China’s National Security Paradigm


Security Rather Than Defence?

‘Security’ has always meant different things to different people, but a trend is emerging whereby interpretation of this amorphous concept is becoming more rather than less expansive. The broadening of the security focus is a reflection of the increased unpredictability of the post-cold war international environment. The threat no longer derives solely from traditionally interstate rivalry, but instead emanates from a wide spectrum of non-state sources. One observer, Naim, has translated these non-state threats into what he terms the ‘five wars of globalization’; that is, illegal trading in drugs, weapons, people, money and intellectual property.1

A recent Report of the United Nation’s High-Level Panel on Threats, Challenges and Change draws attention to the proliferation of these non-state threats.2 The Panel identifies six clusters of threats to international peace and security; namely: transnational organized crime; terrorism; nuclear, radiological, chemical and biological weapons; internal violence, including civil war, state collapse and genocide; the continued possibility of interstate conflict and rivalry; and economic and social threats. Referencing to the UN Panel Report, a December 2004 Financial Times editorial focused on this latter economic (development) threat and its link to security:

Security and development are independently worthy objectives. But bringing them together makes sense on many levels. Both address the challenges of an age of interdependence, in which states can no longer be indifferent to what goes on behind foreign borders. As the UN High Level Panel observed, extreme poverty, disease and environmental degradation are threats to human security, broadly defined. While poverty does not cause terrorism, failed and failing states pose real danger to the west. Security and development are both needed to end cycles of conflict and economic collapse…[However,] Both security and development purists resist the contamination of their great moral struggle. This is mistaken.3

The imperative of ‘managing’ security is clearly important at this supra-national level, but it is also of national significance. For instance, in 1995, Britain’s MoD formally acknowledged for the first time that security embraced not simply defence, but also a broad array of economic, social, political and environmental concerns.4 More recently, in 2004, there was a call for Australia to dispense with its Defence White Paper and instead publish a Security White Paper; the latter subsuming traditional defence concerns in an expanded, more holistic approach towards addressing today’s ‘globalization wars’.5

Significantly, these ‘western’ interpretations of security have arisen because of the contemporary uncertainties of the international strategic environment. Yet, Far Eastern countries have been employing security rather than solely defence policies for decades, if not generations. For instance, the Japanese have implicitly emphasized a security rather than defence model since the 1860s, formally adopting a national security approach in the 1980s. Termed ‘comprehensive security’, the approach seeks to embrace the economic, industrial, technological, political, diplomatic and trading dimensions of a broadly-based definition of security.6 Similarly, the Singaporeans created their ‘total security’ model following Singapore’s 1965 independence from Britain.7 The policy basis of this wider interpretation of security is policy integration; that is, the synergy to be derived from mutual pursuit and reinforcement of distinct, but interrelated, national policy goals.

The focus of this paper is on China’s security policy, which, as with other Asia-Pacific states, goes beyond narrow defence boundaries. China’s national security paradigm should be of universal interest, not simply because of the dramatic emergence of this potential mega-economy, but also because as its economy grows so will its military strength. The country’s approach to security has been influenced by historical and cultural considerations. It is a model characterized by contradictions, including co-operation and competition (Guanxi co-existing with cultural industriousness), Communism and Capitalism (the unique market-socialism model), technological advance and underdevelopment (symbolized by ‘Taikonaut’ Yang Liwei’s 2003 Shenzhou V space orbit occurring at the same time as the existence of widespread rural poverty) and, not least, defence and development (dual-use industrialization). China’s economic power has burgeoned over recent times, and defence, particularly sovereign defence-industrial competence, is of linked, integral importance. National prestige and international respect are important attributes of a robust and indigenous defence capability. Ultimately, at its most basic level, defence is needed to defend economic and social development. These and other aspects of China’s security paradigm have contributed to the forging of a strong national identity built upon cultural consensus and self-sufficiency. Nowhere is this self-sufficiency drive more aptly demonstrated than in technological endeavour. This is reflected by Jiang Zemin’s recent speech to the Chinese people:

