China’s defense industry to become more open to public-private cooperation

By Jiang Jie Source:Global Times Published: 2015-7-23 21:28:02

Visitors look at a four-legged robot on July 16 at a Beijing expo featuring products jointly produced by military and civilian industries. Photo: Li Hao/GT

"Once at war, China will be fighting with a defense force built upon parts of the national strength against a Western military system supported by the country's overall national strength. National security will be severely compromised."

Major General Jiang Luming, a professor at the National Defense University of the People's Liberation Army (PLA), depicted such a scene at a conference in Beijing in early July, which he said will be a nightmare for China unless the country better integrates its military and civilian industries.

Announced by President Xi Jinping as a national strategy in March, the term - military and civilian industries integration - means that arms manufacturers will support civilian industries with their advanced technology and vice versa.

Addressing a forum on the topic on July 16, Xu Dazhe, director of the State Administration of Science, Technology and Industry for National Defence (SASTIND), said that China will ease the restrictions faced by private businesses which want to get involved with military projects.

Authorities will provide more incentives to encourage State-owned defense contractors to increase their use of privately-made products, he added.

As China hastens its efforts to integrate military and civilian industries, concerns have haunted many officials and experts as to whether the national strategy - which aims to boost both China's economy and military - will also come with corruption and the leaking of military secrets. 

A win-win strategy

According to Xu Zhanbin, a deputy director of SASTIND, some 1,000 private companies have been authorized to join the national defense market so far, making up nearly 40 percent of the total number of contractors for military equipment manufacturing in China.

Since 2005, China's defense market has been gradually opening itself to private-sector involvement, albeit with strict requirements.

Private companies must obtain four licenses to bid on military projects covering confidentiality and technological capability.

Many private companies tend to affiliate themselves with government-backed scientific institutes or universities to prove of their technological capability, analysts said.

Sun Harmonics, a Hangzhou-based exhibitor at an expo on military and civilian industries integration held in Beijing earlier this month, caught many eyes with its flexible solar cells that can be carried in a soldier's backpack.

As a private company, Sun Harmonics has been cooperating with several research institutes, including the Chinese Academy of Sciences, Tao Hong, the company's deputy general manager, told the Global Times, claiming that the firm has inked contracts with the PLA.

At another expo, Beijing's Beihang University showed off the 3D-printed titanium alloy components it has produced for military aircraft.

A staff worker, who preferred not to be named, told the Global Times that the titanium-printing technology has also been used to make components for the nation's first homemade large passenger aircraft, the C919.

The university formed a company in 2011 to 3D-print titanium alloy hardware for aircraft, with 110 million yuan ($17.72 million) of joint investment from the Beijing municipal government and the Aviation Industry Corporation of China, a State-owned military aircraft manufacturer. 

Meanwhile, the China North Industries Group Corporation (NORINCO Group), a State-owned arms manufacturer, displayed its civilian products at the two expositions.

One exhibit featured a bionic quadruped robot that resembled the famous "Big Dog" robot made by US firm Boston Dynamics, though the company representatives preferred not to compare the two products.

"China does not want to make a copycat of the Big Dog but to gain full control of advanced technology to keep up with the rest of the world," an anonymous employee of the NORINCO Group told the Global Times.

"The robot will not only serve military purposes, but help carry equipment and supplies for research and rescue missions during natural disasters," he said.

Systemic obstacles

Major General Jiang pointed out that China uses military technologies for civilian purposes relatively rarely. Some 29,000 national defense patents are "sleeping beauties" with great potential yet to be unleashed on the civilian world, which could solve many economic problems including the country's over-capacity of aluminum production.

Addressing the same conference, Wu Mingxi, a research fellow with the Ordnance Science and Research Academy of China, pointed out that the national defense market is poorly managed with multiple government agencies involved in procurement, with bureaucratic impediments to private-public integration frequently appearing and military contractors tending to seek internal cooperation even if other companies can provide better products.

The different market values  behind military and civilian products also pose an obstacle, as manufacturers making military products use set prices but aim for better quality, while lower costs are prioritized when it comes to civilian products, he said.

Wu added that acquiring the four licenses is too time-consuming for private firms, eating up their cash and manpower. After a company finally manages to get the licenses, it will still face several rounds of ongoing examinations that can last up to five years.

Amid the nation's crackdown on corruption in the PLA, some analysts have also expressed concerns about private money pouring into the system, causing bribery.

The General Armament Department of the PLA launched an official military weapons procurement website in January to provide information on the country's weapon and armament needs, relevant policies and procurement notices.

The PLA auditing office was brought under the direct management of the Central Military Commission (CMC) in November 2014 after years of being supervised by the PLA General Logistics Department, to allow the central authorities to better curb corruption.

"The website is a good example of making the procurement process, which used to be confidential, more transparent in a way to reduce [the effect of] personal influence on weapons procurement," Qin Zhen, an executive editor with the Beijing-based magazine Ordnance Knowledge, told the Global Times.

As opposed to other contracts, weapon deals usually include military secrets, making it impossible for the public to conduct close supervision. A tightened auditing process regarding weapons procurement within the PLA can help avoid corruption, Qin said.

However, a Beijing-based military expert, who requested anonymity, told the Global Times that State-owned arms manufacturers may continue to receive preferential treatment in the market as they have business relationships built over time with the general armament department.

Newspaper headline: Brothers in arms

Posted in: Military

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