Vast defence factories including 'aerospace city' are fusing civil and manufacturing capacity to supercharge the country's armed forces China is on a mission to turn its military into a modern fighting force. In the second of this four-part series, we look at how its massive defence industry can support China's military goals, and during wartime could be further bolstered by the civilian manufacturing sector.
In the northeastern city of Shenyang, the future of China's defence manufacturing capacity is rapidly taking shape - an enormous new aviation industrial complex that will eventually occupy an area about the size of 600 football fields.
Video of the site was aired on a provincial television news programme in early July, part of a feature about the provincial governor's visit to the headquarters of the Shenyang Aircraft Corporation. The firm, which owns the collection of new complexes, makes China's main carrier-based fighter, the J-15, as well as the country's most advanced J-35 stealth fighter and prototypes for a sixth-generation jet.
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In the report, Wang Xinwei, governor of Liaoning province, pledged to build a "world-class aerospace city".
Details of what the production lines would eventually look like were not revealed, and Beijing has been tight-lipped on such military facilities. However, the scope of the complex has raised eyebrows.
While the development of the military weapons used by the People's Liberation Army (PLA) has seen rapid progress, the country's industrial capacity to mass produce such weapons in the event of possible protracted warfare has also gained attention amid the wars in Ukraine and the Middle East.
Beijing has maintained a massive defence industry to support its military goals, which during wartime could be further bolstered by the civilian manufacturing sector, experts have said.
They have pointed out that these strengths could be key to winning conflicts, including one in the Taiwan Strait, as rivals such as the United States see their defence industries bogged down by budgets and red tape.
Industrial base, industrial scale
"China's defence industry remains formidable and has increased its incorporation of information and digital technologies. Impressive examples include China's carrier programme, advanced surface ships, stealth aircraft, hypersonic missiles and satellite programme," said Timothy Heath, a senior international defence researcher at the US-based Rand Corporation.
According to the Stockholm International Peace Research Institute (SIPRI) Arms Industry Database, at least four of China's state-owned arms companies ranked among the top 25 globally in 2019, based on the value of arms sales. They included Aviation Industry Corporation of China (AVIC), China Electronics Technology Group Corporation (CETC), China North Industries Group Corporation (Norinco), and China South Industries Group Corporation (CSGC).
The US Navy estimates that China's shipbuilding capacity is roughly 230 times larger than that of America. According to a report by the Centre for Strategic and International Studies (CSIS) in March, China's largest state-owned shipbuilder constructed more commercial vessels by tonnage in 2024 than the entire US shipbuilding industry has completed since the end of World War II.
China's leading position in global shipbuilding stretched to 14 consecutive years, according to a news release by BRS Shipbrokers in May 2024, with its top five shipyards - CSSC, COSCO, Jiangsu Hanjiang Group, Nantong Xiangyu and Yangzijiang Shipbuilding Group - accounting for 62.9 per cent of the global order book.
China has the largest navy in the world, with a battle force of over 370 ships and submarines, including more than 140 major surface combatants, according to the Pentagon.
China launched its first aircraft carrier, the Liaoning, in 2012. It has since built two more, including the Fujian - which is equipped with an electromagnetic catapult and expected to enter service this year. A fourth aircraft carrier - likely to be nuclear-powered - is reportedly being built in the northern port city of Dalian.
The Pentagon's 2024 report said the PLA Air Force and PLA Navy's fleet of aircraft together constituted the "largest aviation forces" in the Indo-Pacific region and the third largest in the world at more than 3,150 aircraft, around 2,400 of which were warplanes.
Meanwhile, the top Chinese military aircraft manufacturers are reporting significant increases in profit, with pledges to further expand production.
Several of AVIC's core subsidiaries have reported strong financial results. Its Shenyang branch, the Shenyang Aircraft Corporation, said in 2023 that it aimed to invest 8.6 billion yuan (US$1.2 billion) to build a production site 4.2 sq km (1.6 square miles) in size over the next five years. It is believed to be the same one that appeared in last month's news programme.
