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Private firms' access to arms sector widens

China Daily, July 20, 2015 Adjust font size:

China will enable more private enterprises to take part in the development and production of weapons and other military equipment, according to a high-ranking defense industry official.

The remarks came as the country opened the First Military and Civilian Industries Integration Expo in Beijing. Private enterprises' military technologies and State-owned defense companies' civilian products are on display at the 10-day event, which began on Thursday.

"The government will open more fields in the defense sector to private enterprises and lower the entry threshold for them," said Xu Dazhe, director of the State Administration of Science, Technology and Industry for National Defense, which oversees China's defense industries.

"The administration will gradually reduce restrictions on private businesses in the military equipment industry and offer more favorable policies to encourage State-owned defense contractors to increase the use of parts made by private companies," he added.

China has been opening the defense market to private enterprises gradually since 2005. Businesses can bid for contracts from the PLA after obtaining four government-issued licenses that cover confidentiality and technological capability.

According to Xu Zhanbin, deputy director of the administration, nearly 1,000 private companies have been given permission to develop and produce weapons or other military equipment, accounting for about 40 percent of defense equipment contractors in China.

"However, many factors still hinder the integration of defense and civilian industries. For instance, private companies have poor access to the large experimental instruments and testing facilities of State-owned defense enterprises," the deputy director said.

The administration plans to invite private businesses to take part in the restructuring of State-owned defense companies, and to ask more State-owned defense companies to go public, he said.

President Xi Jinping has requested the government and the People's Liberation Army to boost the integration of defense and civilian industries. The work has been listed as one of the three missions the Party pledged to accomplish through its ongoing reform of the national defense system and the PLA.

In November, the PLA General Staff Headquarters published 108 military procurement items of "advanced training technologies and equipment", encouraging private companies to take part in the research, development and manufacturing process. In January, the PLA General Armaments Department opened a procurement website to accommodate bidding by private enterprises.

Ding Feng, an expert at the Civil-Military Integration Equipment Research Institute, said the measures will enable private enterprises to use their expertise to meet the demands of the PLA and help to reduce the military's development and procurement costs.