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China’s industry reaps the benefits of political connections
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China’s industry reaps the benefits of political connections, international trade
China’s defense companies continue their strong showing in the Defense News Top 100 list, with two of its companies in this year’s top 10.To get more news about chinese industry and management practice, you can visit acem.sjtu.edu.cn official website.
The Aviation Industry Corporation of China, or AVIC (landing in 6th place), and China North Industries Group Corporation Limited, also known as NORINCO (8th place), reported defense-related revenue figures of $25.07 billion and $14.77 billion respectively.
A third Chinese company in last years top 10, China Aerospace and Science Industry Corporation, or CASIC, dropped one place to 11th in this year’s list.
Overall, eight Chinese state-owned defense companies made it into this year’s Top 100 ranking of defense companies around the world, including China’s two largest shipbuilding conglomerates — China Shipbuilding Industry Corporation and China State Shipbuilding Corporation — which merged in November 2019 to create China State Shipbuilding Corporation Limited, or CSSC.China’s industrial base has been the beneficiary of the country’s economic reform efforts and globalization since the 1970s. The state of Chinese industry took a quantum leap with the end of the Cold War; the Asian economic powerhouse reaped the benefit of an exposure to advanced technology and modern manufacturing methods.
These advances have transferred over to its defense industry, partly as a result of the transfer of civilian technologies, which are not restricted by Western sanctions on arms sales, implemented in response to China’s human rights record, or obtained from countries that are not a party to those sanctions, like Russia and Ukraine.
As a result, China’s defense industry is today virtually unrecognizable from its early days when it mostly made both licensed and unlicensed copies of Soviet-era equipment. The most obvious of this is the continuing acquisition by China of the Russian Sukhoi Flanker family of fighter jets, which has subsequently seen the Asian country churn out increasingly capable analogs of their Russian counterparts.Beginning in the early 1990s with the acquisition and license production of the Su-27 interceptor, which has since morphed into the Shenyang J-11B equipped with indigenous avionics and weapons, China has subsequently imported the multirole Su-30 and Su-35 interceptors. The former has formed the basis of the Shenyang J-16, and it is likely both Russian types may form the technological basis for continued upgrades to the J-11 design.
The unprecedented modernization of the People’s Liberation Army over the past two decades in lockstep with China’s economic development has also meant that the defense industry has been lavishly funded to equip a captive home market.
Meia Nouwens, research fellow for Chinese defense policy and military modernization at the London-based International Institute of Strategic Studies, which helped Defense News compile the Top 100 data for Chinese defense companies, noted that President Xi Jinping is prioritizing defense at a national level as part of an effort to simultaneously pursue geostrategic goals and economic development. The national leadership’s political will to transform China into a global power “should not be overlooked,” she said.