Researchers at the RAND Corporation created a repeatable methodology for assessing the strengths and weaknesses of any country's defense industrial base (DIB) across six topics:
Governance and Regulations
Workforce, Labor, and Skills
Research, Development, and Innovation
They then applied this methodology to assess the DIB of the People's Republic of China (PRC). The study was required by Section 1260C of the Fiscal Year 2021 National Defense Authorization Act. (The methodology and more detailed findings are available in the full report at www.rand.org/t/RRA930-1.)
The sheer size of China's DIB makes it opaque to outsiders and unwieldy for the Chinese government
Seven of the 15 Largest Defense-Related Firms in the World Are Chinese State-Owned Enterprises (SOEs).
2020 Defense Revenue (in millions)
2020 Nondefense revenue (in millions)
2020 Total Revenue (in millions)
Tension between desire for entrepreneurial innovation while securing Party control yields uncertainty and inefficiencies
The Chinese government's centralized power and decisionmaking help drive whole-of-government strategies.
President Xi Jinping and the Chinese Communist Party (CCP) have been working to increase their influence and even direct decisionmaking within defense firms.
By linking defense budget to GDP, China can reliably forecast and plan future defense spending.
China's military-civil fusion (MCF) allows the state to direct university-based research to prioritized science and technology areas.
Topics not prioritized may falter without leadership's spotlight—a risk if the government bets on the wrong technology or businesses are afraid to innovate.
Confidence in intellectual property (IP) protections is low—China has been ranked 49th out of 129 in the world in IP protections.
Lack of independent judicial, legislative, and media oversight requires the CCP to directly monitor, regulate, and control DIB cost or time overruns and quality deficiencies.
There is a lack of transparency about the true objectives in anti-corruption efforts.
Tremendous capacity for manufacturing and deliberate efforts to secure supply chain inputs necessary to manufacture military capabilities
China's DIB relies on U.S. allies and partners for critical military technology inputs
China relies on imports for weapon systems, particularly for aircraft and naval engines, despite efforts to develop them domestically.
Top Weapon System Imports to China, by Country, in 2020
Global weapon sales decreased during the pandemic. It would be premature to consider this decrease as a trend.
Unit of measurement is TIV.
In 2019, researchers at the Center for Advanced Defense Studies (C4ADS) found that the United States—not Russia—was the largest supplier to China's DIB, at almost 20 percent of all of China's DIB imports. C4ADS also found that: 
Eight of the top ten countries supplying China's DIB were U.S. allies.
Some products being imported were listed on the European Union's list of export-controlled goods.
Many imported goods—including U.S. goods—were not export-controlled but have potential dual-use applications, including aerospace and nuclear applications.
Top Five Areas of PRC Manufacturing Import Reliance in 2019
Computers, data processors, optical mechanical readers
Semiconductor fabrication tools and equipment
Japan, Germany, South Korea
Optical, photographic, cinematographic, measuring
Liquid crystal displays
Measurement and calibration instruments
Chemical analysis tools: polarimeters, refractometers
Japan, Taiwan, USA
Vehicles other than railway
Tractors, mass transportation vehicles
Chassis, engine cabs
Germany, Japan, USA
Medicine, therapeutic or prophylactic
Sterile surgical materials: sutures, adhesives
Germany, USA, Ireland
China is a global S&T power and is capable of world-leading military technology innovation, but inter-relationships within China's innovation system are inefficient
China's quality-adjusted military patent output grew at an average annual rate of 16 percent between 2015 and 2019. In contrast, the United States' average annual growth decreased by roughly 6 percent per year over the same period.
China, military tech patents
China, military tech patents (adjusted)
United States, military tech patents
United States, military tech patents (adjusted)
China will be vulnerable to significant workforce upheaval over the next ten years
The DIB and other sectors will face labor shortages and lower profits because of wage hikes and other trends, including
China faces a low fertility rate and an aging workforce.
Chinese university classes generally lack academic rigor; the system incentivizes professors to publish while slighting education outcomes.
China's STEM workforce is insufficient in both quantity and quality to meet demand.
China relies on U.S. and its allies and partners for training, But China is investing in "talent programs" to improve quality and quantity of the S&T workforce
Additional intelligence can improve future analyses
The RAND team was unable to assess the size of China's stockpiles and the rate at which China uses a material, preventing an assessment of how lack of access would affect the PRC.
There is a lack of information on companies that provide services to the People's Liberation Army, including ongoing support of major military systems, information systems, cyber services, and others.
The RAND team was unable to find data or analyses on the size and quality of the DIB software industry. A notable gap is an understanding of firms that provide software for command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems.
The RAND team found no systematic analysis of the flow of Chinese students and researchers back to China from foreign universities.
 International Institute for Strategic Studies, Military Balance+ (online database), 2021, "China (PRC) and United States Defence Economics." Amounts are reported in current-year dollars using market exchange rates.
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Weinbaum, Cortney, Caolionn O'Connell, Steven W. Popper, M. Scott Bond, Hannah Jane Byrne, Christian Curriden, Gregory Weider Fauerbach, Sale Lilly, Jared Mondschein, and Jon Schmid, Assessing Systemic Strengths and Vulnerabilities of China's Defense Industrial Base. Santa Monica, CA: RAND Corporation, 2022. https://www.rand.org/pubs/research_briefs/RBA930-1.html.
Weinbaum, Cortney, Caolionn O'Connell, Steven W. Popper, M. Scott Bond, Hannah Jane Byrne, Christian Curriden, Gregory Weider Fauerbach, Sale Lilly, Jared Mondschein, and Jon Schmid, Assessing Systemic Strengths and Vulnerabilities of China's Defense Industrial Base, Santa Monica, Calif.: RAND Corporation, RB-A930-1, 2022. As of June 23, 2022: https://www.rand.org/pubs/research_briefs/RBA930-1.html