Chapter VII Science, Technology and Industry for National Defense

To meet the requirements of the development of weaponry and equipment and the socialist market economy, China is speeding up the development of its defense-related science, technology and industry, and making efforts to build a new system of defense-related science, technology and industry which is structurally optimized, organizationally efficient, technologically advanced and properly laid out.

Main Tasks

The main responsibility of China's defense-related science, technology and industry is to ensure the production and supply of military equipment to meet the needs of national defense. At the same time, it undertakes the important task of promoting the development of the national economy and enhancing the overall national strength.

In accordance with the requirements of the RMA with Chinese characteristics, the defense-related science, technology and industry strives to raise its capability for weaponry and equipment research and production, and accelerate the research and production of new- and high-tech weaponry and equipment. It adjusts the capability composition of weaponry and equipment research and production, giving priority to the building of capability of new- and high-tech weaponry and equipment research and production, and promoting the optimization and upgrading of the military industrial structure. It strengthens and improves its technology- and defense-based research work, and conducts explorations of frontier technology and future-oriented research, so as to expand its technological reserve. It employs new- and high- technologies to remold military industrial enterprises, so as to convert its weaponry and equipment production capability from a rigid structure to a flexible one. It enhances the development of military standards, so as to establish a universal system of technical standards tailored to new developments of weaponry and equipment. It carries out dynamic adjustments of the research and production of weaponry and equipment, so as to shorten the development cycle and reduce the cost of products.

While ensuring the fulfillment of military orders, the defense-related science, technology and industry vigorously develops dual-purpose technologies and actively participates in the development of the national economy. It promotes the development and technological advances of civilian products manufactured mainly by the military industry, such as those in the fields of nuclear energy and applied nuclear technologies; space and aviation technologies and ships and demolition technologies for civil use. To help bring about industrial upgrades and technological advances of the national economy, it supports the large-scale development of China's western region and the remolding of the old industrial bases in northeast China, and undertakes key construction projects and major equipment development and technical problem tackling tasks.

The first two decades of the 21st century will be a crucial period for the reform and adjustment of the defense-related science, technology and industry. It will adhere to the strategic guideline of combining military needs with civilian needs, reserving military potential in civilian capability, vigorously developing coordination, and making independent innovations, and persist in taking a new road of industrial development. It will establish and improve a mechanism of competition, appraisal, supervision and motivation, give impetus to the optimization and reorganization of resources and the upgrading of the industrial structure, strengthen the building of the basic capabilities of the defense-related science, technology and industry foundations, and enhance in an all-round way the overall quality and sustainable development capability of the defense-related science, technology and industry.

Reform and Adjustment

China's defense-related science, technology and industry continues to deepen its reform, optimize its industrial structure and resources allocation, accelerate system and mechanism innovation, and establish a streamlined and efficient research and production system.

Optimizing the industrial structure. China's defense-related science, technology and industry aims to form an industrial layout with military high-tech industries as the precursor, major dual-purpose industries as the main body, and military manufacturing industries as the foundation. It gives priority to the development of dual-purpose high-tech industries, absorbs advanced civilian technologies from all industries and trades for the service of national defense, and promotes the two-way transfer of military and civilian high technologies. It supports enterprises to develop projects and programs which are technology-intensive, produce good economic results, consume fewer resources, cause less environmental pollution and give full play to the advantages of human resources. It encourages the development of burgeoning industries with information technology, new materials, energy saving and environmental protection, life sciences, oceanic engineering and other high technologies as the precursor, so as to foster new economic growth.

Accelerating the reform and adjustment of military industrial enterprises. China's defense-related science, technology and industry optimizes the organizational structure of military industrial enterprises and encourages competitive enterprises to carry out strategic reorganization on the basis of market demand and their own advantages, in compliance with the principle of specialized division of labor and large-scale production and with products and assets as the link. Military industrial enterprises are impelled to establish a modern enterprise system, accelerate the pace of ownership system restructuring, establish a standard parent-subsidiary system and a legal person management structure, and change their enterprise operational mechanism. Full play is given to the guiding role of the state's input, to lead and channel social funds into the development of the defense-related science, technology and industry and carry forward the diversification of investors. Through reforms and adjustments, the main body of the military industry is streamlined, and a new defense-related science, technology and industry system established, which features a small core, extensive cooperation and military potential reserved in civilian capability.

Improving the innovation system of scientific research. Scientific research institutions engaged in innovation activities in basic research, strategic high-tech research and important public welfare research should expedite the establishment of a modern scientific research institution system according to the principle of clearly defined responsibilities and duties, scientific evaluation, orderly opening, and standard management. Market-oriented applied technology research and development institutions should speed up their transformation into enterprises run on a commercial basis. The goal is to form a defense scientific research system with defense scientific research institutions, institutions of higher learning and key enterprises as the main body, and to enhance the independent development capability of the defense-related science, technology and industry.

