America both helps and hinders China’s military-industrial complex

JIANGHANG AIRCRAFT EQUIPMENT has struggled to tantalise investors with the fuel systems and detachable petrol tanks it builds for Chinese warplanes. The company, controlled by Aviation Industry Corporation of China (AVIC), the country’s biggest aerospace-and-defence conglomerate, had witnessed its share price slump by 50% since it went public in Shanghai last year. But in the first three months of the year demand for its wares has soared. On May 28th Jianghang said that net profit for the period nearly doubled, year on year. Trading in its shares subsequently had to be halted after their price rose by 10%, the maximum permitted one-day swing.

Jianghang is just one of dozens of military-linked companies on a high. Most are not publicly traded and disclose little financial information. State-owned builders of navy vessels have flotillas of listed subsidiaries. AVIC, the main group behind China’s fighter-jet programme with more than 1trn yuan ($157bn) in total assets, has 24 publicly traded divisions. To get a sense of the industry analysts track dozens of small military stocks. Citic Securities, an investment bank, covers 58. Everbright, a state-owned broker, follows 115.

The total weapons sales of China’s four biggest firms that make them—of which AVIC is the largest—have been flat at just over $50bn since at least 2015...