November 8, 2016                                                                    Issue No. 5
In This Issue
Welcome to latest  issue of China D-Tech Watch, which is produced by the Study of Innovation and Technology in China at the University of California Institute on Global Conflict and Cooperation.

For this issue's analysis, we provide a translation of a People's Daily interview with China Aerospace Science and Technology Corporation Chairman Lei Fanpei. We hope that you find it of use. 

Tai Ming Cheung
Comments can be sent to Eric Anderson, Research Analyst, at 

SITC News Team
UC Institute on Global Conflict and Cooperation
Interview with China Aerospace Science and Technology Corporation Chairman Lei Fanpei 
For this issue's analysis, we provide a translation of an interview with China Aerospace Science and Technology Corporation Chairman Lei Fanpei. The interview with People's Daily was given a few weeks before the launch of the Long March 5 rocket and provides key insight into where China sees itself in the context of its own aerospace development and in the context of international competition. Perhaps most revealing is Lei's assessment that China currently has matched leading international space standards in one-third of its technologies but needs to double that before it will consider itself a "strong space power." 
China will this week launch its first Long March 5, which will rank among the most powerful active rockets in the world and fulfill specific needs for the country's space program. Here are five things to know about China's breakthrough.
The CZ-5 can lift 25 tonnes of cargo into lower earth orbit, similar to the performance of the Delta IV Heavy, the most powerful launch vehicle in the US space fleet. The arrival of the CZ-5 means the gap between China and the US in space has narrowed from decades to years and the game will change profoundly from now on, according to several space analysts. The rocket and later versions boosted by even more powerful engines will allow China to match the US in operating large-scale, high-performance spy satellites and global military communication satellites, as well as attempting to put up a full-sized space station, land humans on the moon or send robotic rovers to Mars.
China conducted the first launch of its new Long March 5 rocket November 3. At 25 metric tons  to low Earth orbit, it has twice the capability of the largest existing Chinese rocket and is only slightly smaller than the largest US rocket, Delta IV. It opens many possibilities for China, which has identified large space stations and probes to the Moon and Mars among its nearer-term uses.
Li Dong, designer-in-chief, said the rocket was the most complicated of the Long March series with over 100,000 components instead of tens of thousands of components in other Long March rockets. Scientists conducted over 7,000 tests during its 10 years of development. Lou Luliang, deputy designer-in-chief, said the new technology in Long March-5 would be used in other Long March series rockets in a bid to upgrade all rockets. In 2017, China will launch the Chang'e-5 probe to the moon, which will bring lunar samples back to Earth aboard the Long March-5. The 20-tonne core module of its first space station will also be delivered by the rocket in 2018. The rocket will launch the Mars probe around 2021.
Phillip Clark, a long-standing analyst of China's space activities, says the Long March 5 family of launch vehicles will put the Chinese in the same league as the United States and Russia.

The rocket is the result of more than 15 years of design, development and innovation, requiring new engines and fuel, a launch center accessible by sea to bypass restrictive tunnels, and specially designed transport ships to get it there.
According to the SASTIND, the Long March-5 integrates top space technologies, including non-toxic environmentally friendly fuel and a highly stable control system, representing a landmark in the country's carrier rockets.
Thursday saw China successfully launch its new Long March 5, but neither the launch nor its decade-long development was anywhere as smooth as would have been hoped--and there has been a refreshing openness about these issues after liftoff. 

A full-page PLA Daily article recapping the 2016 Zhuhai Airshow. Ground equipment includes: VT-5 Light Tank, VT-4 Main Battle Tank, WS-64 first precision-guided anti-ship missile rocket launcher system, HJ-12 anti-tank missile; Unmanned battle platforms include: CH-5 UAV, "Infiltrator" UAV, "Sea Fly" unmanned boat, Sharp Claw 2 UVG; domestic advanced fighter include: J-20, Y-20, J-10B, Z-10K, H-6K, KJ-500.

China will unveil its new generation J-20 stealth fighter jet at an air show next week, the air force said on Friday--the first public showing of a warplane Beijing hopes will narrow the military gap with the United States. The J-20 will give a flight demonstration at next week's China International Aviation and Aerospace Exhibition in the southern city of Zhuhai, the People's Liberation Army Air Force said in a statement on its official microblog. Air force spokesman Shen Jinke said the J-20's production was proceeding according to plan and would assist in the air force's mission to "safeguard sovereignty and national security".

