China has mobilised at least Rmb387bn ($55.6bn) to fund private sector companies that develop technology with potential military applications, according to Financial Times calculation.
“Civil Military Fusion”, or the infusion of private companies into China’s defence sector, was a key theme at last week’s Zhuhai air show, where exhibitors were keen to stress how their products fitted into the national strategy.
As a result, state defence companies and provincial governments have pooled money into what are in effect state-backed venture capital funds, designed to guide the private sector into helping to modernise the People’s Liberation Army.
In recent years, officials have broken state monopolies over critical sectors by allowing private companies to participate in designing, manufacturing, and operating everything from telecoms to rockets.
While traditional state-owned players such as the weaponry group Norinco and aerospace company AVIC still head China’s largest defence projects, the regulatory relaxation has spurred private entrepreneurs to related sectors such as secure communications, light arms and unmanned vehicles.