We much understand clearly that the world’s most advanced technology is not for sale…New ideas are the very soul of national progress and are indispensable to the development of any country. If we do not have our own autonomous ability to create innovation and just depend on technology imports from abroad, we will always be a backward country…As a great socialist country we must, in the field of science and technology, be masters of our own fate…As we continue to learn from others and to import advanced foreign technology, we much remain focused on raising China’s ability to do research and development on its own.8

China: Independence and Interdependence

Zemin’s exhortation posits a further contradiction: whilst China’s goal of self-sufficiency endures, the country is presently in the grip of economic, technological and societal liberalization and globalization. Yet, the contradiction is more apparent than real. In the short-run, at least, Deng Xiaoping’s 1979 ‘Open-door’ (Kaifang Zhengce) initiative has shifted policy emphasis from self-sufficiency to international engagement. In fact, there really was no choice if China wanted to rise above economic stagnation, gain access to technology and thus leverage the high costs of developing indigenous industrial capacity. In the long-term, however, such a policy provides China’s policy-makers with the opportunity of ultimately securing economic independence through global domination, thereby strengthening national security.

This process of achieving defence-industrial sovereignty is consistent with China’s broader economic transformation strategy. Acquisition of technological capabilities and the creation of local capacity will be facilitated by participation in global technology networks, both trading and investment. However, because direct access to Western defence technology has been embargoed since the 1989 Tiannamen Square incident, indirect access has been pursued. Such a ‘model’ was described in the seminal 1996 paper by Frankenstein and Bates Gill.9 Paraphrasing their argument, modernization of China’s defence industrial base could be achieved through technology ‘spin-on’ from local strategic industries, manufacturing critical technologies. Recognizing the increasingly important contribution that these technologies play in the development of advanced defence systems, China’s policy-makers have fostered the infusion of foreign capital into the production of commercial goods, such as semiconductors, electronics, computerized equipment and telecommunications, to enhance indigenous defence industrialization. This acquisition strategy, based on ‘short-term’ dependence on foreign direct investment (FDI), translates well with the previously highlighted longer-term objectives of defence industrial self-reliance. As Lim Huaqing observes:

When we stress self-reliance, we do not mean we will close the door to pursue our own construction. What we mean is to actively create the conditions to import varied technology from abroad and borrow every useful experience…One of the basic principles of modernization of weapons and equipment in our Army is to mainly rely on our own strength for regeneration, while selectively importing advanced technology from abroad, centering on some areas.10

Thus, economic and technological self-reliance, remains a crucial thrust of China’s security framework, reinforcing Beijing’s push towards defence-industrial sovereignty.

Realization of self-reliance, however, wrests on the clear and urgent imperative to achieve not just economic take-off but also self-sustaining economic growth. Take-off will be pursued through globalization whilst self-sustaining growth will be progressed by intensifying local technological absorptive capacity.

Accelerating Economic Take-off

Since the 1970s, China’s revolutionary economic reforms centred on the ‘Four Modernizations’. Accordingly, economic policy prioritized the development of agriculture, industry and science and technology, with national defence as the lowest priority. Deng Xiaoping’s view was that a major world war was no longer imminent; that the dominant global trend was instead peace and development.11 China was fully committed to economic construction based on a long-term measured development strategy termed Tao Guang Yang Hui (hide your abilities and bide your time).12 This called for military modernization to be conducted at a measured pace, appropriate to economic development.

So economic development was the key. It was to be pursued through China’s unique ‘market-socialism’ politico-economic model. The thrust of the model was an economic reform process focused on liberalization and globalization. Creating the opportunity for profitable endeavour has dramatically transformed the Chinese economic landscape. The speed of China’s economic transition over the last twenty-five years has no historical parallel. The nation’s economy has become enormous, now accounting for about 12 per cent of global gross domestic product (GDP).13 In dollar terms, its GDP is the sixth biggest in the world.14 China’s economy is only slightly smaller than that of France and will likely overtake Britain’s in 2005, becoming the world’s third biggest economy behind the US and Japan.15 By 2050, it is predicted that China will be the world’s biggest economy.16

