China sold US$800 million worth of arms and military equipment to a variety of nations in 2002, making it the world’s fifth largest arms supplier after the United States, United Kingdom, Russia, and France. Among its principal clients have been Algeria, Egypt, Iran, Kuwait, Pakistan, and Yemen. China also provides military assistance to other countries, such as Fiji, Papua New Guinea, Tonga, and Vanuatu.
The China North Industries Group Corporation (CNGC, often called NORINCO), China’s main defense producer, has some 100 joint ventures and more than 80 overseas offices and branches in 30 countries and regions involved in military and dual-use technology production and sales. Further, China is also a major arms buyer, mostly naval and air force equipment from Russia. In 2004 China gave unprecedented access to senior foreign military officers at a military demonstration in Henan Province. Officers from 15 Asian nations and Russia were present. In 2005 China and Russia held joint eight-day “Peace Mission 2005" military maneuvers near Vladisvostok and in Shandong Province and nearby waters. Air, land, and amphibious exercises were held.
China is a member of the Shanghai Cooperation Organization (SCO), a joint effort with Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. The SCO was established as the Shanghai Five when the partners signed agreements on strengthening mutual trust in military fields in border areas in 1996 and on mutual reduction of military forces in border areas in 1997. After the September 11, 2001, terrorist attacks on the United States and the entry of U.S. and North Atlantic Treaty Organization (NATO) forces into Central Asia, the SCO was formed and members began to hold joint counterterrorism military exercises.
In 2004 the SCO initiated a regional antiterrorism structure to crack down on various transnational terrorist and criminal activities. China also has held joint naval and counterterrorism exercises with Pakistan. The naval exercise, which occurred in the East China Sea, was the first such drill with a foreign counterpart, as Chinese sources put it, “in a non-traditional security field.” The antiterrorism exercise, which was held in Xinjiang Uygur Autonomous Region, involved border guards from both sides.