China's entrance into the international arms market in the 1980s was closely related to reforms in the defense industry and the leadership's desire to acquire the foreign technology needed to modernize PLA weaponry. Before 1980 China provided arms to friendly Third World countries at concessionary prices (see Relations with the Third World , ch. 12). Because China transferred arms based on ideological and foreign policy considerations, terms were generous. Around 1980 China decided to sell weapons for profit to absorb excess capacity in the defense industry, make defense enterprises more economically viable, and earn the foreign currency required to purchase foreign military technology. China continued to sell military hardware at generous terms to some of its traditional friends and weapons customers, such as Pakistan, the Democratic People's Republic of Korea (North Korea), Egypt, Sudan, and Somalia. Hard-currency sales to Middle Eastern countries, however, particularly Iran and Iraq, accounted for the rapid increase in Chinese weapons sales in the 1980s. United States Arms Control and Disarmament Agency studies indicated that from 1979 to 1983 Chinese arms sales ranked eighth in the world, for a total of about US$3.5 billion, of which an estimated US$2.1 billion went to Middle Eastern countries. In 1979 arms sales accounted for 0.9 percent of total exports in 1983 arms sales rose to 6.3 percent of total exports. By 1987 China had jumped to fifth place, ranking behind the United States, the Soviet Union, Britain, and France.

In the 1980s the defense industry and the PLA established a number of trading corporations to sell Chinese military hardware and to acquire foreign technology. The most prominent of these corporations were the China Xinshidai Corporation, affiliated with the NDSTIC China Northern Industrial Corporation (commonly known as NORINCO), affiliated with the State Machine-Building Industry Commission China National Aero-Technology Import and Export Corporation (CATIC), affiliated with the Ministry of Aeronautics Great Wall Industrial Corporation and China Precision Import and Export Corporation, both affiliated with the Ministry of Astronautics China Electronics Import and Export Corporation, affiliated with the Ministry of Electronics Industry China Shipbuilding Trading Corporation, affiliated with the China State Shipbuilding Corporation and China Xinxing Corporation, affiliated with the PLA General Logistics Department. In 1984 these corporations began promoting Chinese weapons, actively seeking technology transfer and coproduction agreements with Western defense companies at international defense exhibitions in 1984.

Data as of July 1987