The Chinese defence market recorded a budget valued at US $104.62 billion in 2010, which is the largest defence budget in the Asia-Pacific region. Defence expenditure has grown at a compound annual growth rate (CAGR) of 11.5% between 2008 and 2012.
The budget of the Chinese defence market is expected to grow at a CAGR of 8.49% through to 2017, to reach an annual expenditure of $174.9 billion.
The Chinese defence market faces strong threats from neighbouring countries and from hostile secessionist forces, which provide an additional incentive for increasing its defence expenditure.
Territorial disputes with Japan and South Korea fester, while angry confrontations with the Philippines and Vietnam in the South China Sea have resulted in those countries encouraging a greater US role in the region, contrary to China's wishes.
The country's robust economic growth will continue to enable the Chinese government to increase its military spending through to 2017.
Despite structural reforms, the Chinese defence market remains under state control and contains very little competition.
Barring a few industrial enterprises, the majority of organisations fail to compete with each other, which impedes the development of China's modern indigenous defence market as there is no incentive for companies to innovate.
For more information on the Chinese defence market, see the latest research: Chinese Defence Market Report
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