China’s defence stocks continued their downward slide on Wednesday, extending losses triggered a day earlier following the abrupt end of hostilities between India and Pakistan. The sudden ceasefire after India’s Operation Sindoor dealt a blow to expectations of sustained Chinese arms exports to Islamabad, deflating the war premium that had lifted defence shares earlier this month.
Market Fallout
Several Chinese defence firms saw sharp declines in Hong Kong and mainland exchanges. The Hang Seng China A Aerospace & Defence Index dropped nearly 3%, with major players such as AVIC Chengdu Aircraft and missile manufacturer Zhuzhou Hongda plummeting 8.6% and 6.3%, respectively. AVIC Chengdu, the maker of Pakistan’s frontline J-10C fighter jets, saw its shares crash over 9% across two trading sessions.
The selloff reflects investor disappointment over the brief duration of the conflict, which had sparked hopes of increased defence orders from Pakistan.
Pakistan’s Use of Chinese Weapons During the Conflict
During the four-day flare-up, Pakistan relied heavily on Chinese-made weapon systems. The J-10C fighter jets played a prominent role in air engagements, with Islamabad’s Deputy Prime Minister Ishaq Dar confirming their deployment. The aircraft, equipped with PL-15 long-range air-to-air missiles, was touted by Pakistani officials as instrumental in its aerial campaign.
However, Indian officials dismissed Pakistan’s claims of downing multiple jets — including French-built Rafales — as exaggerated. The Indian Air Force (IAF) released images of intercepted drones and missiles, many of which bore Chinese or Turkish markings. India credited its integrated air defence system, including Russian S-400s and indigenous technologies like the Akash Surface-to-Air Missile and electronic warfare platforms, for neutralizing most threats.
Prime Minister Narendra Modi underscored this point, stating, “The world saw how Pakistan’s drones and missiles fell like straws before India’s air defence. Our systems destroyed them mid-air.”
Operation Sindoor: High-Tech Clash, Sudden Calm
India’s Operation Sindoor targeted terror infrastructure in Pakistan-controlled territory with precision air and ground strikes. In response, Pakistan launched drone swarms, artillery barrages, and counterstrikes using Chinese-supplied systems — including the JF-17 Thunder and SH-15 self-propelled howitzers.
Despite the technological sophistication of Chinese gear, Air Marshal A.K. Bharti, Director General of Air Operations, IAF, emphasized that Indian systems successfully repelled every attempted breach. “Whether it was a Chinese missile or a Turkish kamikaze drone, none got through,” he told the media while displaying wreckage from intercepted enemy weapons.
Economic Blowback: Arms Sales in Jeopardy
The ceasefire dashed market hopes of increased Chinese defence exports to Pakistan, a key client that sources over 80% of its military imports from China. According to SIPRI, Pakistan spent more than $5 billion on Chinese weapons between 2020 and 2024, including fighter jets, drones, and missile platforms.
Investors had anticipated further orders following the conflict, especially for headline systems like the J-10C and PL-15 missiles. However, with the cessation of hostilities, demand appears to have plateaued. AVIC Aerospace, which is involved in both aircraft and drone production, also fell over 2% in Hong Kong trading.
What’s Inside Pakistan’s Chinese Arsenal?
J-10C Vigorous Dragon: A 4.5-generation multirole fighter equipped with AESA radar and thrust-vectoring engines. Compatible with PL-10 and PL-15 missiles, it represents Pakistan’s most advanced platform currently in service.
JF-17 Thunder (Block 3): Co-developed with Chinese firms, this lightweight fighter has evolved into Pakistan’s domestic production success story. With AESA radar and upgraded engines, it offers improved agility and sensor range. Approximately 120 are in active service.
PL-15 Air-to-Air Missile: A long-range, radar-guided missile believed to have a range exceeding 200 km. Integrated with both the JF-17 and J-10C, it extends Pakistan’s aerial strike capability significantly.
SH-15 Self-Propelled Howitzer: A mobile artillery platform featuring NATO-standard 155mm guns with a range of up to 50 km. Manufactured by NORINCO, it was deployed in border shelling during the conflict.
HQ-9P and HQ-16 SAM Systems: These surface-to-air missile systems, modelled after Russian designs, are used to defend Pakistani airspace. The HQ-9P was inducted in 2021 and is jointly operated by the Army and Air Force.
Chinese UAVs and Loitering Munitions: Pakistan employed various reconnaissance and strike drones, including kamikaze drones, several of which India claims to have intercepted and recovered.
Stealth Fighter Speculation: Pakistan’s J-35 Ambitions
Reports suggest Pakistan is interested in acquiring China’s fifth-generation J-35 stealth fighter. This twin-engine aircraft with internal weapons bays and radar-evading features is still in development and being pitched as China’s answer to the American F-35.
However, this raises strategic questions. As one Indian analyst” noted, “If the J-10C and JF-17 were as effective as Pakistan claimed — shooting down Rafales and breaching Indian defences — then why the urgent need for” J-35s?”
Some defence observers in China suggest that China’s offer of the J-35 aircraft is less of a sale and more of a strategic move in terms of geopolitics. “It’s not that Pakistan lacks the funds. Rather, it’s about China trying to restore its reputation and maintain its last significant defence customer after the recent credibility blow to its weapons,” stated a former Indian military official.
The fallout from Operation Sindoor extends beyond the battlefield. While the conflict spotlighted the capabilities and limitations of Chinese-made arms, it also underscored India’s growing technological self-reliance. The economic repercussions — especially on China’s defence sector — could reverberate far longer than the brief border war itself.
Huma Siddiqui
