China need the involvement of civilian industrial sector to invigorate the defense establishment. China civilian tech sectors are dynamic, nimble and very efficient like Shenzen the city that never sleep that is now maybe richer than Hongkong
Here is the report from Nikkei news
Xi arranges military-civilian marriage to realize his Chinese dream
SHUNSUKE TABETA, Nikkei staff writer
CHONGQING -- Greater exchanges between China's military and civilian sectors rose to the top of President Xi Jinping's agenda with the launch this past Sunday of a new government body for just this purpose. But while Xi insists that such efforts are a step toward making the country a global leader again, some see him as concerned mostly with gaining more power at home.
The city of Mianyang will take the lead in the challenge of military-civilian integration, Vice Mayor Sun Fuquan has said. He was involved in long-term planning at the National Research Center for Science and Technology for Development and was sent to Mianyang, Sichuan Province, in November 2015 to flesh out plans for cooperation between the two sectors.
The city launched an exchange for dual-use technology under Sun last May. As the nation's only such exchange recognized by the Ministry of Science and Technology, it allows the People's Liberation Army and corporations to disclose what cutting-edge research each side is working on, facilitating cooperation in such areas as aerospace technology and nuclear energy.
Mianyang may be an unfamiliar name to foreign ears. But the city, where Tang dynasty poet Li Bai spent his childhood, has held military significance throughout Chinese history. It was a key stronghold in the Three Kingdoms period. Thanks to its inland location and natural defenses, many military factories were moved there in the late 1950s when China prepared for the possibility of war with the U.S.
Leader's political ambitions seen animating move to create synergies
Xian Tianhe Defense Technology is a model case. Originally founded as a system developer in 2001, it entered the military sector in 2006 after impressing the PLA with its know-how. It listed in 2014 -- an apparent first for a civilian company involved in military technology.
Provincial governments in the aviation-industry hubs of Heilongjiang and Jiangxi have led the creation of funds to assist with integration efforts. Heilongjiang in particular will provide 500,000 yuan to encourage joint military-civilian development. The Shanghai government, together with China North Industries Group, is developing business-oriented services using BeiDou. In the Shandong Province city of Qingdao, the home port of the Liaoning aircraft carrier, the navy played a key role in the December launch of a body to assist military-civilian efforts.
A committee on defense financing was created in Beijing in May, with figures from the PLA's National Defense University and the China Development Bank among its members. It will explore new sources of funding for military development. China Aerospace Science and Technology Corp., which handles many of the nation's rocket and missile launches, has set up a new department to work with civilian companies.
Aero Engine Corp. of China was founded in August on Xi's orders for even deeper cooperation between the two sectors. Its major shareholders include fighter jet builder Aviation Industry Corp. of China. The new company will supply aircraft engines for both military and civilian use, reducing the country's dependence on Russia for the former and the U.S. and Europe for the latter.
Political considerations
Integrated military-civilian development is a top priority for China's Communist Party. It is seen as a must for realizing the two centennial goals of becoming a moderately prosperous society by the 2021 centennial of the party's birth and becoming a global superpower by the Communist government's 100th anniversary in 2049.
The drive also serves as a tool for Xi to tighten his grip. "Political power grows out of the barrel of a gun," Mao Zedong once argued. The PLA is loyal not to the country, but to the party, serving as a key source of the Communists' power. Since the founding of modern China, the country's leaders often doubled as commanders of the armed forces. But former Presidents Jiang Zemin and Hu Jintao lacked military experience, weakening presidents' hold on the PLA.
Xi, on the other hand, has a military record and controls the forces through the "second generation of reds": children of those who lived through the Cultural Revolution. His wife, singer Peng Liyuan, holds the rank of major general in the PLA. Xi recently launched a major restructuring of the military with plans to shrink the forces by 300,000. Since this could trigger pushback against Xi, military-civilian efforts also serve as an important source of new jobs. He expects companies to employ displaced service members in exchange for military tech.
"The Communist Party is using military-civilian development as a way to grip the PLA, as well as to increase its influence on corporations by building closer relationships with their leaders," a securities analyst said.
Such considerations are visible in the regional leadership as well. Former China North Industries executive Zhang Guoqing was appointed mayor of Chongqing in January. Ma Xingrui, former head of China Aerospace Science and Technology, recently took office as governor of Guangdong Province. Xi hopes that these appointments will cut into the strong influence wielded by regional factions and the Communist Youth League, where Hu and Premier Li Keqiang began their political careers.
With Donald Trump now president of the U.S., tensions in the South China Sea and over Taiwan are only expected to grow. The Communist Party will face a major leadership reshuffle at its party congress this fall. The twice-a-decade event could offer a glimpse into the details of Xi's "Chinese dream": how to reform what has become the second-largest economy and help it find its place in the world.
