Foster private defence firms, urges China's carrier buyer Xu Zengping
Xu Zengping, who brokered the Liaoning deal in the late 1990s, says China needs its own version of big contractors like Lockheed Martin
The man who bought China's first aircraft carrier says the nation should nurture its own Lockheed Martins, amid President Xi Jinping's push for more military-civilian partnerships in the defence sector.
But experts said the transition would take time because the industry was modelled on the Soviet approach that encouraged putting one company in charge of building a single component, rather than developing entire technologies.
Xu Zengping , who is a member of China's political advisory body, submitted a report to the National People's Congress during the annual sessions in March, suggesting the government should allow private defence companies to develop weapons and equipment for domestic and overseas clients.
"Our government should encourage private companies to take part in our country's defence industry build-up," Xu said. "Private defence companies do not need to deal with bureaucratic red tape like [Chinese] state-owned enterprises, so weapons produced by private companies should be better and cheaper."
In a meeting with the PLA delegation on the sidelines of the NPC session, Xi called for removing policy roadblocks preventing tighter integration between state and private firms in meeting defence needs. China has been trying to move in this direction for at least a decade, but Xi has given it renewed priority, saying such integration had become a national strategy, according to Xinhua.
Li Jie, a naval expert at the Chinese Naval Research Institute, noted the big global players, such as Lockheed Martin, Northrop Grumman and Boeing, were profit-driven companies.
"However, China's defence business model was copied from the former Soviet Union, so all its state-owned enterprises have focused only on developing one specific type of technology," Li said. "For example, research and production teams work independently; they never coordinate their efforts, which means they never know what the other one is doing. Such a system limits the creativity of experts in such enterprises in today's market-oriented economy."
Even with these limitations, China's defence industry has grown into the third biggest arms exporter after the United States and Russia, according to the Stockholm International Peace Research Institute. But much of the sales comprise low-technology weapons going to African countries, according to the institute's research.
Macau-based military expert Antony Wong Dong said it would take time for China to catch up with the biggest global defence companies. "The integration of military and civilian technologies in the defence industry started more than a decade ago, but comprehensive, deeper reforms have started only in the past few years," Wong said.
Xu, who claims he spent US$120 million of his own money brokering the Liaoning aircraft carrier deal in the late 1990s, also said he was considering setting up a shipbuilding company.
"Today's PLA is now equipped with modern weaponry," he said.
"Great modernisation over past decades means China's navy has now come up to international standards, in the same way that the army has modernised. Yet we must learn from history. It's possible the fate and failures of China's Beiyang Fleet 120 years ago could happen again if the PLA fails to root out corruption now," he said, referring to one of four naval fleets of the Qing dynasty (1644-1911).
