China allows greater role for private business in defence industry

Mumbai: China has allowed private business to invest in the country's defence industries, including military infrastructure and weaponry production, as part of an ambitious programme to modernise its military.

China's Commission of Science, Technology and Industry for National Defence (COSTIND) has issued a circular giving detailed guidelines for private sector entry to the military industry, China Daily reported.

Under the new guidelines, private business will be allowed to invest in military infrastructure construction and conduct scientific research for national defence projects and weaponry production. Private business will also be allowed to participate in the reorganisation of military firms, including technology tie-ups for military and civilian use.

China seems to have finally realised that given the scope and type of business, private capital can function more efficiently and the move complements the objective of facilitating better usage of government expenditure on national defence.

The move is also aimed at tapping into the financial and technological resources and expertise of private firms, the circular said.

However, access to military industry will be limited to those private firms that acquires security, quality and production safety certification.

For entering defence production, private businesses will have to acquire certification regarding security, quality and production safety. Under the guidelines, private firms entering defence space would also become eligible for tax exemptions.

China has started dismantling state monopoly in its military industry since 2005 when private firms were allowed to produce what it categorized as "unimportant" military products.