The Chinese Defense Economy's Long March from Imitation to Innovation

Abstract

China's defense economy has been vigorously developing a comprehensive set of innovation capabilities that will eventually allow it to join the world's top tier of military technological powers. China's target is to catch up by 2020. Although this maybe possible in a few select areas, the defense economy as a whole will likely require another decade or more to successfully master the ability to produce major innovations of a radical nature. This paper analyzes the key areas in the Chinese defense economy's gradual but accelerating shift from imitation to indigenous innovation.

Key Words:

• Defense
• Innovation
• Technology

Notes

¹For a review of this development period, see Tai Ming Cheung, Fortifying China: The Struggle to Build a Modern Defense Economy (Ithaca, NY: Cornell UP 2009).

²A keyword search of Zizhu Chuangxin in the journals section of China Knowledge Resource Integrated Database (CNKI) found that the term first appeared in 1994 with two references. The term became widely used from 2005 and peaked in 2007 when there were more than 11,500 article references to the phrase. This intensity subsequently declined to 6,600 references in 2009. I am indebted to Lu Hanlu for this information.

³The actual definition of Zizhu Chuangxin is ‘original innovation, integrated innovation, importation, absorption, assimilation, and re-innovation’. ‘People's Republic of China State Council, Guidelines for the Medium- and Long-Term National Science and Technology Development Program (2006–2020)’, (Beijing 2006), Ch. 2, Sec. 1.

⁴See Linsu Kim, Imitation to Innovation: The Dynamics of Korea's Technological Learning (Boston: Harvard Business School Press 1997).

⁵Moses Abramovitz, ‘Catching Up, Forging Ahead, and Falling Behind,’ Journal of Economic History 46/2 (1986), 385–406.

⁶Linsu Kim and Richard R. Nelson (eds), Technology, Learning, and Innovation (Cambridge UP 2000), 3–5.

⁷Kim and Nelson, Technology, Learning and Innovation, 5.

⁸Andrei Chang and Yuri Baskov, ‘China's Imitation of Su27SK and Its Impact’, Kanwa Asian Defense Review (May 2008), 14–15.

⁹Rebecca Henderson and Kim Clark, ‘Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms’, Administrative Science Quarterly 35/1 (March 1990), 10.

¹⁰Dieter Ernst, A New Geography of Knowledge in the Electronics Industry? Asia's Role in Global Innovation Networks, East-West Center, Policy Studies No. 54 (2009), 10.

¹¹Andrew L. Ross, ‘On Military Innovation: Toward an Analytical Framework’, paper presented at the Conference on China's Defense and Dual-Use Science, Technology, and Industrial Base, University of California, San Diego, 1–2 July 2010, 14.

¹²See Thomas G. Mahnken, ‘China's Anti-Access Strategy in Historical and Theoretical Perspective’, Journal of Strategic Studies 34/3 (June 2011), 299–323; and Andrew Erickson and David Yang, ‘Using the Land to Control the Sea? Chinese Analysts Consider the Anti-Ship Ballistic Missile’, Naval War College Review 62/4 (Autumn 2009), 53–86.

¹³Sheng Zhu and Yongjiang Shi, ‘Shanzhai Manufacturing: An Alternative Innovation Phenomenon in China’, Journal of Science and Technology in China 1/1 (2010), 29–49.

¹⁴Gao Lu, ‘Chinese Jetliner Development is on Track,’ Guoji Xianqu Daobao, 9 June 2009.

¹⁵Michael Mecham, ‘Yankee Support’, Aviation Week and Space Technology, 19 July 2010, 59–60.

¹⁶See Cheung, Fortifying China, Ch. 2.

¹⁷See Tai Ming Cheung, ‘What the J-20 Says About China's Defense Sector’, Wall Street Journal Blog, 13 Jan. 2011.

¹⁸Wen Jiabao, ‘Report of the Work of the Government’, (State Council of the People's Republic of China, 5 March 2008), <www.chinadaily.com.cn/china/2008npc/2008-03/19/content_6549177.htm>.

¹⁹‘Summary of the Medium- and Long-Term Science and Technology Development Plan for the Defense Industry’ (Commission of Science, Technology and Industry for National Defense, 20 June 2007), <www.costind.gov.cn/n435777/n1146913/n1440180/n1440183/105777.html>.

²⁰‘China Sets Up Funds for Key Labs’, Xinhua News Agency, 3 March 2008.

²¹Hou Guangming, The Organization and Policy Research of Military–Civilian Technology Transfers (Beijing: Science Press 2009), 5.

²²Yang Yue, ‘Raise Innovative Ability to Promote Sustainable Development’, Zhongguo Guofang Keji Gongye [China Defense Science, Technology, and Industry], Aug. 2009, 16–19.

²³Organization for Economic Cooperation and Development, OECD Review of Innovation Policy: China (Paris: OECD 2008), 154.

²⁴‘Major Initiatives of 11 Military Industrial Enterprise Groups on Promoting Indigenous Innovation,’ (Commission of Science Technology, and Industry for National Defense, 4 July 2007), <www.costind.gov.cn/n435777/n1146913/n1440180/n1440190/108392.html>.

²⁵Denis Fred Simon and Cong Cao, China's Emerging Technological Edge: Assessing the Role of High-End Talent (Cambridge UP 2009), 164.

²⁶Yang, ‘Raise Innovative Ability to Promote Sustainable Development’,18.

²⁷ Science and Engineering Indicators 2010, National Science Board (Arlington, VA: National Science Foundation), O-7. The OECD has different estimates of Chinese NSE graduates. It reports that there were 0.5 million NSE graduates in 1995 and 1.5 million in 2005. While these numbers include postgraduates, the discrepancy with the NSF figures is significant. OECD Review of Innovation Policy: China, 316.

