400 private firms pass muster to supply PLA

PUBLISHED : Saturday, 24 October, 2009, 12:00am
UPDATED : Saturday, 24 October, 2009, 12:00am

The Defence Ministry said more than 400 private enterprises had passed preliminary screening for potential contracts for research, development and production of military equipment, marking a significant step in Beijing's defence modernisation.

Military experts said that by sourcing locally, costs would be lower and the mainland's backward defence industry would make progress.

A report posted on the ministry's website yesterday said that about 400 private hi-tech enterprises would become a fresh pool the People's Liberation Army could draw on to improve weaponry and logistical equipment.

The participation of the private enterprises in the research, development and production of military equipment would stimulate competition in the industry, the report said.

'According to practical results of the land force's purchasing department, introducing private enterprises to our army has not only improved the quality of our equipment, but also lowered costs and speeded up military technological development,' it said.

Military-civilian integration was suggested by Deng Xiaoping in 1978 when the mainland declared its reform and opening up.

He believed that a world war would not be fought at the end of the last century and therefore announced a massive reduction in forces, including more than a million PLA personnel.

In the three decades since then, two-thirds of state-owned military enterprises have been shut down or absorbed into the private sector to produce civilian goods.

Professor Ni Lexiong, a PLA specialist at Shanghai University of Political Science and Law, said that the reform had resulted in 'the cruel fact' of the market economy driving things.

'China's current defence industry has remained as backward as it was during the Qing dynasty 150 years ago because of an old problem - enormous costs and low efficiency,' Ni said, referring to the 1864 establishment of China's first state-owned warship-building company.

'The cost of production and research and development of Chinese military equipment has been many times above the cost for outsourcing, since 150 years ago. The considerable resulting waste of resources among state-owned arsenals should be blamed on the Communist Party's planned economy.'

Dr Arthur Ding, a PLA expert at National Chengchi University in Taiwan, said Beijing would keep awarding prime contracts for traditional weapons involving state secrets to state-owned military enterprises, regardless of the cost.

'I think Beijing's leadership will only contract to the private sector weapons components or other non-traditional weaponry supplies,' Ding said. 'The PLA has learned a lot from the United States' military, but I don't think they will copy the whole defence industry system from Western countries.'

Anthony Wong Dong, president of the International Military Association in Macau, said the opening up to 400-odd private enterprises was a significant step for the development of the mainland defence industry.

'I believe all the private enterprises that passed the preliminary examinations are the top hi-tech producers,' Wong said. 'It was because the PLA's weaponry quality requirements have strictly adhered to the standards of the US, Russia and other Western countries.'