The Chinese People's Liberation Army recently awarded a contract to a civilian firm for a fiber-optic net to connect its main command centers. This choice was in preference to asking a government company to do the work. While such a step would be unremarkable in the West, for China it may have vast significance. Since opening to private enterprise, China has become a world supplier of electronic goods. The question has been whether the growing Chinese consumer electronics industry would have an impact on the capabilities of the Chinese military. Until very recently, the answer has been no; Chinese weapons still were produced by government agencies, now companies, created under the old Communist system. As a consequence, Chinese equipment and weapons tended to be obsolescent. The Chinese did buy foreign prototypes to adapt for local production.
The situation was exacerbated by the lingering consequences of the Great Cultural Revolution, which tore China apart from about 1965 until about 1975. During this period, schools were closed and many intellectuals were humiliated, often sent to the countryside to do menial labor on farms as "reeducation." By 1980, when the "Gang of Four," who were blamed for igniting and exploiting the Cultural Revolution, were tried, the Chinese government was attempting to make up for the decade. Visitors to Chinese factories, for example, were shown blackboards used for in-house instruction to overcome lost college or university time. Chinese accounts of weapons development suggest the high cost of the Cultural Revolution, as many projects were suspended for a decade or more.
In the 1980s, various NATO countries exported modern equipment, which the Chinese adapted for local production. Examples are the two main Chinese naval combat systems, one based on the French Tavitac and the other on the Italian IPN-10/20. Cooperation ended suddenly, however, in the wake of the Tienanmen Square massacre in June 1989.
In a way, Tienanmen reflected the risks inherent in a Chinese attempt to modernize, ultimately to gain military security. The Chinese were aware the Soviets, from Joseph Stalin on, had chosen to build a military production machine as the dominant element of their economy. The machine produced a flood of tanks and military aircraft to help win World War II, but it proved less adaptable postwar. One reason why was that the West gained heavily from the military applications of its civilian economy. The best-known example is microelectronics, depending on advances in plastics chemistry. When Deng Xiaoping opened the Chinese economy to free enterprise in the 1980s, his country faced a security threat from the Soviet Union. It seems to have been Deng's perception that merely building a strong military industrial base would buy China little security in the long run. Those producing the military equipment would likely try to avoid changes in technology, simply because it was easier to keep making what they were already making. In the Soviet case, Stalin and Nikita Khrushchev had been powerful enough to force through changes, but the political pain had been enough to unseat Khrushchev. Later Soviet rulers had never managed to force their military-industrial machine to rival the Western computer revolution.
Deng's view seems to have been that the first essential was a strong Chinese economy. Given industrial strength, military strength would be a natural byproduct. Creating either would take decades, but Deng could take a long view. His country already had thermonuclear weapons, and it could deter the Soviets from any quick attack. What Deng did not foresee was that the move toward economic freedom would lead many Chinese to question the predominance of the Communist Party. Much the same thing happened elsewhere in Asia as middle classes grew. In China, the outcome was Tienanmen Square, where the Party showed that ultimately its legitimacy rested on raw military power.
For many years, Deng's hopes seem not to have been realized. China did indeed grow economically, but the Chinese military chose to buy only from the state industries, which also exported their products to a few client or semi-client states. The state products seemed uninspired, and China seemed to depend heavily on imported technology.
The great question is whether this is changing. A recent Chinese military exhibition featured posters for a domestically designed naval combat direction system using a Chinese-built "smart" console incorporating standard chips. It is apparently being installed in new frigates. Chinese television coverage suggests that the new missile destroyers use a mixture of imported, Chinese, and Russian hardware, suggesting that the Chinese have learned how to integrate disparate systems. It is not clear to what extent the new consoles and the new system integrate domestic private industry and the older government organizations.
Is the next step a Chinese Boeing or Lockheed Martin?
The key is whether the Chinese military is willing to open to suppliers it has shunned previously. To senior military men, that may be a question both of security and of the convenience of working with familiar organizations. A closed government corporation is virtually an arm of the military and is secure by definition. This is not a matter of ideology. Go back a century, the U.S. Navy took nearly all of its weaponry from in-house suppliers such as the Naval Gun Factory and the Naval Torpedo Factory. One reason it was difficult for competitors to break into this business was that they could not get enough inside information to understand what the Navy wanted. The situation in the United States began to open when the in-house plants could not produce key items. The first were fire control devices produced by the Ford Instrument Company and by General Electric. In the late 1930s, the Navy began to mobilize for World War II, and to do so it enlisted new producers. Torpedo production opened up after the in-house product encountered disatrous problems during World War II. After the war, it was accepted that aircraft companies were more likely than government laboratories to produce successful guided missiles, and the transformation to private industry proceeded.
This transition requires the U.S. Navy to trust vast numbers of outsiders. To do that, it has to rely on a government-wide security clearance program involving several million people. Without the security system, how can the Navy trust employees of outside companies to keep its secrets? Yet, without disclosing its secrets, the Navy cannot possibly expect the outside suppliers to produce anything remotely like what it needs.
China is famous for the intense degree of surveillance of its citizens, which might be mistaken for an exaggerated form of the U.S. security clearance system. The reality is that the system works only within a very stable workforce. Almost certainly, the free enterprise portion of the Chinese economy is less static and entails less supervision of individuals. The difference between the government's control of its own workers and the lack of control of those in the free-enterprise sector is likely to be unsettling at best. Indeed, to some within the Chinese Communist Party, the independence that automatically accompanies a free-enterprise sector may seem threatening.
Too, China is growing largely by exporting consumer goods. For those involved in the electronics trade, that means extensive contacts abroad. From a Chinese military point of view, such contacts must carry advantages and dangers. The advantage is access to the world-quality electronics vital to modern military power. The danger is the sort of contact that may lead to disloyalty.
For now, odds are the old conservative military industrial enterprises will survive for some years without competition. They probably will incorporate modern chips and other primary electronic elements in their equipment, but they are unlikely to feel pressure to adopt open architectures or major new technologies. These factors will inhibit rapid change, once systems enter production. There are persuasive reports of Chinese research organizations pressing radical developments, but the key factor is that those running the major production plants benefit from stable production of more or less stable products. They probably can be relied on to resist radical change.
And the Chinese free-enterprise sector? As in the West, it is not enough for a company to try to interest the establishment in its wares. The establishment has to want to buy. In the case of the fiber-optic net, it understood that it had to buy, because it had no sophisticated in-house supplier. That probably is true also of some computer and communications services. The in-bred conservatism of the official suppliers guarantees that there will be openings for free-enterprise firms. But it is by no means clear that the Chinese government feels compelled to trust the free market firms with its survival.
The other question for China is whether the new high-technology sector really has much to offer the Chinese government. There are reports that the prosperity of urban China has failed entirely to reach the countryside; that millions of peasants are at the point of starvation. For years China has had to cope with a vast army of the unemployed, and this army has grown as the transforming Chinese economy has made it more difficult to maintain official industries. Soon the Chinese government probably will feel compelled to enlarge its army to maintain control of the countryside. Enlargement will make it more and more difficult to modernize units in the way promised; what will matter will be classical ground-force equipment and, perhaps, mobility in the form of helicopters. Lest the reader find this comforting, remember too that the Party now plays mainly the patriotic card, and that it may well feel that a war to liberate Taiwan will divert the peasants from their plight. Odds are such a war would turn out less successful than the generals are telling the Party, and that it would have little impact in a cynical and furious countryside. That would be cold comfort to those watching the war.