At the 19th Chinese Communist Party Congress in October 2017, Chinese President Xi Jinping called for the PLA to be completely modernised by 2035 and to achieve ‘world-class’ status by the middle of the 21st century. China is supporting this ambition by developing a variety of ‘game changer’ military technologies, including hypersonic vehicles, anti-satellite capabilities and artificial intelligence-equipped weapons.

A key guiding concept for China’s military modernisation is ‘revitalising the military through technology’, which involves the development of a self-sufficient defence industry. Past efforts at this have struggled because China’s defence industry was inefficient, poorly managed, rigid and unable to fill the requirements of the PLA.

But this has changed over the last two decades due to expanding defence budgets, technological acquisitions and a raft of reforms that focus on making the sector more competitive. China now has the ability to develop advanced fighters, aircraft carriers, new-generation intercontinental ballistic missiles, drones and other advanced platforms. Another indicator of this progress is China’s booming arms exports, which rose 74 per cent from a global share of 3.8 per cent in 2007–11 to 6.2 per cent in 2012–16. While China is still far behind the world’s leading arms exporters (the United States and Russia), it is catching up fast.

Since 2013, China’s defence industry has been subjected to a series of reforms and initiatives that include new guidelines and plans, innovative institutional arrangements and a renewed focus on civil–military relations.

In recent years, Xi has intensified civil–military integration efforts to leverage civilian expertise in accelerating military modernisation. An important goal of this effort is to make it easier for private companies to work on defence projects. In March 2015, Xi announced the elevation of civil–military integration to national strategy, which highlights its importance for military and economic development. He further underscored this by creating the powerful Central Commission for Integrated Military and Civilian Development to provide high-level guidance and oversight. State agencies, such as the State Administration for Science, Technology and Industry for National Defense, continue to do the bulk of the implementation work.

The Central Commission’s most important strategy document for the defence industry is the 13th Defence Science and Technology and Industry Five-Year Plan (2016–2020). It calls for streamlining and targeting investment across core areas, accelerating weapons development, raising arms exports and promoting collaboration between military and civilian organisations.

Another key initiative is the 2025 Defence Science and Technology Industry Plan, which calls for the upgrade of China’s defence science and technology base. This is in line with the Made in China 2025 strategy — a sweeping initiative to overhaul China’s manufacturing industry.

Moreover, China outlined a list of sixteen megaprojects in the Medium- and Long-term Science and Technology Development Plan (2006-2020). These include advanced numeric-controlled machinery, high-end generic chips, integrated circuit manufacturing and techniques, high-definition earth observation systems, advanced nuclear reactors, manned aerospace and moon exploration, and large aircraft. These projects involve numerous companies and research institutions from China’s sprawling defence industry. Technologies developed for every one of these megaprojects would have important military applications in addition to civilian uses.

But despite maturing rapidly over the last two decades, China’s defence industry continues to be plagued by notable weaknesses such as outdated management models, weak governance, corruption, inflexibility and monopoly power. These weaknesses will need to be addressed if the industry is to better support PLA modernisation in the years ahead.

China’s defence industry has matured considerably since the 1990s and China is now poised to shift from a follower to a leader in defence innovation despite several weaknesses. The industry’s ability to develop and produce high-quality equipment and cutting-edge weapons for the PLA will be key to China’s continuing rise as a military power.

Adam Ni is a researcher at the Strategic and Defence Studies Centre, The Australian National University.