China’s recent trend of close-to double-digit growth rates has propelled its economy forward, shifting in the process the balance of economic activity. The catalyst has been FDI. The ‘open-door’ policy reforms combined with China’s 2002 membership of the World Trade Organization (WTO) has led to almost vertiginous growth of FDI. In 1990, for instance, China received US$ 5.5 billion in foreign investment; this figure growing to US$ 57 billion by 2003, making China the biggest FDI recipient in the world.17 UNCTAD has estimated that more than 80 per cent of the Fortune 500 companies have invested in over 2,000 FDI projects in China.18 However, although China has received around US$ 400 billion worth of cumulative FDI, the third biggest value after the US and UK, it constitutes just 4 per cent of its GDP compared with 39 per cent for the UK.19 Thus, FDI into China can be expected to continue, with the possibility that during the next Five-Year Plan (2006-10) FDI values will reach US$ 100 billion a year. From a security perspective, whilst China’s FDI is small relative to the size of its economy, its impact has been heightened by the targeting of this investment on key manufacturing sectors. In 2002, manufacturing accounted for more than 70 per cent of China’s total contractual FDI value.20 Significantly, nearly 30 per cent of this foreign capital was channelled into the strategic sectors of transport equipment, electronics, telecoms, computers and vehicles.21

Closing the Technology Gap?

The targeting of FDI on strategic sectors, termed ‘pillar’ industries by China’s policy-makers, has not happened by accident. It has been a deliberate policy aimed at promoting dynamic growth poles across China’s economy. The pillar industries may be defined as those that exhibit high growth in sales and value-added, are knowledge and innovative intensive, and are expected to stimulate high levels of downstream industrial activity. FDI has been instrumental in the development of the pillar industries. FDI has thus become a major source of advanced techniques and expertise aimed at closing the technology gap existing between China and the industrialized countries. Complementing this expanding access to foreign technology is China’s institutional Science and Technology (S&T) policy.

China’s focus on S&T goes right back to its first Five-Year Plan (1953-57). By 1955, a total of 840 scientific and technological research industries had been set-up, compared to only around forty in 1949.22 In January 1956, the Chinese government issued its First S&T Plan, termed China’s Long-Term Plan of Science and Technology Development, abbreviated to the ‘Twelve-Year Programme’ (1956-67). Some 616 key technology projects were identified as critical to China’s industrialization-push, including computers, semiconductors, radio-electronic systems and automatic technology.23 In 1962, China’s National Commission of Science and Technology introduced a ‘Ten-Year Programme’ (1963-72) focused on the development of defence-related technologies. This was followed in 1978 by the establishment of an ‘Eight-Year Programme’ (1978-85) supporting 108 research projects aimed at developing capabilities in the fields of energy, materials, computerization, lasers, space technologies, physics and genetic engineering.24

Supplementing these policies and geared towards constructing China’s institutional S&T framework, were the 1985 and 1995 ‘decisions’. The ‘1985 decision’ initiated a series of reforms in the structure, funding and management of the S&T system. One significant reform was the requirement that henceforth research institutes would be required to engage in competitive bidding for central research funding. The ‘1995 decision’ built upon these initial reforms, but additionally linked the development of S&T policy to the parallel reforms that were occurring in the economy.

The 1985 and 1995 decisions respectively sought to reform and accelerate China’s science and technology endeavours. Additionally, these two policy decisions led to the implementation of what came to be known as Plan 863 and the Torch Programme:

Plan 863

This Plan initiated China’s contemporary high technology strategy. It was begun in March 1986 and termed the High Technology Research and Development Programme (abbreviated to 863 after the year and month of its introduction). Plan 863 was based on two considerations: firstly, the need to participate in the global technological revolution in such emerging technology fields as information, biological and sensors; and secondly, the imperative of keeping pace with Western strategic technology programmes, such as America’s Strategic Defence Initiative and Europe’s EURICA programme. Plan 863 was designed to capture the synergistic benefits of developing ‘dual-use’ civil-military technologies. Accordingly, the Plan sought to promote eight fields and twenty subjects in high technology areas.25 China’s Ministry of Science and Technology became responsible for policy implementation in the six fields of biology, informatics, automation, energy, materials and marine technologies, whilst the former COSTIND and its successor GAD, assumed the responsibility for implementing policies to develop lasers and aeronautics.26

Torch Programme

The ‘Torch’ programme was launched in 1988 to accelerate industrialization through the commercialization of high technologies. Commercial applications of advances in research achieved through Plan 863 were channelled into the Torch programme. To facilitate the expected expansion of industrial production, the Ministry of Science and Technology established fifty-three high technology zones throughout China.27 Preferential policies, such as reduced income taxes, were offered to induce firms to locate in these zones.

