Bogeyman
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The Chinese Communist Party (CCP) has placed great emphasis on transforming the People’s Liberation Army (PLA) into a next-generation warfighting force. To build the modern defenseindustrial base needed for this task, the CCP is stepping up its strategy of Military-Civil Fusion (MCF). MCF seeks to harness the sophistication and output of China’s civilian economy for the benefit of defense supply chains. MCF is ushering Chinese companies into the defense economy even as Beijing’s policies encourage companies to innovate by acquiring and adapting foreign technology. The confluence of MCF with this approach, called “Introduce, Digest, Absorb, and Re-Innovate” (IDAR), obscures the distinction between civilian and military uses. Given China’s extensive business and academic presence abroad, there is a clear risk that foreign strategic technologies and expertise could inadvertently contribute to China’s growing military capabilities.
However, with this challenge comes opportunity. For MCF to succeed, the PLA and China’s defense apparatus must radically alter their opaque postures to operate in a market environment. MCF compels China’s defense supply chains to become increasingly transparent, creating visible indicators of participation in the defense economy that can be evaluated using publicly available information (PAI). While the indicators of participation may evolve as the ecosystem does, a segment of these supply chains will always be visible as long as China seeks to involve its civilian sector. The burden is on states, companies, and universities engaging with Chinese firms and institutions to proactively prevent misappropriation of their technology.
This report uses PAI to provide decision advantage to those on the outside of China’s defenseindustrial base. The authors identify 14 public indicators that regulators, investigators, and due diligence officers can use to evaluate counterparty risk (see Risk Signals: An Assessment Tool on page 64). To do so, the report analyzes China’s defense ecosystem and the activities and characteristics of Chinese companies participating in military supply chains by:
The report reveals that MCF and IDAR have resulted in concrete gains for the PLA.
» The case of China South Rail demonstrates how PAI can be used to trace how an ostensibly commercial deal was coopted for military purposes (p. 47).
» The case of Beijing Highlander exemplifies how an openly pro-MCF company has historically developed technologies with international partners for the PLA Navy, and continues to do so (p. 51).
» The case of Bright Laser Technologies highlights how relationships within the defenseindustrial base can entail increased exposure to China’s defense supply chains (p. 55).
https://static1.squarespace.com/sta...8a0bfc672d825e346/1570110297719/Open+Arms.pdf
However, with this challenge comes opportunity. For MCF to succeed, the PLA and China’s defense apparatus must radically alter their opaque postures to operate in a market environment. MCF compels China’s defense supply chains to become increasingly transparent, creating visible indicators of participation in the defense economy that can be evaluated using publicly available information (PAI). While the indicators of participation may evolve as the ecosystem does, a segment of these supply chains will always be visible as long as China seeks to involve its civilian sector. The burden is on states, companies, and universities engaging with Chinese firms and institutions to proactively prevent misappropriation of their technology.
This report uses PAI to provide decision advantage to those on the outside of China’s defenseindustrial base. The authors identify 14 public indicators that regulators, investigators, and due diligence officers can use to evaluate counterparty risk (see Risk Signals: An Assessment Tool on page 64). To do so, the report analyzes China’s defense ecosystem and the activities and characteristics of Chinese companies participating in military supply chains by:
The report reveals that MCF and IDAR have resulted in concrete gains for the PLA.
» The case of China South Rail demonstrates how PAI can be used to trace how an ostensibly commercial deal was coopted for military purposes (p. 47).
» The case of Beijing Highlander exemplifies how an openly pro-MCF company has historically developed technologies with international partners for the PLA Navy, and continues to do so (p. 51).
» The case of Bright Laser Technologies highlights how relationships within the defenseindustrial base can entail increased exposure to China’s defense supply chains (p. 55).
https://static1.squarespace.com/sta...8a0bfc672d825e346/1570110297719/Open+Arms.pdf