REFORMING DEFENSE SCIENCE,
TECHNOLOGY, AND INDUSTRY

General Ding Henggao

The development and reform of defense science, technology, and industry are now in a key stage. A new situation and some arduous tasks lie ahead of us. This is mainly reflected in the following:

General Ding Henggao serves as Chairman, Commission on Science, Technology and National Defense Industry (COSTIND). This article originally appeared in China Military Science (Summer 1994).

Position and Effect in National Strategy

Faced with new conditions and wanting to speed up the reform and development of defense science and technology, we must first of all fully understand its vital importance. President Jiang Zemin pays great attention to this. He asserts that the key to developing defense science and technology is to heighten its level. This is not only the requirement of the new military strategy but also that of the whole modernization drive. We can deepen our understanding of these points from the following three aspects:

Contradictions in the Development of Defense Science and Technology

With changes in international affairs and hot competition in the high-tech world, all countries are readjusting their national strategy and defense strategy and pursuing the development of modern technology, especially high technology, as the key measures to strengthen comprehensive national power and defense strength, and thus gain the strategic initiative. Historical experience has proven that all starting points and guiding ideology in our work should alter with changing situations. Analyzing the distinguishing features of modern technology, especially high technology, and taking into consideration our national and military conditions, we need to seize the opportunity to speed up the development of defense science and technology. We also need to correctly understand and handle some important relationships:

Optimum Disposition and Proper Use of Resources

A problem that restricts or affects the development of the defense industry is the improper defense industrial structure. For this reason, our fundamental goal for modernizing the structure is the optimum disposition and full liberation of the military productive force. As the international situation changes and new technology steadily develops, many developed and developing countries find a flexible military industrial structure to be an important strategic measure in restructuring their national defense industry. Currently, we have made good progress in defense industry adaptation, but the situation is still short of what is expected for example, problems such as activities too large in scale, overextended battle lines, low-level production, inefficiency and so on still exist. In the future, any defense industry should follow and serve the needs of the military strategy in the new era and be suited to the building of the country's socialist market economy system. Additionally, we should pay attention to the following points in our guiding ideology:

The Transition from Military Industry to
Market Economy System

The Fourteenth Party Congress made it clear that the goal of our economic system reforms is to build up and improve the socialist market economy system. The third plenary session of the Fourteenth Party Congress further confirmed the framework of our socialist market economy system and put forward requirements for the initial buildup of the socialist market economy system at the end of this century. How to speed up the reform of the military industry, and build a new system that meets the requirements of the market economy are important issues to study and answer.

The military industry is an component part of the whole economic system of the country. Its production, circulation, distribution, and exchange activities cannot be separated from the national economy. Therefore, it must be subordinated to the need to set up a new economic system in the country, and speed up the transition to the socialist market economy. The transition from a highly centralized, command and planned economic system to a market economic system is a great change of strategic significance for the military industry. The key to what is actually a profound revolution is the proper handling of the relationship between the plan and the market. Deng Xiaoping has emphasized on many occasions that both the plan and the market are tools of economics. President Jiang Zemin pointed out, "The scope, degree, and forms of integration of the planned and market economicscan be different at different times, in different areas and regions." According to the realities and characteristics of the military industry, we should pay attention to the following three points for the present time:

The resolution of the third plenary session of the Fourteenth Central Committee of our Party pointed out that the building of the socialist market economic system is to use the market system as the principle means to allocate resources under the authority of the state. Through several years of experiment and practice we have found that in order to have the market play a role in the defense industry, we need to recognize the importance of using price as a lever and introducing competition to gain efficiency in the allocation of resources, to motivate enterprises. Currently, there is a strong desire to reform the pricing of defense products. But the budget for the armed forces is very tight, and because there have been big increases in the prices of raw materials, it would be very difficult to carry out such reform. Further, a reform would involve big adjustment of interests in supply and demand, and is closely related to financial and monetary system reform, as well as enterprise reform. Therefore, to have military products appropriately priced, and to have a new pricing system, we need to ask the government to have an overall plan to solve the problem. To conduct the reform in the pricing of defense products, with a smooth transition, we should price military products on the basis of actual value and not the market-bearing price, as with civilian products. In principle, we should use both adjustment and the role of the market, with emphasis on adjustment. The government may apply the laws of value and supply and demand, taking into consideration the ability of different sides to cope with the reform and adjusting unreasonable pricing of major military products at an appropriate time. With regard to generally low-priced military products and their accessories, apply a price based on supply and demand, and gradually adjust prices to reflect the market price.

Another outstanding problem is the introduction of competition into defense industry reform. Competition is necessary to encourage creativity and to raise efficiency. In the early 1980s Deng Xiaoping said that there can be competition in weapons production. Some weapons can be produced by more than one department, and the army can choose to buy the better products. But in recent years, because of the unsmooth structure, the unclear division of government and enterprise, interference by the administration, and the weak concept of market, the competition mechanism has not been given full play in the research and production of military products. According to the experiences of the developed countries, and in light of the actual conditions in our country, we should actively introduce competition in the research and production of military products. But the scope, items, and forms of competition should be chosen according to actual situations. For example, in terms of scope, competition can be carried out in the same trade, in the defense industry system or in the whole country in certain cases. In terms of weapons systems, there can be competition in subsystem or in single unit equipment. In terms of items, we can start out in small and medium projects, and when we have more experience, we can then gradually press forward. In terms of forms, we can have competition among units and even within the same unit.

Opening to the World

The current world is an open world. We must notice that the general trend of development in the world economy and in science and technology is increased mutual infiltration, interdependence, and integration. Any country that wants to speed up development has to carry out an open policy. Deng Xiaoping said, "Opening to the outside world is of great significance. It is impossible for any country to have development in isolation and with its door closed, neither would it be possible without the strengthening of international exchanges, and importation of advanced experiences, science and technology, and funds from the developed countries." In fact, even in the confidential and sensitive military sphere, the countries of the world are not closed to each other. Many countries not only import advanced technology and equipment from abroad, but also carry out broad cooperation in the area of military high technology, and have joint research and production of new types of weapons. There is still a gap between the level of our national defense science, technology, and weaponry and that of developed countries. To make quick advances, we need to be self-reliant, but at the same time we should open wider to the outside world. There are two key points in the opening of national defense science, technology and industry:

Training Defense Scientists and Technological Experts

Scientists and technology experts are the creators of science and technology. Science and technology experts in the defense industry play a special role in the development of national defense science and technology and weaponry, and to a large degree determine the development progress of new high-technology weapons, and even the successful realization of the goals of modernization for national defense and army building. Under the overall situation of reform and opening up, and the development of a market economy, the conditions for the existence and development of national defense science and technology personnel have undergone great changes. We need to use new thinking to select and train talent. Deng Xiaoping once said, "We need to open up a way, so that talented people will grow to maturity quickly. We should not block talent. The constant emergence of talents means the success of our cause." Under the new situation, the building of the national defense corps of science and technology experts should pay special attention to the following three points:

A Scientific, Authoritative and Effective Overall System

National defense science, technology, and industry are very important strategically and have a unique pattern of development. Only by strengthening overall control can we take into consideration national and military strategic requirements and make timely decisions and arrangements in light of national economic, scientific, and technological realities based on collective wisdom and scientific proof. According to historical experiences and future trends of development, we should pay attention to the following if we want to raise the authoritativeness and effectiveness of the overall control system:


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