Promoting innovation in talents-related work. A new mechanism should be established as soon as possible for training, attracting, using, and retaining talented people, and for accelerating their growth, so as to create a well-structured contingent of high-caliber people in a whole array of principles. Impetus should be given to the reform and development of higher education for the defense-related science, technology and industry, so as to speed up the training of high-level specialized personnel urgently needed by the defense-related science, technology and industry. Preferential policies should be formulated to encourage college and university graduates, excellent students returned from overseas, and other scientific, technological and management talents from outside the defense-related science, technology and industry to take part in its building. In addition, the personnel employing mechanism and the distribution system should be reformed to raise the salaries and improve the conditions of those engaged in weaponry and equipment research, development and production.

Development of Civil Use Industry

China has made remarkable progress in putting military industrial technology to civil use in the past two years. In 2003, the output value of civilian products rose by 20% as compared with that of the previous year, accounting for more than 65% of the total output value of the defense-related science, technology and industry.

Nuclear power production is being industrialized. China's mainland now has nine nuclear power generating sets in operation, the total installed capacity of which is 7.01 million KW. Another two, each with an installed capacity of 1.06 million KW, are now under construction. In 2003, China's nuclear power production was 43.3 billion KWH, accounting for 2.3% of its total power production. Steady progress has been made in the construction of auxiliary projects for nuclear energy. A nuclear fuel production system tailored to nuclear power production has by and large taken shape, and the production of nuclear fuel has been technologically upgraded. Great importance is attached to the decommissioning of nuclear installations and the treatment of radioactive waste, and great efforts are made to enhance the awareness of environmental protection and ensure the safe disposal of all kinds of radioactive waste. The emergency response system for nuclear accidents has been gradually improved, and the response capability increased.

Major breakthroughs have been made in space technologies for civil use. Since October 1996, China has succeeded in 41 space launches. The successful launching of the "Shenzhou V" spaceship in October 2003 sent China's first astronaut into space. The key technological problems for the new generation of carrier rockets have been tackled. China has successfully launched various application satellites, including SSO (Sun Synchronous Orbit) and GEO (Geostationary Orbit) meteorological satellites, the HY-1 oceanographic satellite and CBERS (China-Brazil Earth Resource Satellite). The R&D of a DMEC (Disaster Monitoring and Environmental Control) satellite constellation, a large GEO satellite platform and a new generation of SSO meteorological satellites is going on smoothly. A lunar probe project was officially started in January 2004, and a lunar orbiting exploration is scheduled to be carried out by the end of 2007.

The aviation industry for civil use has made important headway in the R&D of feeder liners and general-purpose aircraft. ARJ21, a new jet feeder liner with 70 seats, is being independently developed, and is scheduled for delivery in 2008. The Y-12E general-purpose aircraft for use in high-temperature and plateau conditions and the Z-11 and Z-9 helicopters have all received airworthiness certificates and been put on the commercial market. The newly developed "Xiaoying 500" general-purpose plane made its first flight in 2003. The ERJ145 jet feeder liner jointly manufactured by China and Brazil has been delivered to users. An agreement has been formally signed on the building of an assembly line in China for the EC120 helicopter jointly developed by China, France and Singapore. Subcontracting business for the manufacture of foreign aircraft parts has been developing steadily, and begun to be integrated into the large-scale circulation system of the international aviation industry.

The shipbuilding industry for civil use has witnessed sustained rapid growth, with an output ranking third in the world for many years. In 2003, China's accomplished shipbuilding output, newly received orders and on-hand orders amounted to 6.41 million DWT, 18.95 million DWT and 26.23 million DWT respectively, accounting for a world market share of 11.8%, 18.9% and 17.7% respectively. Products manufactured by the shipbuilding industry for civil use have been exported to more than 90 countries and regions. The R&D and designing capability of the shipbuilding industry for civil use has been remarkably raised. It can now build and repair large ships, and has made new breakthroughs in building high-tech ships.

Cooperation with Foreign Countries

China's defense-related science, technology and industry take an active part in international exchanges and cooperation and opens wider to foreign countries. In the field of the military industry for civil use, China encourages military enterprises and institutions to develop both the international and domestic markets, utilize resources from both home and abroad, participate in the international division of labor, optimize the export product mix, and raise the international competitiveness of their products. China also encourages them to introduce advanced foreign technologies and management expertise, improve the use of foreign funds, expand the strategic cooperation with large multinational companies, and raise the technological level of the defense-related science, technology and industry. China attaches great importance to developing cooperation in defense technology with friendly countries, and promotes exchanges of and cooperation in defense technology in the international industrial community.

China's defense-related science, technology and industry takes a prudent attitude toward the export of military products and related technologies, and strictly complies with the policies and laws of the state on non-proliferation. On the export of missiles and other military products, it strictly abides by the Regulations of the PRC on the Export Control of Missiles and Related Items and Technologies, the Regulations of the PRC on the Export Administration of Military Products and the corresponding lists. China has invariably adhered to three principles concerning the export of military products: It should only serve the purpose of helping the recipient state enhance its capability for legitimate self-defense; it must not impair peace, security and stability of the relevant region and the world as a whole; and it must not be used to interfere in the recipient state's internal affairs.