The great arms race

During last month's National People's Congress, finance minister Xiang Huaicheng announced a 17.7 percent rise in China's defence budget for 2001 the 13th consecutive double-digit increase for the military. Moreover, this year's official budget of Yn141bn might be just a half or a third of the true amount that will be spent, according to foreign analysts.

Part of the money will go towards improving salaries of the 2.5m-strong People's Liberation Army (PLA). Xiang said the bigger budget was also needed to "adapt to drastic changes in the military situation of the world and prepare for defence and combat given the conditions of modern technology, especially high technology."

Inferior technology
Since the establishment of The People's Republic in 1949, China has made consistent efforts to acquire defence technology to strengthen the operational and technical capabilities of the PLA. For much of the past 50 years; China's defence technology has been inferior to. its potential foreign competitors. PLA analysis of recent world conflicts demonstrates that China must continue to modernise its defence technology to keep abreast of its competitors.

The foundations of the current Chinese industry were laid during the period of close links between Beijing and Moscow between 1950 and 1962. Initially, China was provided with complete systems by the Soviet Union, which later supported Chinese defence industrialisation. This led to the transfer of design data, equipment and tooling, allowing China to establish an industrial defence base. At the time, the systems and technology provided represented a considerable advance for the PLA, which had been equipped with captured Japanese arms or US arms captured from the Kuomintang.

The Sino-Soviet split cut off the infant Chinese industry from its prime technology source, and the defence sector itself was thrown into chaos during the Cultural Revolution. As a consequence, China was left with the ability to produce only relatively low technology equipment. Even so, it was totally dependent on foreign technology inputs, as shown by the indigenous nuclear weapons development programme and the establishment of the PLA Second Artillery Corps to handle strategic rocket forces and nuclear weapons.

During the 1970s, Chinese weapons became increasingly obsolete. By the following decade, political support for military modernisation and growing links with the West seemed to offer an opportunity to improve PLA equipment and upgrade indigenous production capabilities. To an extent this occurred, but not in the way that Beijing would have liked.

Initially the PLA was interested in acquiring complete systems from the West, but it found that the costs were prohibitive. Instead, it decided to acquire technologies that could be used to upgrade the capabilities of existing Chinese systems. For example, the then GEC-Marconi sold its Skyranger radar for use on the Chengdu J-7 fighter, which was a copy of the Russian MiG-21. Meanwhile, Israeli companies worked with China on upgrading tank performance and provided air-to-air missile technology, including the sale of a limited quantity of Rafael Python 3 air-to-air missiles.

Military isolation
One of the most significant programmes to be undertaken was a Sino-US effort known as `Peace Pearl' under which Grumman (now Northrop Grumman) was to assist Chinese industry in modernising the Shenyang J-8 and the Chengdu J-7 fighter planes. In the wake of the Tiananmen Square incident in June 1989, the Americans pulled out, leaving the Chinese with some equipment and technical documentation but not much else.

With the imposition of defence equipment embargoes by the US and Europe, China found itself essentially isolated. However, the Israeli defence industry continued to work with China on a number of programmes, as did France to a lesser extent. Beijing also acquired Western and Soviet systems for analysis from states such as Iran, Iraq, Pakistan and Thailand.

These foreign technology inputs did improve the capabilities of Chinese industry, but only marginally. There were areas where its manufacturers were still extremely weak, including crucial aspects such as metallurgy and quality control. However, progress was being made. Civil aerospace programmes with Boeing and McDonnell Douglas enabled Chinese industry to see how far they had fallen behind and what steps needed to be taken to catch up.

China was also able to take advantage of educational opportunities offered in the US that led to the return of students who were skilled in many of the latest technologies and practices. During the Clinton administration, China also benefited from a more relaxed attitude to export controls. This allowed China to upgrade its production capabilities by acquiring surplus equipment and tooling from US aerospace facilities at significant discounts. More important, it was able to acquire advanced supercomputers from the US for use by both the military and industry. Finally, China has worked hard to obtain classified data on missiles, nuclear warheads and other high technology systems from the US and other nations.

