India-Pakistan War: How China Is Emerging as the Biggest Winner in Global Defense Markets

गौरव नौड़ियाल ने लंबे समय तक कई नामी मीडिया हाउसेज के लिए काम किया है। खबरों की दुनिया में गोते लगाने के बाद फिलहाल गौरव फिल्में लिख रहे हैं। गौरव अखबार, रेडियो, टीवी और न्यूज वेबसाइट्स में काम करने का लंबा अनुभव रखते हैं।

Amidst the smoke rising across the Line of Control and the roar of fighter jets echoing in the Himalayan skies, a secret and strategic game in the global market is reaching its peak. Emerging as the real player in this game is China. After challenging the West in AI through platforms like DeepSeek, China has now proven the strength of its defense industry on the very first day of the India-Pakistan war. Established media outlets like CNN broke the news of an Indian Rafale jet being shot down on day one although this has yet to be officially confirmed by India. Following such reports in the international press, new analyses of China’s defense industry have begun to emerge.

In a conflict between India and Pakistan, China stands to gain by diverting India’s resources, strengthening its hold over Pakistan, accruing economic and strategic advantages, and weakening India’s global standing.

Pakistan’s defense capabilities and confidence are heavily dependent on Chinese military support. China has major strategic interests in Pakistan, especially the China-Pakistan Economic Corridor (CPEC) and access to the Arabian Sea through Balochistan. Any Indian action in this region directly threatens CPEC. Recently, Pakistan even accused India of supporting insurgency in Balochistan.

Seen in this light, the chain of events that brought India and Pakistan once again to the brink of war under the pretext of the Pahalgam attack is not just a matter of terrorism. It reveals a multi-layered Chinese strategy tied to its market ambitions. Data from as early as May 7 suggests Chinese defense companies stand to gain directly from this war. This conflict has provided the perfect testing ground for China’s untested defense technologies. It may be remembered in history as a major milestone in the global acceptance of Chinese defense systems. On May 7, markets witnessed the downfall of French and Russian defense technologies Rafales at the hands of China’s J-10C. The tension has boosted prospects for Chinese mainland exporters.

Pakistan, which imports most of its defense equipment from China including J-10C fighter jets claimed to have shot down five Indian aircraft, including three Rafales, a Sukhoi, and a MiG-29. This directly benefited Chinese companies, particularly AVIC Chengdu Aircraft Corporation, the maker of J-10C jets, whose stock prices rose significantly.

This suggests that investors anticipate growth in Chinese defense exports, particularly to countries like Pakistan. According to the Stockholm International Peace Research Institute (SIPRI), 81% of Pakistan’s arms imports over the past five years came from China.

China has been consistently challenging U.S. technology dominance. Despite U.S. sanctions and scrutiny, many Chinese companies continue to maintain their presence in American markets and supply chains. Their silent infiltration into these supply networks poses a growing challenge to U.S. national security, economic interests, and technological leadership.

Historically, every time investors pull back from Indian markets during an India-Pakistan conflict, China benefits. After the Pahalgam incident escalated tensions, shares of Chinese defense companies surged. China North Industries Group (NORINCO) and other companies saw a noticeable rise. In parallel, China increased emergency defense supplies to Pakistan—including missile interceptors and spare parts for J-10Cs. All signs indicate that China prepared Pakistan for war while trying to trap India within its borders. Notably, even Bangladesh has recently shown interest in procuring Chinese fighter jets.

China continues to strengthen its defense sector and is now upgrading its technology using DeepSeek, an AI platform. According to the Hong Kong-based South China Morning Post, China has started using DeepSeek in the design of new military aircraft. This AI startup is seen as a cost-effective alternative to American tech giants. Wang Yongqing, lead designer at Shenyang Aircraft Design Institute, said the technology has already shown promising results and will contribute new ideas for future aerospace research and development. This institute is part of the state-owned Aviation Industry Corporation of China (AVIC), which develops advanced fighter jets like the J-15 and J-35.