China's military drone industry, already one of the world's largest, is on full display at the Zhuhai 2016 Airshow. The airshow has featured some of China's high tech attack and surveillance drones for the first time, as well as provided glimpses of the future, with stealthy UAVs, 'marsupial drones', supersonic robot planes, and drone swarms.

China showed its Chengdu J-20 stealth fighter in public, opening the country's biggest meeting of aircraft makers and buyers with a show of its military clout. It remains unclear whether or how the J-20 would be displayed after the flypast, or to what extent foreign executives and media would be allowed a close look as they try to figure out its role and effectiveness. Some foreign observers have questioned its stealth capabilities.

In an unassuming pavilion the size of a large gym, tucked behind the main exhibition halls of the Airshow China expo, Aero Engine Corp of China (AECC) was on public display for the first time. Beijing launched the firm in August in a multi-billion dollar mission to develop home-grown, high-tech products fit for export.

China Aero Engine Corporation displayed products at the Zhuhai Airshow with no new surprises. Details of some of the products displayed.

The PLA Air Force chief said development of the J-20 fighter jet would be sped up, in an apparent bid to quell speculation the domestic aircraft was falling behind its production schedule. Ma told the broadcaster the ­J-20 would not be exported, a sign the aircraft is the most advanced fighter under development by the nation's military.

Since its maiden flight in January 2011 ten prototypes were manufactured (Note: the two demonstrators 2001, 2002 = now 2004, + the prototypes 2011, 2012, 2013, 2015, 2016, 2017 and two static test specimen) and that this type is to be the third stealth fighter jet to enter operational service following the United States' F-22 Raptor and the F-35 Lightning II. In retrospect the J-20A has indeed reached the Low Rate Initial Production (LRIP)-phase with the J-20's design being frozen. If the PLAAF follows now the usual procedures, a first unit equipped with these LRIP J-20As of the current interim standard will enter service within the PLAAF at around the year's end or early 2017; much earlier than expected. As such it seems to be confirmed that even if limited in its capabilities due to the missing WS-15, the PLAAF will bring that type to service as soon as possible to exploit and explore operational tactics and procedures for this new fighter.

Essentially, the J-20 will give the Chinese air force a long-range, hard-to-detect strike and interdiction fighter that can threaten the air bases, carriers, airborne warning and control systems, and refueling aircraft that the United States and its allies rely on to project air power over the vast distances of the Asia-Pacific. While it is not as hard to detect as the F-35 and certainly the F-22, it would still be a lethal and evasive threat hidden within a mass of conventional aircraft and missile tracks in any flashpoint scenario.

Experts say that the striking similarities between China's J-20 and America's F-35 and F-22 are clear evidence that this stolen know-how has allowed Beijing to quickly catch-up on these so-called "fifth generation" fighter jets.

Three significant Chinese pilotless aircraft are appearing for the first time at Airshow China, including two jets. AVIC is presenting its new Cloud Shadow jet and a greatly expanded development of its Wing Loong propeller-driven series at the show, while China Aerospace Science and Technology Corp. is displaying the CH-5, a jet-propelled follow-on to its established CH-4.

Stealth fighter jets are designed to be as furtive as possible and sneak through radar without being noticed. China's new J-20 stealth fighter demanded plenty of attention as it roared over the heads of spectators during its public debut at the Zhuhai air show. The message was clear: China is aiming high in the aerospace business. That ambition, though, is as much about commercial aircraft as it is about fighter jets, and in particular one model was noticeably absent from the show: the C919, a single-aisle short-haul passenger jet which China is developing to take on Airbus and Boeing.

China's Beidou navigation system is now accurate within centimetres and on par with the US Global Positioning System (GPS), said a scientist who has been developing the technology. The system could even offer more precise positioning services than its US rival within China, but further support was needed to make GPS users switch to Beidou, navigational-systems expert Xu Ying said at a technology expo in Hong Kong on Sunday. Beijing has been building the system to make its domestic users, including the military, less dependent on foreign technology. Most Chinese lighthouses, military facilities and fishing boats had been using it since an Asia-Pacific network was completed in 2012, officials said earlier.

