The high-tech wannabees of Asia are going through a bit of a rough patch lately. India has to postpone its Chandrayaan-2 moon mission just an hour before launch, due to a “technical snag.” Japan is imposing controls on the transfer of certain technologies to South Korea, which could impair the latter’s smartphone and semiconductor sectors.

A bit more obscure but just as critical a development is affecting China’s fighter jet business. The Pakistanis have announced that they will start building a more advanced version of its JF-17 combat aircraft, for deployment in 2020.

With these new “Block III” versions, Pakistan will by the middle of the next decade operate up to 200 JF-17 fighters. And each JF-17 it purchases means one less opportunity for China to sell its own fighter jets to its best customer.

China’s rise as a global arms exporter

As I noted before in How China weaponizes arms sales, China has come a long ways in terms of being an international arms exporter. During the 1980s and 1990s, most of its product was decidedly antiquated and obsolete, often knock-offs of Soviet systems developed during the 1950s (such as the MiG-21 fighter jet or the Silkworm antiship missile).

Since the turn of the 21st century, however, China’s defense industry has modernized to the extent that it is now able to offer an impressive array of armaments, competitive with their Western counterparts. These include the K-8 trainer jets, C-701 and C-802 antiship cruise missiles, and the FN-6 man-portable surface-to-air missile. These systems, along with modern self-propelled howitzers, armored vehicles, multiple rocket launchers, frigates, and submarines, have been increasingly sold around the world.

In particular, China has quite recently but also quite significantly become a key exporter of armed drones or unmanned combat aerial vehicles (UCAVs), such as its Wing Loong “Pterodactyl” and Caihong drones. Beijing has sold more than US$700 million worth of UCAVs to militaries in Egypt, Indonesia, Iraq, Jordan, Kazakhstan, Myanmar (Burma), Nigeria, Pakistan, Saudi Arabia, Turkmenistan, and the United Arab Emirates.

Consequently, according to data put out by the Stockholm International Peace Research Institute (SIPRI), China captured 5.2% of the global market during the period 2014-2018, putting it in the number four slot among the world’s biggest arms exporters. More and more countries have been buying Chinese arms; during the period 2014-18, China exported arms to 53 countries, compared with 41 in 2009-13 and 32 in 2004-2008. In recent years, China was the single largest supplier to Africa, capturing nearly one-third of the continent’s overall arms market, drawing customers away Europe, Russia, and the United States.

Where are the fighter jet sales?

And yet no one appears to be buying Chinese fighter jets. China manufactures at least one modern totally indigenous combat aircraft, the J-10. The J-10 is a “fourth-generation-plus” fighter, featuring a canard-and-delta-wing airframe, a fly-by-wire flight control system, and an advanced “glass” cockpit. Newer versions will likely be equipped with an advanced active phased-array radar. The J-10 can launch a variety of air-to-air and air-to-ground munitions.

The J-10 is technologically the equal of the US F-16, and it is probably superior in performance to the JF-17. Yet it has garnered no overseas sales. The same can be said so far of other Chinese combat aircraft, including the JH-7 fighter-bomber (which has been in production for over 20 years) or the F-8IIM (a version of the J-8 fighter developed expressly for export).

The J-10 is technologically the equal of the US F-16, and it is probably superior in performance to the JF-17. Yet it has garnered no overseas sales

It is true that the JF-17 is actually a joint Pakistani-Chinese fighter jet. It was inaugurated by the Chengdu Aircraft Corporation (CAC) in the early 1990s as the FC-1. Pakistan soon joined as a full partner and launch customer. Much of the technology (particularly the avionics, like the radar) are Chinese, although the engine is a licensed-produced version of the RD-33, developed by Russia.

According to news reports, the Pakistanis produce 58% of the JF-17s airframe and subsystems – including the wings, tail, and forward fuselage sections – as well as perform final assembly. CAC is responsible for the remaining 42%, particularly the mid- and rear- fuselages (and presumably the engine as well).

So China makes around 40 cents on every dollar with each JF-17 produced (although it probably has to kick some of this back to Russia as part of the licensed-production deal for the RD-33).

China: creating its own competition?

Only a handful of JF-17s have been sold to countries other than Pakistan: 16 to Myanmar and three to Nigeria. Additional sales have been hard in coming. Sri Lanka, Sudan, Malaysia, and Zimbabwe have “discussed” the idea of buying the aircraft, but so far no deals have materialized. As of now, the JF-17 depends almost entirely on the Pakistani Air Force (PAF) buying it.

But each JF-17 sale steals a sale from the Chinese directly. Case in point, the PAF was at one time thinking about acquiring up to three dozen J-10 fighters. Eventually, however, this deal fell through, and the Pakistanis went ahead with production of the Block III JF-17.

As Chinese fighter jets like the J-10 and the JH-7 age technologically, their “sellability” will continue to erode. It may be that FC-31 – China’s candidate for an entry-level fifth-generation fighter – may succeed where these earlier fighters did not, but it’s an open question at this point.

Ironically, China’s inability to successfully market a totally indigenous fighter comes at a time when the global fighter jet business stands to expand rapidly. According to the Teal Group, the global fighter market could be worth as much as US$520 billion over the next decade. Unless China can come up with a competitive fighter jet, it could miss out on much of this business.