According to its 2024 annual report, AVIC's Xian Aircraft Industrial Corporation, which produces bombers and large transport aircraft like the Y-20, recorded revenue of 43.2 billion yuan, up 7.2 per cent year-on-year.
AVIC Chengdu Aircraft Industry Group, manufacturer of the J-20 stealth fighter and a leading contender for China's sixth-generation combat aircraft programme, reported 1.78 billion yuan in revenue, up 6.1 per cent over the previous year. The company said it had entered a new phase of "intelligent cost control" and high-autonomy manufacturing.
A senior researcher shed light on the new efficiencies in an interview with state broadcaster CCTV in July. Sun Cong, chief designer of the J-15, said the planes were "being made like mobile phones as the functions are now software-based, so the systems and software could be designed separately [to boost efficiency]".
Despite China's slowing economic growth, its defence spending has been stable, growing 6.8 per cent in 2021 to 7.2 per cent in 2025.
"With global instability and conflicts flaring up in multiple regions, maintaining stability requires a strong defence capability," said Fu Qianshao, a military analyst formerly with China's air force.
"That means accelerating the development and deployment of advanced weaponry, expanding production capacity, and ensuring that the most cutting-edge systems enter service to meet the needs of national defence."
Fu said that China had sped up its weapons research and development timelines in recent years to meet military modernisation goals.
"The traditional model - where a new generation of equipment might take five to 10 years to design - no longer meets the demands of modern military modernisation," he said.
China's defence capacity is underpinned by its strong overall manufacturing base, which, according to a Rand Corporation report last year, accounted for around 25 per cent of global manufacturing output, half of which was considered dual-use.
Lu Li-Shih, a Taiwanese analyst and a former Taiwanese navy captain, credited the vigour to industrial initiatives such as "Made in China 2025" - a national plan launched a decade ago to upgrade the manufacturing sector - and military-civil fusion (MCF), which not only encourages greater civilian contributions to the military but also enables military state-owned enterprises to support the broader economy.
"Aircraft production lines in China are designed for dual use - when military demand rises, they produce military aircraft; when demand falls, they can switch to civilian production," Lu said. "This is the essence of China's military-civil integration."
The MCF strategy is aimed at accelerating the integration of civilian and military industrial bases, promoting the mutual transfer of technologies and resources between the two sectors to enhance both national defence and economic development.
It was elevated to a "national strategy" in 2015. Since then, thousands of private companies have been urged to participate in defence procurement to support the PLA's goal of achieving a "world-class" military by 2049.
Who's winning the US-China rivalry?
The support China's military receives from a strong industrial base contrasts sharply with recent trends seen in the US military.
In a keynote address in 2022, Cameron Holt, a retired US Air Force major general who was then deputy assistant secretary for contracting, said that the Chinese military was acquiring weapons "five to six times" faster than the US, according to a report in The National Interest.
It noted that while some US military hardware programmes may see rapid progress in their early stages, they could be hampered by budget adjustments - in essence, too much bureaucracy.
For instance, according to a July report by Breaking Defence, the engine system for the F-47 sixth-generation fighter jet was likely to face a two-year delay and would not be completed before 2030. The report quoted a US Air Force representative as saying that the hold-up reflected "supply chain challenges".
The US Navy's next generation attack submarine's development was also expected to be "significantly delayed", from financial year 2035 to 2040, according to a report to Congress sent by the Congressional Research Service in July. Such a delay could have an impact "on the future US ability to maintain undersea superiority and fulfil US Navy missions", the report said.
Meanwhile, the next Ford-class aircraft carrier was facing a two-year delay - to March 2027 - USNI News reported in July.
Fu said American plans were not always adhered to. "Many US plans look good on paper but are abandoned before completion. Without a full development-production-sustainment cycle, it leads to massive waste in new weapons development. So even though the US has the world's largest defence budget, its production capacity lags far behind China's," he said.
China's supply chain was also a strength, he added.
"Manufacturing cannot operate without the support of a broad and complete industrial chain - for example, materials production is not strictly part of the defence sector, but is crucially related," Fu said. "A comprehensive and self-sufficient industrial system is essential. Without it, even basic items like artillery shells cannot be produced independently," he added.
