Chinese state media reported March 25 that China has concluded a large-scale weapons purchase agreement with Russia. Beijing has long been thought to be interested in the advanced Russian submarines and fighter aircraft included in the weapons package, and the media report is the strongest confirmation yet that a deal has been struck. According to the report, the contract included the purchase of 24 Su-35 multirole fighter jets, four Lada-class diesel-electric submarines and continued cooperation in developing S-400 long-range surface-to-air missiles, 117S turbofan engines, Il-476 large transport aircraft and Il-78 aerial refueling tankers.
Russia has a long history of exporting weapons to China. In the decade following the collapse of the Soviet Union, arms sales to India and China essentially allowed Russia to maintain its defense industry and pursue research and development at a time when funds for the Russian military had dried up. However, after China reverse engineered the Russian Su-27SK air superiority fighter and gave it the J-11B designation, Moscow became wary about selling China any high-tech or advanced weaponry.
What China Gains
China, whose indigenous defense industry has expanded significantly, is interested in purchasing mainly the latest weapons technology from Russia in order to advance its capabilities (although Beijing is also interested in other items such as supply parts, transport helicopters and turbine blades). Russia fears that Beijing will not only reverse engineer these weapons but also will proceed to undermine Russian arms exports by using the copied weaponry to compete with Russia in other arms markets. In fact, during 2012 China replaced the United Kingdom as the fifth-largest arms exporter, accounting for 5 percent of global arms trade. Because of this, Russia has until now steadfastly refused to consider selling any high-tech weaponry to China in small batches or without stringent legal warranties for observing intellectual property rights.
For its part, China has been keen to acquire key weapons technology that it has not yet mastered. For all its defense industry advances, China remains hampered in certain areas, such as sophisticated turbofan engines for its aircraft and air-independent propulsion systems for its diesel-electric submarines. Securing access to such technology would give China a shortcut around years of independent research efforts.
The negotiations over the Su-35 multirole fighter highlight these issues. During China's November 2012 Zhuhai Airshow, Mikhail Pogosian — the president of Russia's United Aircraft Corporation — confirmed China's interest in the Su-35, which had been rumored for years. In the past, Moscow and Beijing had failed to reach a deal due to a disagreement on the number of planes included in the proposal. Russia previously insisted that the Chinese acquire at least 48 fighters in the initial procurement to make the deal worth its while, especially given the risk of reverse engineering. China in turn reportedly pushed for a sale of 12-24 aircraft. The current arms deal includes 24 Su-35s.
Interestingly, the reported sale involves a significant transfer of technology. Beijing has long been suspected of being interested in the Su-35, principally to acquire access to its powerful 117S thrust vectoring engine, which increases maneuverability. China was also reportedly interested in the Lada-class submarine in part due to its advanced air-independent propulsion system based on oxygen-hydrogen fuel cells. The announced contract allegedly gives Beijing access to both coveted technologies.
Benefits for Russia
Though the deal appears to be greatly beneficial to China, Russia is likely to gain considerably from the contract as well. No firm figures have emerged on the cost of the announced sale, but previous estimates have placed the purchase of the four Lada-class submarines alone at $2 billion. Given that Russian defense exports to China in 2011 totaled $2 billion, the announced contract will boost Russian arms exports significantly.
The Russian defense industry is in a far better position now than it was during the 1990s, but it is still in need of funds for research and development projects. The Russian State Armament Program 2020 will contribute a significant portion of those funds, but money derived from arms exports will still play a critical role as Russia moves forward with costly weapons programs, such as its PAK-DA next-generation bomber project. Moscow is also increasingly concerned that its monopoly over the lucrative Indian arms market is eroding, and greater funds from China will be critical in balancing out lost market shares around the globe.
Unlike China, Russia has yet to confirm the sale, and it is likely that the two sides have not finalized all the details yet. It will be interesting to see if Moscow has taken any measures to protect itself from Chinese reverse engineering efforts or if the Kremlin has simply allowed the technology transfer in exchange for a considerable sum of money. Overall, both sides stand to benefit in the short term from the arms contract, even if in the long run the sale helps China position itself as Russia's rival in the global arms market.