China is accelerating reform and innovation in its defense-related science, technology and industry, promoting strategic and specialization-oriented restructuring of defense industry enterprises, enhancing the capabilities of independent innovation in the R&D of weaponry and equipment, and striving to establish a new system of defense-related science, technology and industry which caters to both military and civilian needs, and channels military potential to civilian use.

Promoting Innovation in Structures and Mechanisms

To meet the needs of weaponry and equipment development, as well as development of the socialist market economy, China is constantly reforming its management system of defense-related science, technology and industry. According to thePlan for Restructuring the State Councilpassed by the First Session of the Eleventh National People's Congress in 2008, the Science, Technology and Industry Commission for National Defense of the People's Republic of China has been superseded by the State Administration of Science, Technology and Industry for National Defense.

In 2007, the State Council approved SomeOpinions on Deepening the Reform of the Investment System of Science, Technology and Industry for National Defense, which explicitly proposes a new investment system featuring effective government regulation and control, participation of social capital, standardized intermediary services, vigorous supervision and management, and positive military-civilian interaction. As a result, an open development pattern for defense-related science, technology and industry is taking shape. The investment field has been further broadened, and investment structure further optimized. Ways of investment have been diversified to include not only direct investment, but also injection of capital and investment subsidies.

China is speeding up the transformation of the structures and mechanisms of the defense industry enterprises, and is in the initial stage of establishing a new system of defense-related science, technology and industry that features a small core, extensive cooperation and a large military potential reserve among civilians. Structural contradictions in defense-related science, technology and industry have been gradually and fundamentally solved through strategic restructuring and the streamlining of the main body of the defense industry. China is steadily promoting the transformation of defense industry enterprises into joint-stock enterprises, actively exploring approaches to diversifying the structure of property rights, giving priority on helping qualified competitive enterprises to be reorganized and listed on the stock market, and encouraging specialization-oriented restructuring and the integration of the efforts of enterprises, universities and research institutes. Relevant laws and regulations have been improved to standardize and supervise the process of reorganizing the defense industry enterprises and getting them listed on the stock market.

Improving the Weaponry and Equipment Research and Production System

Establishing a sound licensing system for weaponry and equipment research and production. In accordance with the ImplementationMeasures for Weaponry and Equipment Research and Production Licensingpromulgated in May 2005, the defense-related science, technology and industry has adopted a licensing system for weaponry and equipment research and production featuring management of categorization. While maintaining state control over weaponry and equipment research and production, the document allows the non-public sector to enter this field and compete for research and production projects. In March 2008 the State Council and the CMC issued theRegulations on the Licensing Administration of Weaponry and Equipment Research and Production, further improving the system.

Enhancing the basic capabilities of weaponry and equipment research and production.Defense-related science, technology and industry are striving to enhance the informationization of weaponry and equipment design and development, and to render product design more digitalized, modularized, standardized and reliable. It has built digital simulation and hardware-in-the-loop (HIL) simulation facilities and a number of important advanced experimentation and demonstration facilities, which has resulted in a higher design capability and R&D success rate.

This sector has also increased final assembly and integration capabilities, and a number of key enterprises have realized systems integration of assembly, experimentation and testing. This has substantially raised core manufacturing capabilities by giving priority to resolving processing and technical issues in complex parts processing, precision manufacturing and special welding. In addition, a number of large-scale basic experimentation facilities serving the entire industry have been constructed, as well as specialized testing and experimentation centers for reliability testing and burn-in screening of components and parts, and improved measures, standards and other basic support conditions for defense industries have been put in place. With the improvement of basic capabilities, a leapfrogging development in the ability to provide weaponry and equipment has been achieved.

Building a dynamic innovation system for defense-related science, technology and industry.The government has taken the lead to create a favorable environment for innovation and guide innovation activities through policies and investments. With the research institutes and enterprises of the defense industry as the backbone and with institutes for basic research and institutions of higher learning as a vital new force, China is giving full play to the advantages of integrating enterprises, universities and research institutes, and making efforts to increase its capability for independent innovation in defense-related science, technology and industry. To consolidate the foundation of human resources for the innovative development of defense-related science, technology and industry, both the national major projects of science and technology and important projects for defense scientific research and weaponry and equipment R&D have been taken as platforms to identify, cultivate, employ and attract talented people.

Enhancing Cooperation with Other Countries

Following the principles of mutual benefit and common development, China is conducting cooperation with foreign countries in defense-related science, technology and industry. It emphasizes exchanges and cooperation with developed countries in defense industry technology to draw on their experience in technological development and management. It enhances mutually beneficial cooperation with developing countries, and engages in joint R&D and production in major cooperative projects, in accordance with the national conditions and specific requirements of the partners. On the export of military items, it adheres to the following principles: It should only serve the purpose of helping the recipient state enhance its capability for legitimate self-defense; it must not impair peace, security and stability of the relevant region or the world as a whole; and it must not be used to interfere in the recipient state's internal affairs.

China's defense-related science, technology and industry actively conduct cooperation with other countries in the field of hi-tech industries, combining military and civilian needs, and makes great efforts to develop hi-tech civilian products with high added value. Major breakthroughs have been made in developing the international market for space products. China has exported its first satellite; and the earth resources satellite project with Brazil has played an important role in both countries' economic development. China has significantly enhanced its cooperation with other countries in aviation products and technologies, and made new headway in developing the international market for civil aircraft. China's shipbuilding industry has exported products for civil use in series and batches, further increasing its share in the international market for such products.