China's great leap in military power

Although China's defence budget is officially far smaller than that of the US and its defence technology is less sophisticated, it is make steady progress as a builder and vendor of weaponry.

epa01882042  Close up of a convoy of military vehicles carrying rockets during a mass parade including 200,000 performers and representatives of each wing of the armed forces showing off its latest weaponry passes through Tiananmen Square to mark the 60th anniversary of communist rule in Beijing, China 01 October 2009. The parade showed everything from airplanes for in-flight refuelling to intercontinental missiles as well as tens of thousands of children in brightly coloured costumes.  EPA/ADRIAN BRADSHAW *** Local Caption ***  01882042.jpg
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When China last year marked the 60th anniversary of the communist takeover, there were goose-stepping female soldiers, hordes of children marching in every colour and giant pictures of leaders from Mao Zedong to Hu Jintao pulled along Beijing's main thoroughfare under bright sunshine.

For China, the day was a celebration, but the message sent to the outside world was unmistakable: China was rising as a global power.

It was not just the scale of events that made this point, but also the formidable array of defence technology on show. There were unmanned aerial vehicles, satellite devices, tanks and missiles pulled along Chang'an Avenue. More than 50 types of new weapons developed, it was said, using indigenous technology were showcased.

It was a mighty display, but no surprise given the heavy increases in spending that China's armed forces have enjoyed in recent years, coming as some of the country's neighbours have detected a growing assertiveness when it comes to regional tension points. Every year from 1989 to 2009, China's publicly announced defence budget rose by more than 10 per cent.

This year the government reported a relatively modest 7.5 per cent increase, officially bringing spending to US$77.9 billion (Dh286.11bn). Beijing is thought to actually dig a lot deeper into its pockets than this.

"Obviously there are all types of expenditure, especially research and development in the military sector hidden in other budgets," says Joseph Cheng, a professor of political science at City University of Hong Kong.

"Most experts expect the actual expenditure is twice to several times the published amount."

Indeed, the US Pentagon estimates the real budget is between $105bn and $150bn, making China the world's second-largest defence spender. Although this is still just a fraction of Washington's $719bn annual defence spending, and while a portion of China's defence expenditure continues to go on overseas equipment, the growing military budget nevertheless helped the country's defence industry to develop substantially.

"The Chinese government is very strongly in support of building up the defence industry to make the country self-sufficient in arms development and production," says Richard Bitzinger, a senior fellow at the S Rajaratnam School of International Studies at Singapore's Nanyang Technological University who has written extensively on China's defence industry.

Although China's defence sector is developing fast, transforming an industry formerly based on sheer manpower into a modern, slimmed-down fighting force with cutting-edge technology has not always gone smoothly.

As Mr Bitzinger and Kenneth Boutin wrote last year in a paper titled China's Defence Industries: Change and Continuity, as recently as the late 1990s the sector was lagging decades behind that of the West, with low production volumes and projects taking inordinate amounts of time to come to fruition.

It was too centralised and bureaucratic, heavily overstaffed, lacked collaboration between research institutes and suffered from inadequate communication between the industry and the People's Liberation Army (PLA) it was supposed to serve. Advanced weaponry was brought in from abroad, particularly Russia.

A key white paper in 2004 set out China's aim to make a "generation leap" in its defence technology by restructuring organisations to compete for PLA contracts, according to the authors. Also, by carrying out more work in the civilian sector, it was hoped defence institutes would gain use of dual technologies in areas such as IT and computer-aided manufacturing.

There has been progress, the pair wrote, but not on the scale some may have hoped for. There are still too many people employed and too little competition, except in areas such as the construction of naval vessels. This means key hardware still comes from overseas, but continuing liberalisation to encourage non-state-owned enterprises to enter the defence industry is aiding improvements.

Mr Bitzinger strikes a positive tone when describing the sectors' current state. There are "choke points", such as in the provision of jet engines, where the Chinese still rely on Russian expertise. Yet in many areas, major progress has been made, and China is more capable, he says, of producing its own high-tech engines and missiles.

"They're slowly but surely weaning themselves away from the Russians," he says. "A lot of things are nearing going into production … Some of that is reverse-engineered from the Russians to the point where they own the technology.

"Because they continue to put a lot of money into the basic science and technology, they are able to develop more indigenous capability. A lot of their missile systems are pretty much indigenous. Orders are up and the government is buying more."

While China might be able to rely on itself more, whether other governments are willing to turn to China for their defence purchases is another matter. According to figures from the Stockholm International Peace Research Institute, China is the world's seventh-biggest defence exporter, shipping about a fifth as much as Russia.

China is, however, becoming a rival to Russia and South Africa as a supplier to African nations - sometimes controversially, as when it supplies regimes with dubious human rights records, such as Zimbabwe.

According to a 2008 report from the US Council on Foreign Relations, between 2003 and 2006, China sold $500 million of arms in Africa - 15.4 per cent of global arms sales to the continent. In Africa and beyond, major buyers of Chinese weaponry have included Ethiopia, Sudan, Tanzania and Iran.

China may require another significant step forward before it is able to sell to countries that have tended to rely on western manufacturers.

"The challenge for China is the challenge they've faced for about 20 to 30 years," Mr Bitzinger says.

Enterprises that jump to China's defence

China’s main defence companies are state-owned enterprises that work under the direction of the State Council.

Norinco (China North Industries Corporation)

This company founded in 1980 employs 456,000 and is one of China’s key defence suppliers, producing equipment including vehicles, small arms and precision strike systems. Much of the equipment it produces is derived from Russian designs. Major civilian projects include work on the metro in Tehran.

CSG (China South Industries Group)

This group is made up of dozens of companies and has extensive civilian interests, including car manufacturing, but is also involved in defence manufacturing and research and development in a wide spread of fields. It employs about 250,000 people.

CSIC (China Shipbuilding Industry Corporation)

CSIC, headquartered in Beijing, and China State Shipbuilding Corporation (CSSC), based in Shanghai, are the two principal shipbuilding companies in China. CSIC was formed from parts of CSSC that were split off in 1999. Analysts regard Chinese shipbuilding as one area of genuine competition between state-owned enterprises.

AVIC (Aviation Industry Corporation of China)

This company traces itself back to the Korean War and has gone through countless restructurings and name changes over the decades. Employing at least 400,000 people, it is responsible for military and civilian aircraft.