Macro background

The global arms trade market is surging and fluctuating and growing

According to the latest data on global arms trade released by the Stockholm International Peace Research Institute (SIPRI) in Sweden, after hitting a new low since 2005 in 2020, the global arms trade indicator will grow rapidly again in 2022 (33.547 billion TIV, +27.30%), reaching a new high since the 21st century, but will decline again in 2023 (29.105 billion TIV, -13.24%).

The growth rate of global military spending and military trade continues to grow

There is a logical correlation between the global arms trade index and the changes in global military spending, and it has volatility and lag. In the past 20 years, a comparison of the changing trends of global military spending and military trade shows that global military spending as a whole has maintained the same overall growth trend as global military trade for a long time. However, the global arms trade aggregate trend indicator is more volatile, and after 2018, it diverged from the trend of global military spending, and the arms trade index gradually recovered after 2020.

In 2024, the international situation will be chaotic and intertwined, and the changes in a century will be accelerated. The Russia-Ukraine conflict and the Gaza conflict have been prolonged, the situation in the Red Sea has continued to be tense, and many uncertainties such as important elections will be held in many countries around the world and the lack of momentum for world economic growth, and the military spending of many countries will continue to grow against the backdrop of a high base in 2023. In 2024, the growth rate of U.S. military spending will be 3.3%, the growth rate of Russian military spending will reach 68.75% in the context of the Russia-Ukraine conflict, Japan will continue to break double, reaching 16.5%, and the military spending of many countries such as South Korea, Germany, and France will also significantly exceed the expected growth rate of their GDP, which also indicates that the global military trade import index is expected to rebound in the future.

Judgment on changes in global arms trade

In recent years, the frequent occurrence of geopolitical events, the emergence of the "proxy war" model, and the continuous growth of global military spending will boost the continued prosperity of the global arms trade in the long term ahead.

In addition, according to the detailed data disclosed by SIPRI, in 2023, the overall indicators of second-hand and second-hand but modernized products in the global military trade products, which are mainly sold to Ukraine, are growing. Judging from this, with the consumption of old weapons and equipment in the current global inventory by the Russian-Ukrainian battlefield, the global arms trade will return to the upward channel driven by the demand for new products in the future.

Participants in arms trade

The indicators of traditional military trade countries have declined, and emerging arms trade countries have developed rapidly

According to SIPRI data, the import and export indicators of military trade of many countries have changed significantly. In terms of exports, China, Germany, South Korea, Australia, and India showed varying degrees of growth in their arms trade export indicators, with year-on-year growth rates of 16.75 percent, 121.94 percent, 204.41 percent, 103.03 percent, and 385.71 percent, respectively, while the export indicators of traditional military trade countries such as the United States, Russia, Britain, and France decreased by 27.61 percent, 51.25 percent, 27.69 percent, and 38.43 percent year-on-year.

A major exporter of arms trade

The world's top five arms exporters are the United States, France, Russia, China and Germany, accounting for 74.54% of the world's total. The share of the United States alone exceeds that of the other four countries in the top five combined, and its position as the world's largest supplier of weapons and equipment has been stable for a long time; France's arms trade export index has grown significantly, surpassing Russia to become the world's second largest arms trade exporter; The export indicators of Russian and German military trade have decreased significantly compared with 2014-2018 (-52.55% and -14.44%), ranking down one place, of which Russia's export share in the world (10.54%, -10.95pcts) ranks first in the world.

A major exporter of arms trade

The United States: Financing the military industry with arms trade. The United States has long pursued the idea of "supporting the military industry through arms trade" and has achieved a strong and sustainable defense industrial base by strengthening international military trade. On the whole, US arms exports have the characteristic of giving priority to national strategic and diplomatic needs, and the arms exporting countries must be US allies or countries with relatively good relations, and once relations break down, the United States will stop exporting and supplying spare parts.

France: Generating revenue from arms trade. Unlike the United States, which is keen on attaching political conditions, France's arms sales are more focused on practical economic interests, and the government has always regarded the export of weapons as an important purpose of the defense industry. With the exception of the ban on the export of nuclear weapons and strategic missile systems, France has given the green light in principle to the rest of its arms exports, with less concern about political implications.

Russia: Domestic demand precedes arms trade. Since the collapse of the Soviet Union, Russia has established the high-tech industry as the development direction of the military industry, and has continuously increased defense procurement and defense spending, implemented a globalization strategy in the field of military industry, and carried out all-round export of military products and technologies. Due to the containment of the Russia-Ukraine conflict, Russia's current military trade is characterized by domestic demand before military trade, and the export index of military trade has been significantly compressed in recent years.

|主要军贸进口国

全球前五大武器进口国依次为印度、沙特阿拉伯、卡塔尔、乌克兰和巴基斯坦合计占全球35.07%。

In terms of sub-regions, the Asia-Pacific region is still the largest importer of arms trade, accounting for 37.38% of the world's total, followed by the Middle East (30.39%), Europe (21.43%), the Americas (5.66%) and Africa (4.34%).

India's military trade import index accounted for the proportion of the global (9.83%+0.75pcts) increased, surpassing Saudi Arabia and becoming the world's largest arms trade importer.

Major importers of arms trade

India: Make up for shortcomings with military trade. Although in 2011 India set the realization of substantial independence in the production of defense equipment and weapons systems as the primary goal of defense production as soon as possible, due to the huge gap between its own weapons and equipment production capacity and the world's advanced level, the current weapons and equipment of the Indian army still mainly rely on arms imports.

Ukraine: Fighting on the arms trade. The conflict between Russia and Ukraine has led Ukraine to increase arms purchases and receive military assistance from more than 30 countries or organizations such as the United States and Germany, which has affected Ukraine's arms trade procurement to increase dozens of times, becoming the fourth largest arms purchaser after India, Saudi Arabia and Qatar.

Major military trade equipment

Aircraft (including drones) account for about half of the total military trade. The development cost and technical requirements of aviation equipment are extremely high, and only a few countries in the world can manufacture advanced military aircraft, and the value of a single unit is large, making aircraft the core component of international military trade.

The volume of missile arms trade transfers has grown rapidly. On the one hand, it is because it continues to be used in large quantities as a consumable, and on the other hand, under the "education" of modern warfare since the 21st century, the importance of standard weapons such as missiles in information warfare has been increasingly recognized, especially low-cost weapons and equipment such as high-efficiency thousand-yuan drones and cruise missiles have become more and more sought after.