longer has much economic leverage against China because the two countries are the largest exporters on the planet. If you want to take arms sales away from China you must match Chinese terms and low prices. The Americans often point out that their weapons are the best in the world and superior to everything else. Many customers don’t care about that and prefer effective weapons at the lowest prices and no restrictions on their use. American diplomacy seeks to limit weapons shipped to trouble spots around the world. Chinese arms dealers know that their government will back them up if the Americans try to block sales. Adopting Chinese sales techniques is difficult for the United States because the Americans consider themselves morally superior to the Chinese when it comes to arms sales. Getting legislators to support new trading procedures that match those the Chinese use are unpopular with American voters. To effectively disrupt Chinese arms exports will require some fundamental changes in how U.S. arms exporters do business and in what the American government will support. U.S. voters want Chinese arms sales curbed, but are they willing to go along with the noxious practices that will require it? That remains to be seen.

Meanwhile the Chinese continue doing business. The North Industries Group Corporation, or Norinco, is a Chinese weapons export company with over $80 billion in annual sales. Norinco specializes in land-based systems for the Chinese military as well as a growing list of export customers. While some high-tech components are reserved for Chinese military versions, export customers can get anything else and even receive equipment modified so that specific non-Chinese components can be installed. Norinco will do just about anything to get a sale or please a customer. Norinco doesn’t sell much to Western countries, except for commercial grade hunting and police weapons and accessories. In this market Norinco quality is competitive and their prices even more so. All this has enabled Norinco to become one of the top ten arms manufacturers in the world, and the first Chinese firm to join a list dominated by American and Western multinational firms.

Norinco is often the supplier of high-tech weapons to nations that are first-time users of these systems. Norinco export tanks are often less capable and cheaper versions of the ones China builds for its own forces. In some cases, the export models lack new features China considers secret and not for export. In most cases export models simply get less advanced and cheaper tech. More importantly Norinco is willing to modify weapons to suit buyer tastes. China is also economically and politically powerful enough to sell to countries the United States is trying to prevent from having more weapons or improved models.

China is increasingly eager to compete with the most popular Russian and Western weapons. China has already taken much of Russia’s traditional low-end market and is now moving on to the more complex, expensive and effective Western designs. China often uses stolen tech and the Russians never really had the clout to stop China from stealing tech. But the West is different and better able to strike back, at least in theory. The Chinese are putting that to the test.

In 2024 Russia crippled their economy by emphasizing the production of weapons they could not afford. Russia was already suffering from economic sanctions imposed by its major trading partners in Europe and some in Asia. This led Russia to depend more on trade with China. To make this work China assured their Western trading partners that Chinese goods sold to Russia would not include weapons or munitions. At the same time China continued to ship munitions to Russia.

Ukraine reported that Russian troops were using Chinese munitions and presented proof. When Chinese officials were shown these munitions, their excuse was that Russia must have obtained these munitions from third parties. China is a major exporter of munitions, and those buyers could sell their Chinese munitions to anyone, including Russia.

For Russian defense industries the news got worse as customers for Russian weapons were already turning towards Western manufacturers. India, long the top market for Russian weapons, was already turning to higher quality and more reliable Western weapons before Russia invaded Ukraine, and proved the superiority of Western weapons, particularly those from the United States. Ukraine was the first major conflict where the adversaries were both industrialized nations with well trained personnel and modern weapons – identical modern weapons in most cases.

Currently the Russian economy is short about 5 million workers. This is great for skilled workers because private and state-owned firms offer high pay for qualified workers. Shortages of unskilled workers can be partially addressed by allowing more foreigners, mainly from Central Asia, to legally enter Russia and find jobs. Foreign workers already in Russia illegally are being hired and legalized, though they are often conscripted. Russia is burdened with many war-related sanctions but has found ways to deal with sanctions to lessen their impact. Russian conscription officials are thrilled by the higher bribes offered by desperate employers.

Economics almost always determines the outcome 0f a war. This is the case in the Ukraine war where one of Russia’s vulnerabilities turns out to be its trading and banking relationships with China. The problem here is that Chinese trade with western nations, especially Europe and the United States, is far larger and more valuable than trade with Russia. China obtains 5.1 percent of its imports from Russia while Chinese sales to Russia account for only 3.3 percent of Chinese exports. Most Chinese exports and imports are with the United States and Europe.

Western economic sanctions on Russia for the war hurt but its government and businesses has a lot of legal and illegal methods to keep the economy going despite the sanctions. The sanctions included banning Russian use of international banking services. Without this Russia had to find some other way to make and receive payments. Some Chinese banks tried to work out practical workarounds but gave up after a few months when they realized that they could be sanctioned and there were plenty of competing import/export banks willing and able to handle the business sanctioned banks could no longer service.

Russia found ways to continue importing and exporting after the banking sanctions came into effect. Despite that, throughout the first half of 2024, Russia found itself encountering more and more obstacles in financing its foreign trade. Russia could always find independent banks and smuggling networks to handle some trade, but at greater expense, including the risk of trade goods or payments being seized. This has been the case since they invaded Ukraine in 2022, were promptly sanctioned and adapted as best they could. These new banking sanctions are the most damaging of those imposed on Russia. Over three years of the original sanctions significantly damaged the Russian economy. That means the Russia poverty rates are up and families of men mobilized, often unwillingly, into the army and sent to Ukraine, are angry and more frequently protesting in public. This is illegal in Russia, but the protestors are so numerous now that there is no practical way for the government to arrest and imprison all of them. The Russian government still sends more troops to Ukraine but is also looking for some sort of compromise to end the war, and all those ruinous sanctions.

China demonstrated that it is no longer a close ally of Russia and sees the collapse of Russian arms exports as a plus for the Chinese goal of dominating world arms exports.