Reforming China’s defense industry

ABSTRACT

Even with sizable economic inputs, access to foreign technologies, and considerable political will, China, up until the late 1990s, experienced only limited success when it came to the local design, development, and manufacture of advanced conventional weapons. Not surprisingly, therefore, reforming the local defense industry in order to upgrade its technology base and manufacturing capabilities and to make armaments production more efficient and cost-effective has long preoccupied the Chinese leadership. The fact that most of these efforts had little positive impact on the country’s military technological and industrial capabilities only encouraged Beijing to experiment with additional reforms in the hopes of finally getting it right.     

Arming China: Major powers’ arms transfers to the People’s Republic of China

The rise of China has been fuelled by a massive military modernisation programme relying, in large part, on the acquisition of foreign military equipment. The question of how the world’s major powers define their arms transfer policies towards China is therefore crucially important. This article makes two original contributions. First, drawing on neoclassical realism, it proposes an explanatory framework integrating international and domestic factors to explain variations in major powers’ arms transfers. Second, based on a large body of elite interviews and diplomatic cables, it offers the first comprehensive comparison of American, British, French and Russian arms transfer policies towards China since the end of the Cold War.     

Guns–butter tradeoff in contemporary China

This study offers an investigation of the relationship between defense and social spending in the People's Republic of China. In particular, three consecutive questions are answered here. Does a warfare–welfare tradeoff exist in China's budgetary allocation? Is it positive or negative? What is the causal direction involved? By applying a vector autoregression analysis for the period of 1952–2006, this study finds a unidirectional crowd-out effect going from defense to social spending.     

Guns for Butter? Empirical Evidence from China

Abstract

This study examines the causal nexus between defence spending and education expenditure in China using the bootstrap Granger full-sample causality test and sub-sample rolling window estimation. The full-sample result indicates that there is no causality between defence spending and education expenditure. By adopting a time-varying rolling window approach to revisit the dynamic causal relationships, this article identifies a negative unidirectional causality running from education expenditure to defence spending. The finding suggests that it is the education expenditure crowds out defence spending in China rather than reverse. No causality is demonstrated from defence spending to education expenditure, indicating that an increase in military spending will not crowd out expenditure on education. The results could be partly explained by that the education expenditure in China is below the requirement of corresponding economic growth, urging for more financial budget. Whereas the findings support a negative trade-off between defence and education expenditures, they refute the theory of ‘guns for butter’.     

US–China military relations: competition and cooperation

ABSTRACT

China’s efforts to build a ‘new type of great power relations’ and a ‘new type of military-to-military relations’ do not constitute a major turning point in relations with the United States. Political relations set limits on military cooperation, and the two sides have been unable to construct a sustainable strategic basis for relations. This has contributed to an ‘on-again, off-again’ pattern in military ties. Trends show a pattern of frequent disruptions in military-to-military relations from 2000 to 2010, followed by an increase in interactions beginning in 2012. Nevertheless, obstacles on both sides are likely to limit mutual trust and constrain future development of military-to-military relations.     

Understanding China’s goals and strategy in the South China Sea: bringing context to a revisionist systemic challenge – intentions and impact

ABSTRACT

The slow moving conflict in the South China Sea has been characterized by some as “not worth the candle.” China claims the entirety of the South China Sea pursuant to a nine-dash line, the legal impact of which has been limited by international courts. At the same time, China has changed the reality of control over the South China Sea by building a number of fortified islands in the Spratly Islands and elsewhere. The US has either refused to stand up to China's behavior (Obama) or responded unevenly (Trump). This paper examines the impact of China's behaviour on local parties, US interests, and the liberal international system.     

China’s Search for a ‘Strategic Air Force’

Once dismissed by many outside observers, the Chinese People’s Liberation Army Air Force (PLAAF) has undergone an impressive transformation over the past two decades, emerging as one of the world’s premier air forces. As it continues to modernize, it is focused on becoming a ‘strategic air force.’ PLAAF strategists suggest this means it should play a decisive role in protecting Chinese national interests, field modern capabilities commensurate with China’s standing as a major power, and enjoy the institutional status befitting its role as a ‘strategic service,’ an important consideration given the historical dominance of the ground force in China’s military.     

Civil–Military Relations in India: The China Crisis and After

The pattern of civil–military interaction in India is informed by the notion that civilians should refrain from involvement in operational matters. The emergence of this trend can be traced back to the defeat against China in 1962. In its aftermath, the belief that the debacle occurred because of civilian interference took hold. Thereafter, politicians restricted themselves to giving overall directives, leaving operational matters to the military. The Indian ‘victory’ in the subsequent war with Pakistan was seen as vindicating this arrangement. This essay argues that the conventional reading of the China crisis is at best misleading and at worst erroneous. Further, it contends that the subsequent war with Pakistan actually underscores the problems of civilian non-involvement in operational issues. The historical narrative underpinning the norm of civilian abstention is at the very least dubious.     