Military modernization has been a cornerstone of President Xi Jinping’s policies. Traditionally, Chinese arms manufacturers focused solely on the People’s Liberation Army (PLA), but in the past decade, they have pivoted toward international markets to generate additional revenue and support Beijing’s geopolitical ambitions. Arms exports are now a vital yet often overlooked aspect of China’s global security and economic strategy. They not only expand China's sphere of influence but also create new competition and policy challenges for European arms manufacturers in overlapping markets.

China’s Defense Industry Growth (2015–2025)

In 2015, China’s defense budget was approximately $146 billion. By 2024, it had increased to around $314 billion. The projected 2025 budget is estimated to be between $320–340 billion. At today’s rates, that’s about ₹27.7 lakh crore in Indian currency. China’s defense budget is roughly 3.6 times greater than India’s.

China’s defense industry includes major state-owned giants like NORINCO, AVIC, and CSIC. Successes include modern weaponry like the J-20 stealth fighter, Type 055 destroyers, and hypersonic missiles. China leads globally in drone tech, AI-based systems, and naval strength (754 ships, 3 aircraft carriers). It has a robust domestic supply chain and exports arms widely, especially to Africa and Pakistan. After the U.S. ($997 billion), China holds the second-largest defense budget in the world.

For China, this war offers an opportunity not only to test its weapons in real combat but also to divert global attention from contentious issues like the South China Sea and Taiwan.

Balochistan | The Spark That Shook China

In March 2025, a series of attacks on the China-Pakistan Economic Corridor (CPEC) in Gwadar and Ormara deeply unsettled Beijing. Chinese engineers were targeted, and the weakness of Pakistani security forces was exposed. On March 4, 2025, a suicide attack at Gwadar port killed three Chinese engineers. On March 7, another attack on a CPEC convoy on the Ormara Highway killed six Pakistani soldiers and one Chinese citizen. In response, China’s Foreign Ministry held emergency “consultation meetings” in Beijing, attended by PLA officials. These meetings discussed putting “indirect pressure” on India to back off from Balochistan. International media began reporting that Pakistan blamed India for the unrest in Balochistan.

Pahalgam Attack | A Proxy Trigger

The killing of tourists based on religious identity in Pahalgam seems to be a proxy trigger. India responded with a high-intensity military operation named “Operation Sindoor,” which crossed the LoC into Pakistan-occupied Kashmir. If India’s involvement in Balochistan is proven, then this move by China has effectively drawn India back within its own borders. Meanwhile, Balochistan Liberation Army has killed 12 Pakistani soldiers. Though this conflict is unfolding in South Asia, it reflects power play at a global scale.

6 Strategic Gains for China

Diverting India’s Strategic Focus: A conflict with Pakistan would concentrate India’s military and diplomatic energy on the western front, giving China an upper hand in disputed regions like Ladakh and Arunachal Pradesh. Similar to how China used the 1962 Cuban Missile Crisis as cover to strike India.
Strengthening the China-Pakistan Axis: Already close allies, a conflict would deepen Pakistan’s dependence on China, giving Beijing more control. This helps balance India’s growing ties with the U.S., Japan, and Australia.
Economic and Trade Gains: War would pressure India’s economy, while China could profit by supplying arms to Pakistan and filling gaps in disrupted trade chains. Historical parallel: 19th-century opium trade used by China to exploit British India’s vulnerabilities.
Weakening India’s Global Image: Prolonged war could tarnish India’s reputation on the world stage, helping China gain more influence in the UN, G20, and BRICS. India’s 2023 G20 presidency and its closeness with the West challenge China’s dominance.
Exploiting Global Distractions: If the U.S. and NATO remain preoccupied with Ukraine or the Middle East, China could use the opportunity to push forward on Taiwan or the South China Sea—just as it did during the 1962 conflict.
Military and Technological Validation: Pakistan’s use of Chinese weapons in real combat acts as a testbed. If successful, this could boost international demand for Chinese arms.

India and Pakistan now stand on the brink of a war that is not merely about territorial disputes, but a much larger geopolitical chessboard where China plays the role of mastermind, using the conflict to elevate its defense industry and expand its global influence.