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Military Industry Accessible to Non-public Companies

China's national defense industry will be open for the first time to non-public companies this year as a new trial method is put to effect on Wednesday, the International Herald Leader reported Monday.


Currently, many private companies are striving to seek a license to branch into the production, research and development of China's weaponry industry, said the Beijing-based newspaper.


According to an official method issued by the Commission of Science Technology and Industry for National Defense, which is due to become valid on June 15, a total of 300 licenses will be issued in the latter half of this year.


In that case, the state capital's long-standing monopoly on China's national defense industry will breach for the first time, and non-public companies will therefore gain unprecedented access to the special industrial sector.


Liu Dongkui, an official with the commission, said that a total of 540 companies, all state-owned, have been granted such licenses in the past six years since 1999.


"Our next step is to target qualified non-public companies. About 60 to 70 private firms are now on the top of the candidates' list," he said.


Classifying the licenses into two categories, with the first kind qualified for "core military production" and the second kind for manufacturing "subordinate products" like high-strength armor plate and electric instrument, Liu acknowledged that non-public companies would be only allowed to pitch in subordinate production.


The licenses for "core military production" are still reserved for state-owned military factories. Besides, the total number of such licenses will be strictly controlled.


In contrast, no ceiling will be imposed on the licenses for "subordinate production." All private companies, foreign firms and joint ventures are welcomed to apply, he said.


National defense experts are said to have applauded the measure because "it would facilitate a better use of the government's national defense outlay and force existing military factories to be more competitive as the market competition will become increasingly fiercer with the arrival of new comers," said the newspaper.


(Xinhua News Agency June 14, 2005)

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