Foreign Correspondence

[Amaunet]

China Preparing To Open Arms Industry To Private Investment: Report

Beijing (AFP) Jun 07, 2005
China is preparing to open its arms industry to private and foreign investment to take advantage of the private sector's resources to modernize its military, state media said Tuesday.
The move will be "historic" as it will open up a tightly-guarded state monopoly to civilian companies to do weapons research and development, the China Daily said in a commentary.

Under a new policy of the Commission of Science, Technology and Industry for National Defence effective June 15, private and foreign-funded ventures will be treated equally as state firms in bidding for licences to develop certain categories of weaponry, the report said.

"With the go-ahead from regulators, China's private businesses are making inroads into one of the last 'bridgeheads' of state monopoly, developing weapons for national defence," the editorial said.

The commission announced late last month that it will issue around 300 weapons development and production licences in the second half of this year to suppliers, including private enterprises, to produce weapons considered "sub-systems" or "special auxiliary products."

The move is aimed at mobilizing the country's talent and resources to help its military.

"Those in the IT and new materials sectors ... have expertise that few state military industrial firms can ever match," the editorial said.

Allowing private companies to enter the arms sector will also help make state-owned players more competitive by subjecting them to competition, said the paper.

China, however, must ensure the private sector provides quality weapons and that they will keep state secrets, it added.

The commission is expected to come up with specific guidelines on which weapons or equipment programmes might be open to outside suppliers.

Government departments will also have to change the rules once tailored exclusively to state-owned military industries, such as rules giving only state firms preferential tax treatment.

Such revisions will take place "very soon" the report cited an official with the commission as saying.

China earlier this year announced a 12.6 percent increase in military spending to 244.65 billion yuan, or 29.5 billion dollars, but the real figure is believed to be much higher.

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