Although newly elected House Republicans have vowed to cut spending, they also have advocated a stronger approach to China, which could mean bigger contracts for defense contractors such as Lockheed Martin and Northrop Grumman.
Bloomberg reported that Virginia Republican Randy Forbes, who may become head of the House Armed Services readiness subcommittee said, “We have to look at the totality” of China’s efforts. Once lawmakers look at emerging challenges from China such as cyber warfare, aircraft carriers and missiles, they’ll say, “We better be changing our readiness capability.”
House Republicans may place a “greater focus on modernization, research and development and looking at near-peer competitors than ongoing operations,” said Cord Sterling, vice president of the Aerospace Industries Association, which represents Lockheed, Raytheon and Northrop Grumman. “Strategic defense, including missile defense, space, shipbuilding and aircrafts are all areas where investment is needed to focus on near-peer threats,” he said.
This expected focus will most likely mean a shifting of money toward weapon programs, rather than increased spending. This would benefit companies that create sea-based anti-missile systems, like Bethesda, Lockheed and Raytheon. Companies that manufacture submarines, destroyers and long- range drones, such as Northrop Grumman and General Dynamics could also benefit. Alliant Techsystems, which creates targets to test defenses against a supersonic Chinese anti-ship missile, might benefit as well Bloomberg reported.
China, which spends the second most on its military worldwide, is strengthening its military capabilities to extend its reach into the Indian Ocean and Pacific, the Pentagon said in an annual report to Congress in August. Republicans want the Pentagon to release more information on China’s strategy of developing weapons designed to deny U.S. forces access to areas near Chinese waters, according to Forbes.