JANE’S INDUSTRY STUDY
03 Sep 08. A study carried out by Jane’s Industry Quarterly shows that China, India and Russia collectively invested USD50.5 billion in defence in 2003, this figure almost doubled to USD99.47 billion by 2007 and Jane’s expects it to increase by a further 62% to reach USD161.44 billion by 2010.
Ranked 4th, 8th and 11th in global military expenditure by Jane’s Defence Budgets, China, Russia and India have three of the largest defence budgets in the world.
Rank Country Defence Budget
(2008) USD Billion
1 United States 696.30
2 United Kingdom 79.27
3 France 65.74
4 China 58.07
5 Japan 48.10
6 Germany 43.55
7 Saudi Arabia 38.32
8 Russian Federation 36.73
9 Italy 31.40
10 Korea, South 28.30
11 India 27.21
12 Brazil 24.62
13 Australia 19.74
14 Spain 19.37
15 Canada 16.19
This complete study of the global defence market has been carried out by Jane’s for the launch issue of Jane’s Industry Quarterly, a new supplement to Jane’s Defence Weekly.
Jane’s Industry Quarterly shows that a combination of high military expenditure and the revitalization of the three countries’ defence sectors will have far-reaching implications for Western organisations, both in terms of opportunities and potential competition in the global market.
Jane’s Industry Quarterly argues that Russia is going to see its exports dip around 2010 as major customers India and China look elsewhere. But the outlook isn’t completely hopeless, as Russia is likely to look again at countries it sold tanks and armoured vehicles to during the Soviet days.
Russia currently offers the strongest opportunity for investors and international defence organisations – a willingness to partner for the international market, with the opportunity for direct investment dead ahead.
Jane’s believes structural reforms will potentially give investors access to Russia’s export order book.
Jane’s believes countries operating Sovietera equipment will likely look to procure Russian, or indeed Chinese, armoured vehicles in the next 25 years. A combination of the cost of Western-sourced equipment and, in a number of cases, the existence of arms embargoes will lead such countries to look East. Jane’s Defence Forecasts has identified 40 countries worldwide with main battle tank inventories composed of at least 50 per cent T-72, or armoured personnel carrier inventories made up of at least 50 per cent BMP1 ot BTR60. The operators are concentrated in Africa, Southeast Asia and Latin America.
Should China’s defence budget continue to grow at the rate recorded over the past seven years, it will stand at USD360 billion by 2020.
China reported average gross domestic product growth of 10 per cent per annum over the five years, compared to an average of 8.5 per cent in India and 6.78 per cent in the case of Russia. A massive internal market is developing – and the need for investment to underpin further growth will create opportunities for both strategic and financial investors.
China “resembles the Japan of the 50s and 60s”, Jane’s report shows. Rapid technological development and a relatively low cost base will put China in a very strong position as a global exporter of defence materiel in the coming decades.
China has a well-documented interest in Africa’s resource wealth and has been vigorous in its cultivation of economic ties, considering access to energy and commodities to be an essential element of its continuing economic development. Developing a military export capability potentially provides China with an additional source of leverage when negotiating these critical access arrangements. Recent shipments of arms to Sudan and Zimbabwe have also demonstrated China’s clear willingness to business with regimes other suppliers will not.
A series of European Union and United Nations embargoes are putting a number of African states on the ‘no-go’ list of We