²⁸ Science and Engineering Indicators, National Science Board, O-8.

²⁹ Science and Engineering Indicators, National Science Board, 2-27.

³⁰ OECD Review of Innovation Policy: China, 316.

³¹Jin Lixia, ‘Study of the Ability of COSTIND-Affiliated Universities to Contribute to the Indigenous Innovation Capabilities of the Defense Science and Technology Base’, master's thesis, Harbin Institute of Technology, China, June 2006, 19.

³²Shanghai Univ. of Economics and Finance 500 Strongest Enterprises Research Center, ‘500 Strongest Enterprises Report: China's 100 Strongest in 2006’ (Shanghai: Shanghai Univ. of Economics and Finance Press 2007), 460.

³³National Development and Reform Commission (NDRC) of the People's Republic of China, ‘Outline of the 11th Five-Year Program’, Ch. 45.

³⁴See Wang Xiaobin, ‘Analysis and Evaluation of the Capabilities of the Defense Science, Technology and Industrial Base,’ Master's thesis, Harbin Institute of Technology, China, 2007, 43.

³⁵No official figures for defense industry profits have been released since 2007 when the figure was RMB 43 billion, but defense industry officials announced a 6 percent increase in profits in 2008 over the previous year, which would have been an RMB 2.5 billion rise. See Chen Qiufa, ‘Unremitting Efforts Made in the Construction of an Advanced Defense Industry’, Zhongguo Guofang Keji Gongye, Jan. 2009, 11; and Lu Zhou, ‘Profits of Military Industrial Enterprises Last Year was RMB 43 Billion, Double the Profit of Three Years Ago’, Zhongguo Zhengquan Bao, 8 Jan. 2008.

³⁶‘China Discusses Feasibility of Large Aircraft Program,’ Xinhua News Service, 3 July 2008.

³⁷Charlotte So, ‘AVIC Firms Reuniting To Form Aircraft Manufacturing Giant’, South China Morning Post, 18 June 2008.

³⁸Interviews with Chinese defense industry experts, China, Feb. 2011.

³⁹Russian sales totalled US$27 billion between 1992 and 2006 and has averaged $2 billion annually between 2001 and 2008. See Sergey Luzyanin, ‘Analysis of Russian–Chinese Military–Technical Cooperation’, Moskovskiye Novosti, 17 Aug. 2007; and ‘Total of VTS Between Russia and China Has Amounted to $16 Billion in the Last 8 Years’, RIA-Novosti, 10 April 2009.

⁴⁰‘Russian Official Notes Shift from Direct Arms Sales to Joint Projects with China’, Interfax-AVN, 8 Oct. 2009.

⁴¹Wu Xingchen and Andrei Chang, ‘Business Cultures and Russia–China Military Cooperation’, Kanwa Asian Defense Review, 15 Aug. 2007, 29–30, and Reuben Johnson, ‘Sino-Russian Union Falters’, Janes Defense Weekly, 7 Nov. 2007.

⁴²‘Russian Federation–China Military–Technical Coop Shows Positive Trend’, ITAR-TASS, 9 Nov. 2010.

⁴³Ernst, A New Geography of Knowledge in the Electronics Industry?, 1.

⁴⁴Ibid., 1–6.

⁴⁵Cheung, Fortifying China, Ch.5.

⁴⁶Mark Lorell, Julia Lowell, Michael Kennedy and Hugh Levaux, Cheaper, Faster, Better? Commercial Approaches to Weapons Acquisition (Santa Monica, CA: RAND 2000).

⁴⁷Cheung, Fortifying China, 215–27.

⁴⁸Tai Ming Cheung, ‘Mianyang-Science at the Epicenter: The Shaken Foundations of Mianyang's Quest to be a Dual-Use and Hi-Tech Hub,’ National Center for Technology and Law, George Mason Univ., VA (Aug. 2008), <http://www.law.gmu.edu/nctl/stpp/mianyang.html>.

⁴⁹Jiang Luming, Luo Yongguang and Liu Qun, ‘Military-Civilian Integrated Development of Weapons and Equipment in China: Problems and Solutions’, Junshi Jingji Yanjiu [Military Economic Research] (July 2010), 31–3.

⁵⁰Jiang Luming et al., ‘Military–Civilian Integrated Development of Weapons and Equipment: Problems and Solutions.’

⁵¹Li Xueyong, ‘Beefing Up Efforts to Speed Up Indigenous Innovation, Focusing Attention on Accomplishing Transition of Economic Development Model’, Qiushi, 1 June 2010.

⁵²Yan Hao, ‘China Bets on State-Led Scientific Research System to Shift Economy’, Xinhua News Service, 3 June 2010.

⁵³See Kenneth Lieberthal and Michel Oksenberg, Policy Making in China: Leaders, Structures, and Processes (Princeton UP 1988), 135–68.

⁵⁴Margaret Pearson, ‘The Business of Governing Business in China: Institutions and Norms of the Emerging Regulatory State’, World Politics (Jan. 2005), 296–322.

⁵⁵‘Xinhua Publishes Details of PRC State Council Institutional Reform Plan’, Xinhua Domestic Service, 15 March 2008.

⁵⁶Regulations on weapons-related issues are now issued jointly by the Ministry of Industry and Information Technology and GAD. For example, rules that were passed on armaments research and production licensing in April 2010 came from these two entities.

⁵⁷‘China Nuclear Chief Latest Hit in Graft Crackdown’, AFP, 5 Aug. 2009.

⁵⁸Sun Guangyun, Zhongguo Guofang Keji Gongyede Gaigehe Fazhan Wenti [The Problems of the Reform and Development of the Chinese Defense Technology Industry] (Beijing: Hangkong Gongye Chubanshe [Aviation Industry Press] 2003), 134–8.