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ICG Risk Blog - [ China: a planners' preference defense industry succeeds in spite of systemic shortcomings ]

China: a planners' preference defense industry succeeds in spite of systemic shortcomings


China's military-industrial complex is a study in contrasts. Effectively unique in the third world/developing world in that it produces a complete range of military equipment that includes "small arms, armored vehicles, fighter aircraft, warships, submarines, nuclear weapons and intercontinental ballistic missiles; is one of the oldest and largest defense sectors, yet faces system shortcomings that have evinced difficulties in "translating theory and design into reliable weapon systems":

  • Technologically backwards defense industries (much indigenous design equivalent to 1970s-1980s technology
  • Critical R&D gaps (aeronautics, propulsion, microelectronics, computers, avionics, sensors and seekers, electronic warfare, and advanced materials.
  • Systems integration and program delays
  • Inefficient, wasteful production dogged by excess capacity
  • Consistently poor production quality control
  • Small and sporadic production runs
  • Inadequate funding
  • Centralized and personality-centric production management leading centralized, hierarchical, bureaucratic, and risk-averse state-owned enterprises (SOEs)

One wonders if it matters, given the criticality of the arms sector in a planners' preference economy in a postwar environment in which the PRC's political and economic evolution had outstripped a military people's doctrine perfected in WWII that came to be seen as a massive gap in power projection, international legitimacy and primacy, and an inability to exercise a "sovereign right over territories it claims as integral to the PRC." The PRC commenced a "massive drive to modernize its conventional and strategic forces to levels comparable with the [US across] the entire spectrum [of] equipment, structures and systems, doctrine and human resources" with a specific focus on:

developing limited power-projection capabilities to deal with a range of possible conflict scenarios along its periphery, especially in maritime areas. The PLA is acquiring military capabilities designed to defend Chinese sovereignty and territorial interests and, in particular, to pose a credible threat to Taiwan in order to influence Taiwan's choices about its political future; ...These capabilities are also intended to deter, delay, or complicate U.S. efforts to intervene on behalf of Taiwan."

Despite the aforementioned deficiencies, some remarkable weapons systems are now appearing that had "their genesis in design and development" decades ago:

  • Dong Feng 31 (DF-31) three-stage, solid-fuel, mobile ICBM , employing endoatmospheric decoys, and delivering a "single megaton-yield warhead or up to five multiple independently targeted re-entry vehicle (MIRV) with a selectable yield of 20, 90 or 150 kilotons" at a range of 8,000 kilometers using inertial guidance with celestial nav correction to a reputed 100 meter CEP. The DF-31 places all the US west coast, all US Pacific and Indian ocean assets, all of Europe, and parts of Russia and India within range. The enhanced DF-41 will be able to target the entire US.
  • Jian-10 (J-10) fighter (based on the Israeli Lavi using US technology), improved variants of the XAIC Jianhong JH-7 (FB-7) fighter-bomber, Hongqi-9 (HQ-9) long-range SAM (based on Russian S-300P/SA-10 Grumble, US Patriot technology (ostensibly via Israel)) and preexisting Chinese systems), the Type 039 Song class) diesel-electric submarine, and the Type 052C Lanzhou Class guided missile destroyer (DDG)

Despite these remarkable accomplishments, overall defense efficiency remained low and sluggish, the result of which was an overhaul of the Chinese defense complex in the 1990s. The vast Commission of Science, Technology, and Industry for National Defense (COSTIND), created in 1982 by merger of four large defense groups, was broken up to be replaced by a General Armament Department (GAD) responsible for overseeing defense procurement and new weapons programs, in effect, becoming the PLA's purchasing office. The SOEs were reformed into eleven defense industry enterprise groups (DIEGs) intended to function as "true conglomerates, integrating R&D, production, and marketing" that would compete against one another for PLA procurement contracts thereby becoming more innovative and efficient by downsizing under a policy of "letting the strong annex the weak."

Reforms still have not introduced market forces nor have they addressed the "the lack of advanced technical skills and expertise, compartmentalization and redundancy, and a bureaucratic/risk-averse corporate culture":

  • Competitive bidding and market pricing have yet to appear in the procurement process
  • DIEGs have yet to compete with one another
  • Defense industry rationalization in both manpower and plant closures is glacial
  • Massive subsidies continue to flow to the defense sector to retire its debt

Given the desire to reach peer status with the US, one might expect the Chinese military-industrial complex to remain selectively productive yet inefficient and suboptimal overall as cubic acres of dollars are applied to deliver key components:

It could be argued [that] that simply throwing more money at the defense industry has had a considerable impact - through increasing procurement and therefore production, and by providing more funds for R&D.

Bridging the Gap: PRC Missile Modernization and the Changing Deterrence Environment
By Vijai K Nair
Volume 5 Issue 7 (March 29 , 2005)

The PRC's Defense Industry: Reform Without Improvement
By Richard A. Bitzinger
Volume 5 Issue 6 (March 15 , 2005)

A Paper Tiger No More?
The U.S. Debate over China's Military Modernization
Richard Bitzinger
Asia-Pacific Center for Security Studies, December 2003

Gordon Housworth

InfoT Public  Strategic Risk Public  


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