China's supply chain advantages include its near monopoly on rare metals that are critical for manufacturing various missiles and munitions. According to the Rand Corporation, 18 of 37 minerals relevant to defence applications are concentrated in China.
According to the 2023 CSIS report, the country was also the global leader in cast products and produced more than the next nine countries combined, including more than five times as much as the US.
Heath, from Rand, said the US defence manufacturing base had declined considerably as its supply chain was globalised to reduce costs.
"Chinese defence industries also often carry out dual-use production to include civilian-use platforms such as merchant ships to offset costs. US leaders are aware of the gap in defence industrial capacity and have debated ways to revise supply chains and restore some of the lost manufacturing capacity," Heath said.
Research and development, and skilled personnel and engineering talent also matter. China's R&D spending for science and technology has risen 10 per cent this year to 398.1 billion yuan, funding that will primarily benefit areas like semiconductors, artificial intelligence (AI) and quantum computing.
However, China's shortcomings in advanced chips remains a key gap with the US, as the country continues to rely on certain foreign capabilities - such as advanced semiconductor fabrication tools and software - to produce AI hardware.
Recent lessons for a Taiwan conflict
Mainland China's defence industrial capacity provides a potential advantage in military operations against Taiwan, according to think tank reports and analysts.
Recent regional conflicts highlight the importance of maintaining a robust stockpile. According to a CNN report on July 28, the US used up roughly 25 per cent of its high-end THAAD (Terminal High Altitude Area Defence) missile interceptors during June's 12-day conflict between Israel and Iran, raising concerns about its ability to sustain future missile defence operations.
The war in Ukraine has been a stark reminder that any protracted conflict today is likely to take the form of an industrial war, which would require a defence industry capable of manufacturing enough munitions, weapons systems and material to replace depleted stockpiles, according to a 2023 report by CSIS.
In nearly two dozen iterations of a CSIS war game that examined a US-China conflict in the Taiwan Strait, the US typically expended more than 5,000 long-range missiles in three weeks of conflict, the report noted.
In terms of anti-ship missiles, the CSIS report said, "in every iteration of the war game, the United States expended its inventory of long-range anti-ship missiles within the first week of the conflict". It took nearly two years to produce a long-range anti-ship missile, according to the report.
While Beijing has never acknowledged having a timeline for military action against Taiwan, it has also never ruled out the use of force to reunite the island it views as part of China.
The United States, like most countries, does not recognise the self-governed island as an independent state. However, Washington is opposed to any attempt to take Taiwan by force and is committed to arming it for defence.
Beijing has intensified its military exercises around the island since August 2022 when then US house speaker Nancy Pelosi visited the island.
"The defence industry provides China the ability to manufacture weapons and equipment to replace losses that are difficult for other militaries to replicate due to the lack of integrated defence industrial production networks," Heath said.
Missiles and drones in particular are critical to modern warfare, and China has the ability to produce both in large numbers, an important factor in sustaining combat power, he added.
According to the Pentagon, China surpassed 600 operational nuclear warheads in its stockpile as of mid-2024 and will have more than 1,000 operational nuclear warheads by 2030, many of which will be deployed at higher readiness levels. China will continue to grow its force through at least 2035, it added.
"Parameters are important, but production capacity is even more crucial," Chinese military analyst Du Wenlong said on his social media account in July, as he highlighted the role of mainland China's pulse assembly lines in producing its warplanes and missiles.
Although Taiwanese analyst Lu believed that the mainland was likely to resolve the Taiwan issue swiftly - before US aircraft carriers could intervene - he argued that US forces were more likely than the PLA to face ammunition depletion.
He also said that PLA exercises near Taiwan were ideal for assessing its ammunition consumption levels, allowing estimates to be made during these drills and stockpiles to be prepared in advance.
The South China Morning Post has reported that the PLA has sent more military aircraft near Taiwan since William Lai Ching-te was sworn in as its leader in May 2024.
The aircraft have crossed the de facto median line more often and engaged in more operations, as observed in daily manoeuvres.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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