PLA analysis of the Gulf War of 1990-91 revealed that, despite a decade of modernisation attempts, it was still deficient in terms of equipment and technology.

It was also falling behind in a regional context. For example, the PLA Air Force could not guarantee air superiority over the Taiwan Straits or even defend major coastal cities against the threat of attack. In the 1990s, Taiwan's air force received 150 Lock-heed Martin F-16A/B fighters and four Northrop Grumman E-2T Airborne Early Warning platforms from the US, 60 Dassault Mirage 2000-5EiIDi fighters from France as well as introducing 130 indigenous AIDC Ching Guo fighters.

The only option for the PLA was to acquire complete weapon systems and significant technology inputs from overseas in a crash programme of modernisation. Fortunately, changes in the international situation facilitated the achievement of these aims. The collapse of the Soviet Union removed a threat, and its once mighty defence industrial base fell upon hard times. Outstanding debt to China and the desperation of Russia's defence industry to make sales provided China with the means to meet its equipment requirements.

In 1991 China placed an order with the Komsomolsk-on-Amur Aircraft Production Organisation (KNAAPO) for 27 Sukhoi Su-27SK fighters and four Su-27UBK two-seaters. The Sukhoi Su-27 was a massive advance for China's air force and the aircraft were all delivered by November 1992. Three years later, a second contract was placed with KNAAPO for 16 Su-27SKs and six Su-27UBKs, which were delivered in 1996.

This set the scene for a far more ambitious programme under which KNAAPO and its parent company Aviation Industrial Concern Sukhoi allowed China to purchase the rights to licence production of the Su-27. The contract signed in early 1996 was valued at US$1.5bn-2.2bn and covered the rights for the production of up to 200 Su-27s at Shenyang over 15 years. Under the terms of the contract, aircraft will be supplied initially in kit form for assembly at Shenyang, with Chinese local content gradually increasing over the life of the programme. Earlier this year, the military news agency AVN reported that Russia is to deliver 100 jet engines for the Su-27 as part of the joint venture deal.

Boost to air force capabilities
In 1999, China placed another contract with the same companies for the supply of up to 60 Sukhoi Su-30MK two-seat tactical fighters. The arrival of these aircraft provides an immediate boost to the capabilities of the air force and a significant infusion of technology into the military areas of the Chinese aerospace industry. The absorption of equipment from Russia should be made easier by the fact that, more than 30 years after the Sino-Soviet split, the Chinese defence industry still clings to `Soviet' working practices.

Other major contracts signed with Russia included the delivery of four Project 956 Sovremenyy-class destroyers and Kilo-class conventional submarines. China also acquired Antey S-300PMU1 surface-to-air missiles (equivalent to the US Patriot) and the Antey Tor-Ml short-range SAM system.

These contracts with Russia provide an immediate boost to the PLA. They also help Chinese industry through co-production arrangements, the transfer of technology and direct Russian assistance to indigenous Chinese defence programmes. Outside of these arrangements, China has recruited scientists from Russia, the Ukraine and other parts of the former Soviet Union to work on defence programmes.

As for the industrial structure, rationalisation is likely to continue. According to the Commission of Science, Technology and Industry for National Defence, 17 munitions enterprises filed for bankruptcy last year and five more completed mergers.

Downstream, China will be looking to meld defence technology acquired from Russia, the West and other sources, with home-made systems and technologies to create a new breed of defence equipment. That is in the future. Today, the PLA is prepared to spend to acquire systems for its immediate needs and to upgrade existing systems. The belief is that the extensive Chinese missile arsenal under the control of the PLA's Second Artillery Corps will provide a sufficient shield while the rest of the PLA gets its house in order. The importance of the missile force in Chinese defence planning is emphasised by Beijing's strong opposition to US plans for missile defences.

The PLA leadership recognises that much of its equipment is worthless under modern conditions – hence its willingness to spend heavily on systems from Russia. However, it is preparing for a future in which China will be able to have its own stable of high-technology weapons and be able to deter any aggression from opponents.