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Assessing China’s Defense Industrial Base | Web version
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Congressional alert
April 13, 2022
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UPI/Alamy Stock Photo
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China’s defense industrial base (DIB) has been a key player in building the People’s Liberation Army’s capability to win high-tech wars along China’s periphery and protect Chinese people, property, and interests around the globe. A new RAND report, conducted to meet a congressional requirement from the Fiscal Year 2021 National Defense Authorization Act (NDAA), presents an assessment of the systemic strengths and vulnerabilities of China’s DIB.
The assessment spans six topics: economics; governance and regulations; research, development, and innovation; workforce, labor, and skills; manufacturing; and raw materials.
The assessment revealed systemic strengths and vulnerabilities in China’s DIB and several areas in which China is reliant on the United States and U.S. allies. Among its findings:
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- The sheer size of China’s DIB makes it relatively opaque to outsiders and unwieldy for the People’s Republic of China. China’s DIB is extensive, making an examination of deep structural problems difficult for outside analysts. Lack of transparency is another limitation, as it is in any closed society, but this challenge is exacerbated by the authors’ assessment that in some areas even China’s central government lacks transparency into its own state-owned enterprises and other DIB suppliers.
- China’s DIB both benefits and suffers from the effects of single-party dominance of government. The centralization of power and decisionmaking within the Chinese government supports its ability to drive whole-of-government strategies, set priorities, and align government actions around its priorities in ways that would be difficult for the U.S. government. But the ability of the Chinese government to lead with one voice creates a potential weakness when the entire DIB pivots toward the new priorities to the detriment of others. This challenge is a risk for China should the government bet on the wrong technology or shine its light too brightly on one aspect of its DIB and leave another in the dark.
- China is a global science and technology power, yet the Chinese defense innovation system suffers from weak linkages between elements and dependency on foreign inputs. China has a quantitative advantage relative to the United States in patented military technology, even after adjusting for quality. However, China’s defense innovation system does not effectively transmit knowledge and information between its constituent components, and China remains dependent on foreign countries—including the United States and U.S. allies—in many areas, including education, material imports, and intellectual property.
- Although China’s manufacturing capacity looks strong, there are clear dependences that indicate potential weakness. China runs large trade deficits with East Asia and Europe in manufacturing. China is the world’s leading importer of most bulk commodities, and there are high-tech imports that sustain the manufacturing base. China’s DIB remains dependent on Russia, Ukraine, and, to some degree, France for aircraft and naval engines despite China’s efforts to develop the capability domestically.
- China will be vulnerable to significant workforce upheaval over the next ten years. China’s labor force will shrink over the next two decades as fertility rates continue to drop. The researchers also found indications that China’s DIB might struggle to attract and retain trained talent in the future.
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Per the NDAA instructions, the approach utilized for this analysis is repeatable and could be applied to any country.
A brief overview of the report can be found here.
Read more »
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RAND Congressional Resources Staff
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