Merging the military
In the government work report, Chinese Premier Li Keqiang said one important task in 2017 will be integrating economic and military development, as well as deepening reforms in the science and technology industries related to defense. The Beijing-based China Reform Daily (CRD) spoke with industry experts and insiders attending the annual session of the National People's Congress (NPC), which concluded last week, to shed light on means to tackle institutional barriers in the integration of economic and military development and ways to channel more resources to better develop the national defense industry and benefit Chinese society.
China announced a top-down policy in July 2016 for the integration of economic and military development, calling for improvement for relevant laws, as well as synchronization and sharing between the two by 2020.
Experts said the integration of economic and military development is twofold: the conversion of military technologies for civilian use and the participation of civilian companies in military industries.
Yet the development of the two sectors faces issues such as a lack of unified standards, administrative barriers and information disparity. The Beijing-based newspaper China Reform Daily (CRD) spoke with several NPC deputies to bring the matter into focus.
China's defense-related science and technology industries were born out of the planned economy. Military industrial companies held a monopolistic position within the system, with only sporadic participation by private companies, said Li Xianyu, NPC deputy and head of an undisclosed equipment research institute. It will be difficult for companies to grow strong from such a low level of involvement.
Li said the line between military and civil technologies has been increasingly blurring, so strict classification for the military and civil industrial sectors is not only unnecessary, but also constrains development.
"From the Beidou navigation satellites to intelligent households, military tech is applied to many sectors of the national economy and is used by civilians," Li said.
A lower threshold
The CRD report said Southwest China's Sichuan Province provides an example of civilian and military integration.
In Sichuan, there are more than 500 companies in the business of defense-related research and development, production, repair and services. More than two thirds come from the private sector, the CRD reported. Private companies offer auxiliary products in the aeronautics, astronautics, weapons and shipping sectors.
The key is to push military companies via reforms toward the market and improve their performance with the pressure brought by the market forces, said Liu Jie, NPC deputy and vice governor of Sichuan.
Sichuan is working on issues such as lowering the threshold for private companies to participate in military development, simplifying administrative procedures and bridging an information gap between civil and military industrial companies, Liu said.
In 2017, Sichuan hopes to grant access to another 50 private companies, Liu said.
Li predicted that the high-tech sector, headed by the strategic and emerging industry, will become a new hotspot in the conversion of military technologies into civil usage. For companies controlling related technologies, there is a huge potential market.
Two years ago, an armored military vehicle broke down during a drill in South China's Guangdong Province and repairs required specific spare parts, according to the CRD report. Authorities went to great lengths to find the parts at a warehouse located 100 kilometers away. After the drill and during a replay, the authorities discovered that a company 10 kilometers away from the site of the breakdown had the necessary parts. Poor information caused delay and waste.
Multiple layers of information systems in the civil and military sectors is an issue, according to CRD. The newspaper found that in the people's mobilization sector alone, there were nine independent systems programmed by different institutions, with incompatible software.
Whenever a national standard can do the job, there is no need to spend extra effort to set up separate military standards, said Wang Yuyan, NPC deputy and Party chief of Yuncheng, North China's Shanxi Province.
Wang also suggested establishing compatible industrial standards applicable to both military and civilian industries.
Chen Zhou, NPC deputy and a researcher at an unnamed military science institute, agreed with Wang Yuyan.
Chen said that the relevant governing bodies should be able to produce a transparent, timely updated list detailing the specific standards of civilian/military dual-use items to help break down the barriers preventing the integration of economic and military development and maximize resource sharing and technology transfer.
Wang said in the military informatization project alone, in the field of military telecommunication, demand for electronics and integrated circuits will reach hundreds of billions of yuan.
Converting military achievements for civilian use could become another growth point for the economy.
Li suggested that one way to boost vitality is to explore ways for large military industrial companies to serve as the nucleus of a cluster of defense-related projects, leading small and medium-sized private companies.
Li also emphasized the importance of an exit mechanism to phase out problematic private companies in a timely manner.
The low level of resource sharing between civilian and military sectors has also impeded integration. Some large scientific testing instruments, testing facilities and key equipment used for production face the problems of repetitious imports and construction, as well as low utilization rates, according to the CRD report.
Liu said a lack of overall planning, information disparity grown out of a dual system and separate standards have hampered the resources sharing.
Li, echoing Wang's opinion, recommended creating unified industrial standards for both military and civilian uses.