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Domestic Developments

Foreign and Security Policy

  • Xi Jinping calls for China to shape international security policy. At a meeting of China’s new National Security Commission in February, Xi called for a “global vision of national security policy” and vowed to build up the capabilities necessary to achieve this. China should increase international cooperation and provide “guidance” to the international community.
  • Focus on terrorism keeps growing. Terrorism is high on the list of Beijing’s security priorities. It was first recognized as an emerging security threat in the 2015 Defense White Paper, where it was listed as one of “three evils,” along with separatism and extremism. Threats and attacks against Chinese citizens between February and July (including the ISIS video threatening China and the killing of two Chinese citizens in Pakistan), as well as growing evidence of ethnic Uighur fighters joining ISIS have underlined this threat perception.
  • Security cooperation along the Belt and Road becomes a priority. Beijing hosted a security cooperation dialogue on the Belt and Road only a few days before the main Belt and Road Forum on May 14-15. This dialogue was attended by officials from over 20 countries, including Turkey, Saudi Arabia and Malaysia. Discussions concentrated on counter-terrorism, public security and the protection of overseas interests. The government-issued Vision for Maritime Cooperation under the Belt and Road Initiative (June 20) also includes a section on maritime security, emphasizing the conduct of joint search and rescue missions and the strengthening of cooperation in maritime law enforcement along the route.

Force Development and Capabilities

  • Military budget rise continues to slow down. In March, Beijing announced a 7 percent increase in its military budget for 2017, reaching CNY 1.04 trillion. This is the smallest increase in years, after two-digit rises between 2010-2015 and a 7.6 percent increase in 2016. However, the opacity of China’s military budget and the fact that several defense-related costs are not included in this official figure suggest that real expenditure may be substantially higher.
  • Force reform and restructuring continues. Xi’s military reform continues unabated. In April, Xi announced a major restructuring of its armed forces into 84 corps-level military units under the five regional commands. Soon after, the Ministry of Defense also announced that the PLA would streamline the previous 18 army groups to 13 (designated as the 71th to 83th group armies). Official PLA media reported on July 12 that the PLA plans to downsize its army to under one million, while providing more resources to the other services. The Marine Corps, for instance, will be expanded from 20,000 to 100,000 according to a government announcement from March 14. At a Politburo study session on the military, held on July 24, Xi continued to call for “all-out efforts” in pushing forward PLA reforms.
  • National strategy for civil-military integration picks up speed. On June 20, President Xi once again emphasized the importance of civil-military integration at the first meeting of the newly-established Central Commission for Integrated Military and Civil Development. The goal of this commission, which Xi heads, is to push forward the modernization of China’s antiquated arms production system by top-level design, breaking through bureaucratic and institutional barriers. There have been a number of important developments on this issue this year:
    • On February 24, the Equipment Development Department of the Central Military Commission (CMC) issued a document on boosting civil-military integration in weapons development. This document introduced a set of measures to liberalize the weapons sector, including reducing restrictions on the types of weapons that private firms are allowed to develop by reducing the number of permits required, and establishing a pilot program for military procurement of commercial services in the aerospace sector.
    • On March 5, the People’s Liberation Army (PLA) declassified and made available to the public 2,346 patents in an attempt to facilitate the transfer of military technologies to civilian industries. This is the first time the PLA has declassified and published military patents since it began to register them in 1985.
    • The central government has opened up some defense research and development projects to private firms in the hope that this will create more competition in the market and spur SOE reform. China's military is offering to fund 2,000 private projects on equipment and weapons research with up to CNY 6 billion this year.
    • On June 23, the State Administration for Science, Technology and Industry for National Defense (SASTIND) published the 2017 Civil-Military Integration Special Action Plan, months ahead of the expected publication date. This plan emphasizes the key role of top-level design and aims to promote the inclusion of civil-military integration in regional economic development plans.
  • Committee focusing on high-tech weapons development revealed. On July 26, the 8th episode of the CCTV-produced “Carrying Reform Through to the End” documentary series revealed the creation of the Scientific Research Steering Committee (SRSC) earlier in the year. This new Committee falls under the direct supervision of the CMC and, along with the CMC’s Science and Technology Commission, will spearhead weapons-related research and innovation. The SRSC will act as a counterpart to the United States’ Defense Advanced Research Projects Agency (DARPA), an agency of the Department of Defense responsible for the development of emerging technologies for military use, often through investments in private firms and research projects.
  • PLA unveils new equipment and capabilities. Between February and July, the Navy commissioned several advanced ships, including a new heavy-lift semi-submersible (March 14), its 5th Yuzhao-class landing platform (June 15), a new Type 055 destroyer (June 28), as well as China’s second aircraft carrier (April 26). The PLAAF, in turn, introduced the fifth-generation J-20 stealth fighter jets on March 10. Besides, new domestically developed aircraft took their maiden flights. These include the world’s largest amphibious aircraft, the AG-600 (April 29) and the Z-19E attack helicopter (May 18). All of these new capabilities are steps towards Beijing’s goal of developing an amphibious force capable of conducting and sustaining operations far away from China’s borders. In early 2017 there were also reports of various trials and tests of China’s newest missile systems. In January, Beijing reportedly tested its DF-5C intercontinental missile in what is widely seen as a response to the THAAD deployment in South Korea. In February, the PLA live-fire tested the new AR-2 short-range air-to-surface missile and released a video that seemed to show the DF-16 medium-range ballistic missile for only the third time ever.
  • Defense companies focus on international market. Chinese defense companies have an eye on the international market for their new models. For instance, the home-developed Wing-Loong II UAV and the FC-1B/JF-17B dual-seat trainer – co-developed by Chengdu Aircraft Industry and Pakistan Aeronautical Complex –, which successfully completed their maiden flights on February 27 and April 27, target international customers as cheaper alternatives to US systems. During Saudi King Salman’s visit to Beijing in March, a deal was sealed to set up the first Chinese drone factory in the Middle East in Saudi Arabia. This factory, which will make China’s CH-4 UAV, is the third of its kind outside China, after production sites set up in Pakistan and Myanmar.
  • PLA demonstrates strength at 90th anniversary. On July 29, President Xi presided over a large-scale military parade at the Zhurihe military training base in Inner Mongolia to celebrate the anniversary of China’s armed forces, which falls on August 1. In a demonstration of strength, the PLA displayed some its most advanced equipment – including DF-31AG ICBMs, J-20 and J-16 fighter jets and Xian Y-20 cargo planes. Xi gave a speech urging troops to “unswervingly follow the absolute leadership” of the CCP.