The United States is still the top arms merchant in the world, but China, Russia and other
nations are gaining a bigger seat at the highly profitable weapons and munitions table.

IHS Jane’s Defence, a widely followed publisher on defense issues, released its annual global review that showed the arms business is booming, with trade jumping from $56 billion in 2008 to $73 billion last year.

“This is the biggest explosion in trade the world has ever seen,” Paul Burton, senior manager of IHS Jane’s Defence, told CNBC. The publisher reported that at its current pace, the world arms industry will more than double by 2020.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

In the United States, global arms sales rose 30 percent from 2008 to 2012, from $20 billion to $28.5 billion.

As usual, U.S. companies held most of the top military exports slots, with Lockheed, Boeing, Raytheon, United Technologies and General Dynamics among the leaders. The largest export programs are military aircraft, a segment where American traditionally excels.

But IHS Jane’s Defence said other nations are also boosting their exports, with Asia in particular showing strong arms-exports growth.

“The West’s edge on technology will erode this decade as Asia outspends the USA and Europe,” the annual reported predicted, concluding the “rise of Asia Pacific exports threatens U.S. dominance of the global defense industry.”

Between 2008 and 2012, Russia’s arms exports rose 21 percent to $10.1 billion, China’s increased 92 percent to $2.2 billion, Japan’s rose 106 percent to $101 million, and South Korea’s increased 668 percent to $573 million.

The leading global destinations for U.S. arms exports in 2012 were Turkey, Egypt billion, South Korea, United Arab Emirates and Iraq. The biggest importers of weaponry from other nations were India, but the Middle East and Turkey are the fastest growing import markets, with imports more than doubling since 2008.

Among interesting tidbits from the report, CNBC said the IHS Jane’s Defence data showed
Russia has been buying drones from political foe Israel, that Brazil has become a major exporter of jet trainer aircraft, and that South Korea is diversifying with production of trucks, aircraft, communications systems and even mine sweepers.

Engineering & Technology magazine said budget cuts in Washington, as it withdraws from countries such as Afghanistan, mean the U.S. will account for 30 per cent of world arms exports by 2021, behind Asia's 31 per cent.

China's ramp-up in military spending in recent years is worrying its neighbors such as Japan, who in turn are raising their own defense spending, despite China’s repeated reassurances that there is nothing to fear, the magazine said.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.