Military Modernization in Chinese Technical Progress and Industrial Innovation

Abstract

This paper assesses the impact of military-related programs on Chinese technical progress since 1980. We argue that efforts to modernize weapons production and integrate the civilian and military sectors of the economy have increased China's innovation potential and led to an improvement in the country's overall technological capabilities. Although it is still too early to draw sweeping conclusions, China appears to be following a road taken by other great powers before it, where the pursuit of modern defense systems stimulates the development of advanced technologies.

Acknowledgment

We thank Franklin Serrano and an anonymous referee for comments on an earlier draft of this paper. The usual disclaimers apply. Carlos Medeiros acknowledges financial support from the National Research Council of Brazil (CNPq).

Notes

1 According to data compiled by Angus Maddison based on PPP methodology, China's GDP was 22% of US GDP in 1978, a relative gain of 7 percentage points since 1950. By the late 2000s, according to the same estimate method the Chinese economy was almost 90% the size of the American economy.

2 In the mid-2000s, civilian markets accounted for between 22% and 60% of revenues of major US defense contractors such as Boeing, Honeywell, General Dynamic and Northrop Grumman.

3 Government research institutes were the victims of sharp budget cuts in the late 1980s.

4 Liff & Erickson (2013) calculate an average annual growth rate of −3.2% for 1980–1989.

5 Paper can be accessed at http://www-igcc.ucsd.edu/assets/001/502352.pdf

6 Some are discussed in the Introduction.

7 A term used by Rosenberg (1963) referring to similarities between manufacturing processes—military or civilian—that often permit the transfer of new techniques and machines from one industry to another.

8 Interconnects permit data to be transmitted throughout a supercomputer.