China’s drive to build a modern, high-tech military is increasingly undermined by a widening corruption crisis that is raising doubts about its true strength.
This month, the Stockholm International Peace Research Institute (SIPRI) released a report mentioning that China’s major state-owned defense firms suffered the steepest downturn among the world’s top arms producers in 2024, as corruption scandals rippled through the sector and disrupted procurement.
According to the report, arms revenues of the eight Chinese companies on the list fell 10% to USD 88.3 billion, the sharpest decline of any country, dragging down overall regional performance. SIPRI researchers said six firms saw revenue losses after high-profile graft probes triggered postponements, cancellations and reviews of major military contracts.
Specifically, the report mentions that China North Industries Group Corporation Limited (NORINCO), China’s biggest land-systems maker, reported a 31% plunge in sales after the government removed its chairman and the head of its military division over corruption allegations, prompting delays to key projects.
Similarly, the report says that China Aerospace Science and Technology Corporation (CASC) recorded a 16% revenue drop as satellite and launch-vehicle programs were postponed following the corruption-linked dismissal of its president.
Furthermore, it states that the Aviation Industry Corporation of China (AVIC), China’s largest defense producer, also saw revenues slip 1.3% amid slower aircraft deliveries.
SIPRI noted that while other Asian producers generally expanded, China’s decline stood out as systemic misconduct within procurement channels constrained output and undermined its efforts to modernize its forces at scale.
These industrial setbacks point to a deeper structural issue inside China’s military system—one increasingly shaped not just by procurement failures, but by the political logic of Chinese President Xi Jinping’s centralization of control.
As corruption increasingly disrupts China’s defense-industrial output, the problem may be rooted not only in procurement misconduct but also in Xi’s broader project of power consolidation, which is reshaping incentives inside the People’s Liberation Army (PLA) and deepening the structural vulnerabilities undermining China’s military effectiveness.
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An October 2025 Beyond the Horizon article mentions that Xi’s sweeping purge of nine senior PLA generals, including Central Military Commission (CMC) and PLA Rocket Force (PLARF) Commander Wang Houbin, was framed as an anti-corruption campaign but primarily served to consolidate his personal control over the military.
This tightening grip may be part of a broader political project. G Venkat Raman mentions in a May 2025 Observer Research Foundation (ORF) report that Xi’s accelerating consolidation of power stems from his drive to secure “regime security” and place “politics in command” at the center of all policymaking.
Raman notes that Xi views centralized authority as essential to realizing the “China Dream,” managing economic stagnation, and countering what China perceives as rising external threats.
He notes that Xi’s dominance enables long-term strategies to achieve technological self-reliance and accelerate military modernization — a core element of Xi’s ideological and strategic drive to strengthen regime security and position China for great-power competition.
Yet purging these networks did not remove the incentives that sustain corruption; the Beyond the Horizon article notes that by dismantling entrenched patronage networks accused of bribery and procurement scandals, Xi reinforced loyalty as the paramount criterion for advancement.
However, it points out that while centralization curbs rival factions, it paradoxically entrenches corruption, as officers rely on political alignment rather than merit to survive. It states that while Xi’s purges strengthen the Chinese Communist Party’s (CCP’s) dominance, they risk undermining transparency, morale, and competence, leaving the PLA disciplined by fear rather than institutional accountability.
Delving deeper into how corruption may be corroding China’s military capabilities, Xuan Dong mentions in a June 2025 report for the Institute for Security & Development Policy (ISDP) that corruption in China’s military is rooted in decades of commercialized military services and an expanded procurement system that enabled bribery, kickbacks and substandard equipment.
Dong points out that despite Xi’s decade-long anti-graft campaign, systemic abuses persist, including fraud in weapons development and bribery-for-promotions schemes. He adds that purges of top equipment officials have disrupted planning, while fear-based politics erode professionalism and cohesion. He adds that corruption is fundamentally degrading the PLA’s credibility, readiness, and long-term modernization.
If left unaddressed, such distortions risk producing the same hollowing effects observed in other authoritarian militaries.
One need only look at the early months of the Russia-Ukraine War to see the impacts of corruption on military capability. In a May 2022 article for the peer-reviewed Survival journal, Robert Dalsjo and other writers point out that systemic corruption hollowed out Russia’s military long before its 2022 invasion of Ukraine, creating inflated troop rosters, poor training, neglected equipment, and false readiness reports that collapsed under combat pressure.
Dalsjo and others say graft, embezzlement and falsified paperwork—from padded personnel numbers to maintenance shortfalls—produced a “Potemkin” image of modernized forces that senior commanders and the Russian leadership believed.
They state that the war exposed systemic rot – undermanned units, broken logistics, unusable kit, poor morale and incompetent coordination. They note that corruption-driven deception directly degraded Russia’s combat power and contributed to its early battlefield failures.
Given Russia’s precedent, China might find itself in a similar situation should it decide to use force to reunify Taiwan. The implications for China’s own strategic ambitions—especially Taiwan—are significant.
The US Department of Defense’s (DoD’s) 2024 China Military Power Report mentions that Xi’s sweeping purges have disrupted key modernization programs, including missile programs that the document identifies as central to China’s capability for a Taiwan contingency.
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It notes that several ousted leaders oversaw ground-based nuclear and conventional missile projects, raising doubts about weapons reliability and readiness. It adds that such systemic corruption could slow or weaken China’s push to achieve the capabilities required for a high-intensity Taiwan contingency.
Yet the erosion of China’s warfighting capacity goes beyond disrupted weapons programs and extends into the PLA’s internal culture.
In a September 2025 report for Stiftung Wissenschaft und Politik (SWP), Christian Wirth mentions that Xi’s concentration of authority creates a culture of upward delegation and risk aversion that runs counter to the mission command principles required for fast, multi-domain joint operations.
Wirth notes that while PLA doctrine urges lower-level commanders to act autonomously in “informationized” warfare, the PLA’s Leninist organizational culture, politicized promotion systems and enduring fear of political missteps impede decentralized decision-making. As a result, he says genuine mission command will not take root until a new generation of officers is trained and socialized under joint, technology-driven operational conditions.
Taken together, these trends indicate that China’s modernization drive is being undercut from within, as corruption and political control erode both the industrial base and the operational culture the PLA needs to fight a modern war.
Unless China confronts the systemic incentives that privilege political loyalty over competence, it risks replicating the very structural failings that crippled Russia’s military in Ukraine, with profound implications for any future high-intensity conflict, including a Taiwan contingency.
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