China hopes to create its own military-industrial complex, but it won’t be easy

The Chinese defense industry has once again become the focus of world media after a string of attention-grabbing headlines this year. On April 25, the Thai government approved a $393 million submarine contract with China. The day after, China’s first domestically built aircraft carrier was launched at Dalian port. The following week, China’s first civilian airliner, the Comac C919 took its maiden flight, another feat for the defense corporations involved.

Now the world’s second-largest spender on national defense, China is advancing reforms in its defense state-owned enterprises (SOEs). Xi Jinping, as commander-in-chief, has long been vocal about deepening defense industry reform, a sentiment shared by his colleagues on the Central Military Commission (CMC). In 2015, General Xu Qiliang, vice chairman of the CMC, “called for China to develop a military-industrial complex like the one in the U.S.”—where the private sector and the invisible hand assume the leading role.
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