Institute on Global Conflict and Cooperation

This policy brief examines the rejuvenation, current state, and future prospects of the Chinese defense economy. Fifteen years of reforms have turned this once lumbering holdout of autarkic central planning into an aspiring champion of technological innovation. Critical factors behind these improving fortunes include top-level leadership support, effective implementation of a well-defined development vision, a leading role played by defense corporations, the remaking of the research and development apparatus, the emergence of new generations of highly-trained scientists and engineers, efforts to integrate the civilian and defense economies, and access to Russian technologies. One of the main conclusions is that the development of the defense economy will continue on an upward trajectory and could even accelerate, as long as the Chinese leadership remains committed to the goal of building a world-class military industrial complex, funding remains plentiful, and end-user demand continues to be strong.