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China's PLA enlists capitalist competition
The Center for Security Policy ^ | November 28, 2002 | Richard D. Fisher, Jr.

Posted on 12/04/2002 8:34:57 PM PST by HighRoadToChina

China's PLA enlists capitalist competition
By Richard D. Fisher, Jr.
The Wall Street Journal, 28 November 2002

ZHUHAI, China -- Pity the organizers of the Zhuhai Airshow. They had the foresight to schedule this year's show in early November, well after the Chinese Communist Party's 16th National Congress was originally expected to finish. But then the Party postponed its confab to the same time, and the cadres decided that flyboys, aerobatics and large (profitable) crowds would detract from the pomp and ceremony of the leadership transition in Beijing. So the event was decidedly low-key, and the organizers had to take a financial dive.

However, Zhuhai did manage to herald one critical development: China's defense aerospace sector is showing unprecedented commercial ambition. The pavilions and displays contained plenty of signs that China's People's Liberation Army is learning that the tools of capitalism -- greater internal competition, greater transparency and an intense search for investment -- can yield better weapons. Makers of all sorts of systems are being given the freedom to take risks, and even fail. This most essential aspect of a successful marketplace has long been missing from the Chinese defense sector.

The best example of this is the contrast between the Chengdu Aircraft Corporation, a classic state-owned defense combine, and its more modern competitors. At CAC, failure has never been allowed, and thus it pervades its entire product line. It main jet fighter, the J-7, is just a highly modified version of a 50-year old Soviet design, the Mikoyan MiG-21. Amazingly, the PLA Air Force is about to buy another version of this relic, the J-7G.

CAC's new product, the J-10, is impressive by Chinese standards. A multi-role fighter, it features a delta wing and a canard -- a tail in front. But its estimated capabilities are on a par with a 1980s-model Lockheed Martin F-16 -- which in fact was an original source for much of its inspiration and technology.

But the development of the J-10 has been a never-ending story. The program got started in the late 1960s, the plane started flying in 1998, and it is only now believed to be entering production. CAC's fear about the J-10's viability is demonstrated in its apparent collusion in the release of many Internet-source photos of its fighter, photos which have served to "declassify" the program for enemies and customers alike. CAC officials could barely conceal their contempt at not being allowed to display the J-10 at Zhuhai, another likely sacrifice for the Party Congress.

One of CAC's upstart competitors is the five-year-old Beijing SuperWing Technology Research Institute Co., which came to the airshow to market its CY-1 multi-role fighter. Like the J-10, the CY-1 is a canard-delta multi-role fighter with F-16-like performance. But it uses a novel aerodynamic "side stake" to allow the plane to achieve stable flight without using expensive computer-driven, fly-by-wire systems needed by the J-10. When you dig a bit, however, you find out that Beijing SuperWing only sells concepts; it does not actually make airplanes. But they do need investors, and with the right capital are confident of generating a prototype in five years.

Not too far away, one potential partner to produce the CY-1, the Guizhou Corporation, scoffed at the concept fighter, skeptical that it could forgo fly-by-wire systems. They too were pushing a new product, their FTC-2000 trainer, which could also easily be modified into a fighter-bomber to compete with the J-10 and the CY-1.

Neverthless, Beijing SuperWing professed optimism about the CY-1, claiming that the "customer," an airshow euphemism for the PLA, was "very enthusiastic" about its idea. And why not? By simply empowering the company, the PLA potentially gets an inexpensive fighter with reasonable performance without spending their own money -- and in a fraction of J-10's glacial development period. And even if the company fails, the PLA gains, as Beijing SuperWing's managers and engineers will have learned valuable lessons to apply to future projects.

SOEs like CAC have much to fear from upstarts like Beijing SuperWing. For if one assumes that China's new leadership is not preparing for a near-term major war, then its defense aerospace sector is unsustainable. The PLA is currently funding eight fighter and fighter-bomber programs and three fighter development programs -- at a time when the United States is debating whether it can afford just three. Should the PLA's new, younger leadership decide to fund success instead of failure, then companies like CAC will suffer.

How competition can spur greater transparency was demonstrated by the Aerospace Solid-Propellant Launch Vehicle Co., which revealed in model form three new mobile, solid-fueled space launch vehicles (SLVs) capable of launching Chinese micro and nano satellites. Company officials readily admitted that two of their new SLVs corresponded to the PLA's DF-21 medium-range ballistic missile and its new DF-31 intercontinental ballistic missile. A third SLV corresponds to the DF-31A, a new ICBM with a 12,000-kilometer range only recently exposed by the Pentagon and so far unacknowledged by the Chinese government.

This was the first time the PLA has depicted its new ICBMs in any form, a disclosure that would have been unthinkable for previous Zhuhai shows. But it makes sense too. The confidence of commercial satellite customers will be enhanced knowing that their launch vehicles are based on proven military missiles. More darkly, some in Washington fear these SLVs and their associated micro-satellite programs will be used to develop new anti-satellite weapons.

The use of capitalist competition to aid in weapons development is not confined to aerospace. The PLA is now holding a competition between two new families of wheeled armored fighting vehicles and two competing models of a HUMVEE heavy jeep vehicle. For the first time this year, the PLA Navy launched two copies of the same destroyer-sized warship built by competing companies.

For its organizers the Zhuhai Airshow may have represented a sacrifice of capitalist gain for the sake of China's communist leadership. But by any read of the show's busy participants, China's defense aerospace sector has abandoned its state planning past and is now spreading its capitalist wings.

Mr. Fisher is a fellow with the Center for Security Policy in Washington and has attended all four Zhuhai airshows.

TOPICS: Business/Economy; Foreign Affairs
KEYWORDS: capitalists; corporatism; pla
Those good old Capitalists--selling their mothers to make a buck--endanger the rest of us.
1 posted on 12/04/2002 8:34:57 PM PST by HighRoadToChina
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To: NormsRevenge; ninenot; flamefront; Sawdring; Enemy Of The State; Jeff Head; brat; dalereed; ...

2 posted on 12/10/2002 2:21:48 PM PST by Tailgunner Joe
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4 posted on 12/10/2002 3:27:53 PM PST by NormsRevenge
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