Other policies, such as the January 2000 guidelines on rewards to incentivize research, followed in the wake of the 1995 decision, but it was the latter that was the starting point for effecting the transformation of China’s S&T base. Jiang Zemin, expressed the view that a major tenet within the 1995 decision, was the need to ‘stabilize on one side, but let the other side be free’ (wenzhu yitou, fangkai yipian).28 Thus, with respect to high technology the government provides preferential government support (‘stabilizing’ the underpinning investment in technologies of national strategic importance) and at the same time encouraging commercial spin-on from the commercial sector to defence (letting the other side be free).

National Security: Challenges Ahead

Critical evaluation of China’s economic take-off and its technological progress indicate that whilst much has been achieved, formidable challenges remain. FDI-driven development of China’s high technology pillar industries has managed to create capacity, but the absence of an indigenous high-tech subcontracting base means that there is minimal local value-added. Research conducted by Daniel Rosen indicates that the bulk of China’s high technology exports in 2002 were dominated by basic parts and accessories for information technology products and mature products like DVD players and laser printers; that around 50 per cent of Chinese technology imports and 60 per cent of technology exports were undertaken by wholly foreign-owned enterprises; and finally, that just 16 per cent of the sales value of China’s high tech exports comprised local value-added.29 Semiconductors, one of China’s designated pillar industries, provides a focused example of the challenge policy-makers face. The country is a voracious consumer of ‘chips’ and an increasingly important location for silicon-wafer plants that provided an estimated 19 per cent of global capacity in 2003.30 Yet, indigenous industry remains tiny, with 85 per cent of China’s semiconductor needs still met by imports.31 Foreigners own most of the country’s chip plants, with most of these concentrating on low-value assembly and testing rather than design and manufacture.32

From the perspective of creating a science and technology infrastructure, there has been considerable progress, but, again, performance metrics score heavily on breadth rather than depth. Fifty plus years of investment have created over 19 million scientific and technical personnel, staffing 5,860 research institutes.33 Impressively, China’s R&D intensity (R&D expenditure as a percentage of GDP) is expected to have nearly doubled over the last decade: from 0.6 per cent in 1996, to 1.1 per cent in 2001, and an estimated 1.5 per cent in 2005.34 Whilst such developments are impressive, this growth has been built upon a weak S&T infrastructural base. For instance, using a purchasing power parity measure, China’s R&D intensity is around one-fifth of the US level; in nominal terms, it spends less than 5 per cent of the US total.35 Transfer into China by MNCs of R&D capacity and capability may help to close the technology gap. However, of the more than 200 R&D centres established by MNCs between 1991 and 2002 in the information and communication industries alone, only around fifty engaged in any meaningful R&D.36 Most centres simply provide management and sales training to local staff and if R&D work is undertaken, then it is at a low-level, focused mainly on software upgrades and basic systems integration solutions.37

Conclusion

China’s national security calculus embodies economic, technological and political elements as well as the defence dimension. The historical and cultural attributes of co-operation and synthesis have led to a politico-economic emphasis on market-socialism, dual-use industrialization and FDI-driven technology transfer. The search for self-reliant security goals in a 21st century international environment is underpinned by liberalization, facilitated by globalization, and driven by the profit motive. Whilst the long-term goal of defence-industrial sovereignty remains ambitious, the process of economic transformation has been hugely successful; the Chinese people no doubt responding to the words of former Premier, Deng Xiaoping, ‘to get rich is glorious’.

 

 

Ron Matthews and Zhang Yan

Professor and Visiting Researcher, Cranfield University (UK)

 

Notes

1.    Cited by Peter Layton, ‘No More Defence White Papers?’ Asia-Pacific Defence Reporter (November 2004) p.36. Original source: Moises Naim, Foreign Policy Journal (2003).

