Global defense contractors are circling for business in Asia, with countries from Australia to Vietnam upgrading and adding everything from submarines to fighter jets as China expands its military reach.
Defense budgets will keep rising, according to IHS Jane's, which forecasts that spending in the Asia-Pacific region will climb 23 percent to $533 billion annually by 2020. That will put it on a par with North America, which is expected to account for a third of global defense spending by then, from almost half now.
The figures reflect a shifting strategic dynamic as China pushes for greater influence and the U.S. seeks to preserve decades of dominance in the western Pacific. While military spending in Asia is coming off a low base — especially in Southeast Asia — and remains a relatively small proportion of gross domestic product, nations that for years relied on outdated ships and planes are starting to renovate their fleets.