Meeting the China challenge: Some insights from scenario‐based planning

‘Meeting the China Challenge’ employs the methodology of scenario‐based planning to offer a set of recommendations for long‐term U.S. policy toward China. The article first describes the core elements of this analytical technique. It then uses a version of the scenario‐based planning approach to establish four plausible scenarios regarding China's future role in East Asian security. Finally, it outlines a combination of shaping and hedging strategies that would best advance US security interests in East Asia over the next 20 years.     

On the contribution of defense innovation to China’s economic growth

As the most knowledge-intensive industrial sectors, China’s defense industries are developing very fast. The present paper will explore the contribution of China’s defense innovation to its economic growth. Cobb–Douglas production function, integrating defense and non-defense stock in knowledge, is applied during the course. In addition, an input–output analysis of defense equipment procurement was done. Positive effect of China’s defense innovation on economic growth has been revealed by comparing the results from the two methods. And some suggestions are made to strengthen the effect.     

Measuring hard power: China’s economic growth and military capacity

China’s rapid economic growth is facilitating massive increases in its military spending and causing increased security concerns in Asia and the Western Pacific. But there is uncertainty over how large China’s military spending is relative to other countries, or how fast it is growing in real terms. We address this issue by deriving a relative military cost price index based on the relative unit costs of inputs. We find that China’s real military spending is much larger than suggested by exchange rate comparisons, and even larger than standard purchasing power parity comparisons. We also find, however, that the real growth of China’s military spending has been smaller than conventionally thought. This is due to rapidly growing wages in China and the large share of personnel in China’s military budget.     

China and American Seapower in East Asia: Is Accommodation Possible?

Abstract

Debates about the future of American seapower in East Asia turn on the argument that American seapower presents a risky and costly luxury that undercuts the cooperative potential of US–China relations. This article asks whether accommodation between China and the United States on the possession and exercise of American seapower in East Asia is possible. Accommodation on this front could significantly lower the risks of unintended escalation and in turn undermine arguments that favour an American retreat from East Asia. The article outlines how accommodation can be achieved on the exercise of American seapower in the region.     

Defense spending and economic growth: evidence from China, 1952–2012

This paper examines whether defense expenditures contributed to economic growth in China for the 1952–2012 period. We examine the contribution of defense to economic growth using recently published official data on economic activity, defense, and government expenditures. We employ the Feder-Ram and augmented Solow models of economic growth to explore the defense-growth relationship. The Feder-Ram model appears to poorly explain economic growth in China. The augmented Solow model suggests, however, that a 1% increase in defense expenditures raises the economic growth rate by approximately 0.15–0.19%.     

China’s ‘Three Warfares’: Origins,Applications, and Organizations

Entering the twenty-first century, China has demonstrated an assertive foreign policy, not only in employing various types of economic and military leverage but also in conducting the Three Warfares (三战) – psychological warfare, public opinion warfare, and legal warfare. This article attempts to identify the motives and methods of China’s Three Warfares by analyzing its history, logic, and agents. Based on this analysis, the author also presents the position of the Three Warfares in China’s foreign policy and the warfares’ impact on the international security environment involving other major powers and China’s neighbors.     

“Made in China”: an emerging brand in the global arms market

Possession of a brand is a sine qua non for economic success, not least because it connotes trust in delivering the value promised. Although Western arms exporters offer branded systems whose sales are influenced by price, there is a plethora of other economic variables, such as offset requirements and life-cycle support. Entrants to the international arms market will struggle without such arms “packages.” China’s entry, however, goes beyond the traditional economic paradigm. A four-stage historical model offers the backdrop for identifying the drivers that have forged its market entry into 55 countries worldwide. The strategy initially focused on sales of rudimentary military equipment for political purposes, but recently it has begun to commercialize exports, repositioning them from a low- to a high-tech sales trajectory. A Sino “brand” is thus emerging, reflecting both competitiveness and diplomatic considerations, especially non-interference in client state domestic affairs.     

Innovation in China’s Defense Technology Base: Foreign Technology and Military Capabilities

ABSTRACT

China’s defense science, technology, and industrial system has been undergoing a far-reaching transformation over the past two decades and the single biggest factor behind this turnaround is the role of external technology and knowledge transfers and the defense industry’s improving ability to absorb these inputs and convert into localized output. China is pursuing an intensive campaign to obtain defense and dual-use civil–military foreign technology transfers using a wide variety of means, which is explored in this article.     

Hardening the Hard,Softening the Soft: Assertiveness and China’s Regional Strategy

There is a growing view that the emerging brand of Chinese regional diplomacy in recent years is increasingly assertive. This article attempts to make better sense of this perceived more forceful Chinese diplomacy. It argues that Chinese regional behavior is more profitably understood through the lens of a two-pronged foreign policy strategy that combines two particular aspects. One is a tougher and more uncompromising approach toward issues that China regards as concerning its core interests. The other is a more flexible and cooperative position toward interests that, while significant, are of secondary importance.