2.    See, ‘Courage to Fulfil our Responsibilities’, The Economist (December 4, 2004).

3.    ‘Security For All’, The Financial Times (24/25 December, 2004).

4.    See, British Defence Doctrine, Joint Warfare Publication (JW p.0-01) (1996). See particularly p.5.6, where the doctrine states ‘Security policy is inseparable from wider foreign and economic policy’.

5.    Peter Layton, op. cit., p.36.

6.    Introduced in the 1980 Report of the Comprehensive National Security Study Group, the logic of the approach rests on the understanding that security is wider than simply the military dimension. Due to Japan’s dependence on imported food, raw materials and energy, security necessarily encompasses politico-economic as well as military elements, each of which complements and reinforces the contribution of the other. See Ron Matthews and Keisuke Matsuyama (eds) Japan’s Military Renaissance? Macmillan Press (1993) p.3.

7.    See, Ron Matthews, ‘Singapore’s Defence-Industrial Model?’ Asia-Pacific Defence Reporter (April-May 1999).

8.    Zhu Lilan, editor, Science and Education for a Prosperous China, CPC Central Party School (1995).

9.        John Frankenstein and Bates Gill, ‘Current and Future Challenges Facing Chinese Defence Industries’, The China Quarterly (1996) pp.394-427.

10.  Cited by John Frankenstein and Bates Gill, Ibid., p.425. Original source: ‘Lim Huaqing writes on Military Modernization’, FBIS-CHI (August 18, 1993) p.19.

11.  Qin Yaoqi et al, Deng Xiaoping’s Thoughts on Force Building in the New Era, Beijing: Foreign Language Press (1998) p.86.

12.  Ibid.

13.  For a fuller explanation of China’s economic phenomenon, see Ron Matthews and Zhang Yan, ‘Bling Dynasty – The Great Leap Upwards’, Financial Management (October 2004) pp.15-17.

14.  Ibid.

15.  ‘Job Losses to China and India are a Big Challenge’, Daily Telegraph (December 3, 2004).

16.  Ibid.

17.  ‘Bulls in a China Shop’, The Economist (March 20, 2004) p.9.

18.  UNCTAD estimate (2001).

19.  See Ted Stone, ‘Pragmatic for the People’, Financial Management (October 2003) p.22.

20.  Sourced from Ministry of Commerce of the People’s Republic of China, http://www/fdi.gov.ch (July 2004).

21.  Ministry of Commerce of the People’s Republic of China, ibid.

22.  China’s Science and Technology Development, http://www.edu.cn/20010101/22309.shtml.

23.  Mi Jianing, ‘China’s High Technology Policy and its National Technology Innovation System’, Proceedings of US-China Seminar on Technical Innovation, (ed) L.M. Branscomb and Qingrui Xu (2002).

24.  Ibid.

25.  High Tech Research and Development (863) Programme, Ministry of Science and Technology, http://www.most.gov.cn/English/programs/863/menu.htm.

26.  Ibid. Note COSTIND is the Commission on Science, Technology and Industry for National Defence and GAD is General Armament Department.

27.  Science and Technology Policy in China, http://www.scbc.org/international/china/policy.html.

28.  Zhu Lilan (China’s former Minister of Technology), (ed) Science and Education for a Prosperous China, CPC Central Party School (1995).

29.  Daniel H. Rosen, ‘Low-Tech Bed, High Tech Dreams’, China Economic Quarterly (Quarter 4 2003) p.22.

30.  ‘Technology in China – The Allure of Low Technology’, Economist (December 20, 2003) p.105.

31.  Arthur Kroeber, ‘China’s High-Tech Success Story is Pure Fiction’, Financial Times (January 2, 2004).

32.  Arthur Kroeber, Ibid.

33.  The Overall Strategic Development of the Chinese S&T Endeavour, http://www.chinese-embassy.org.uk/eng/kjjl/kjfz/t27123.htm.

34.  Daniel H. Rosen, ‘R&D – But Mostly D’, China Economic Quarterly (Q4, 2003) p.36.

35.  Ibid., p.36.

36.  Ibid., p.37.

37.  Ibid., p.37.




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