Strengths and Weaknesses of China Defense Industry and Acquisition System and Implications for the United States

Abstract

Major technological progress is taking place across virtually the Chinese defense industry's entire spectrum from traditional sectors such as aerospace and seapower to the newer domains of space, information technology, and cyber. This is steadily narrowing the defense technological gap with the U.S. At the same time though, the Chinese defense industry and acquisition system is plagued by deep-seated problems that calls into question whether the current progress is sustainable over the long-term. Understanding the state, reforms, and prospects for China's defense industry and acquisition system is of critical importance to the U.S. This paper examines the dueling realities of China's defense industry and acquisition system. A central reason why the Chinese defense industry has been able to be keep costs down and accelerate the pace of acquisition is because it has operated on an absorption-based, good enough development model. But as it transitions to more of an original innovation-based, higher end development framework, risks grow significantly and this will impact on the costs and pace of the acquisition process.