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The Decision on Major Issues Concerning Comprehensively Deepening Reforms, issued by the Third Plenum of the 18th Communist Party of China Central Committee, lays special emphasis on “boosting coordinated development of military and civilian industries”.
The document says China will strengthen the defense industry, perfect the collaborative innovative system of defense science and technologies, reform defense production management and armament procurement system, and encourage private enterprises to invest in scientific research, and production and repair sectors of the defense industry.
This shows that coordinated development of the military and civilian industries has not only entered a new stage, but also has become an important part of China’s economic development and national security strategies, as well as an essential means to achieving national prosperity.
At the core of coordinated development of the military and civilian industries is the reasonable distribution of national resources between the defense and non-defense industries. Coordinated development of the military and civilian industries becomes inevitable when a country’s technological strength and market economy reach a comparatively high level of development. Between defense and non-defense needs, the one that is more important and urgent will get more resources.
The coordinated development of the military and civilian industries can promote economic construction. In fact, given the limited resources China has, the coordinated development of military and civilian industries is the best way to derive maximum benefit from economic and defense constructions.
There are two key factors in the coordinated development of military and civilian industries. First, China should encourage defense enterprises to develop civilian industries and top civilian industries to enter sensitive defense sectors such as scientific research and weapons’ production. Second, defense enterprises should carry out further shareholding reform, and mergers and acquisitions to promote the development of military and civilian dual-use technologies in order to help two-way technology transformation.
China’s defense industry is gradually forming a cluster of new armament scientific research and production enterprises. These enterprises are leading companies in military and related industries, and are gradually joining the advanced ranks of their peers worldwide. So China should establish a dynamic management system, and an access and exit mechanism for this emerging cluster.
Civilian enterprises have now the opportunity to enter the sensitive defense sectors, and they can do so in three ways. First, civilian enterprises can bid for military projects or cooperate with military enterprises in scientific research and complementary production.
Second, since civilian enterprises develop rapidly they can invest in national defense industries and become an important source of investment for the sector.
Third, civilian enterprises can participate in the development and industrialization of military and civil dual-use technologies. Non-public enterprises are encouraged to participate in research and development of military and civilian dual-use high and new technological products, especially high-tech military-civilian joint industries such as civil nuclear energy, civil aviation and space technology, and shipping.
Demonstration bases of integrated military and civilian industries can effectively boost regional economic development. Since 2009 the Ministry of Industry and Information Technology has established 24 national integrated military and civil industrial demonstration bases in several provinces and autonomous regions. And 20 provinces and autonomous regions have set up special funds, worth 1.66 billion yuan ($272 million), for the development of integrated military and civil industries.
The high-end, precise and large-scale weapons’ industry is at the forefront of the industrial chain, which can directly support civilian industries’ development.
Military enterprises should develop products for civil use, which in the long run would directly promote economic development. Moreover, goods produced by military enterprises can always be put to civilian use. According to data released after the meeting of China Association for Peaceful Use of Military Industrial Technology in 2003, two decades’ efforts have helped China make great achievements in offering products made by military industries for civil use, especially in the fields of nuclear technology, aerospace, aviation and shipping. More than half of the personnel in the military industry work for the development and production of products for civil use, and their output value accounts for about 80 percent of the defense industry’s science and technology sector’s total.
Civilian enterprises can improve their scientific research and production capability by entering the science and technology sectors of the defense industry, and contribute indirectly to economic development.
The restructuring of military enterprises can promote the defense economy as well as civilian economy in many areas including advanced technology, equipment, facilities, intellectual property rights and talents.
The military can lease facilities and equipment such as roads, bridges, tunnels, harbors, airports and warehouses to civilian enterprises for direct economic benefits. It can also sub-contract scientific research, production and repair works of military-related projects to civilian enterprises.
Also, a huge amount of components and spare parts, raw materials and supporting equipment for military use are purchased directly from the market, helping the civil industries’ logistics and consumption sectors.
And the development of strategic projects involving satellites, navigation system, space station, space exploration and aircraft carriers will achieve a two-way transition between the defense and civilian economies.
Source: China Defence