China Great Wall Industry Corp.'s win of a contract for a high-throughput Ka-band broadband satellite for Thailand's Thaicom is a breakthrough deal for China's satellite export industry, which up to now has relied on domestic demand and special-circumstances orders, mainly from emerging-market governments. The contract, from Thaicom subsidiary International Satellite Co. Ltd., is valued at $208 million covering the satellite's construction and launch, continuing a China Great Wall Industry Corp. practice of bundling satellite construction and launch contracts.

A scale model of a probe designed to orbit and study Venus has been unveiled at the 18th China International Industry Fair in Shanghai. The spacecraft is an exhibit belonging to the China Aerospace Science and Technology Corporation, the main contractor for China's space program.

China has completed assembly of its first domestically made aircraft carrier and design work on the vessel was finished, the defence ministry said recently. Ministry spokesman Wu Qian said workers were also installing equipment on the carrier, without giving further details.

According to sources in China, the steel cutting of the first Type 075 Landing Helicopter Dock for the People's Liberation Army Navy (PLAN or Chinese Navy) is expected to take place by the first quarter of 2017. China State Shipbuilding Corporation is said to have been awarded the contract and will act as prime contractor.

The Type 055 just began major construction and probably won't enter service before 2018. But when it does, it could be the biggest and most powerful surface warship in Asia. It's unclear exactly what the Type 055 will do, but indications are that it will function as the main air-defense escort for China's new domestically-built aircraft carrier, currently under construction at Dalian in northern China.

Goals for the 13th Five-Year period include holding fast to the "Made in China 2025" plan and by 2025 establishing a maritime strong power. This will include focusing on manufacturing technology and information technology to raise the level of the current shipbuilding industry.
The PLA Navy | CSIS

The PLA Navy has seen impressive transformation and growth since the 1980s and continues to pursue an ambitious naval modernization program. A "fortress navy" once dependent on land-based support and comprised mostly of patrol craft has shifted towards a force more capable of independent action, comprised of major combatants, and better able to project power along China's periphery and around the world. A new report by the CSIS Burke Chair in Strategy provides a detailed analysis of PLAN force structure.

Based on a review of policy documents and interviews with China-based industry experts, Ernst describes key policy initiatives and stakeholders involved in the current strategy; highlights important recent adjustments in the strategy to broaden China's semiconductor product mix; and assesses the potential for success of China's ambitious efforts to diversify into memory semiconductors, analog semiconductors, and new semiconductor materials (compound semiconductors). The chances for success are real, giving rise to widespread worries in the US and across Asia that China's bold strategy for semiconductors may result in a zero-sum game with disruptive effects on markets and value chains. However, Chinese semiconductor firms still have a long way to go to catch up with global industry leaders. Hence, global cooperation to integrate China into the semiconductor value chain makes more sense than ever, both for the incumbents and for China.
Massive government investment in China's semiconductor industry risks distorting the global market for integrated circuits, leading to damaging overcapacity and stifling innovation, US Commerce Secretary Penny Pritzker has warned. In a recent speech, Pritzker sharply criticized a $150-billion plan by the Chinese government to expand the share of Chinese-made integrated circuits in the domestic market to 70 percent by 2025, from 9 percent now. "Let me state the obvious: this unprecedented state-driven interference would distort the market and undermine the innovation ecosystem," Pritzker said at the Center for Strategic Studies think-tank in Washington.
US intelligence services warned Berlin that a now on-hold Chinese takeover of German semiconductor equipment maker Aixtron could give Beijing access to technology that could be used for military purposes, business daily Handelsblatt said. The German Economy Ministry said Monday it had withdrawn its approval for Fujian Grand Chip Investment Fund  to buy the Aachen-based firm for 670 million euros ($732 million), citing previously unknown security-related information.
The Pentagon's Joint Staff recently warned against using equipment made by China's Lenovo computer manufacturer amid concerns about cyber spying against Pentagon networks, according to defense officials.
Against a backdrop of combating corruption in its military, the Chinese commitment last September to refrain from commercial cyberattacks appears less significant. "It's not that China's living up to the agreement because they're living up to the agreement," says James A. Lewis of the Center for Strategic and International Studies in Washington, D.C. "They're living up to the agreement because they're trying to modernize the PLA and reduce corruption." While a decline in commercial hacking isn't a significant loss for China as a whole, he adds, "it is a huge loss for individual companies and PLA units."
Programmable-chip maker Lattice Semiconductor said it is being bought by Canyon Bridge Capital Partners, a newly formed private equity firm backed by Chinese funding for $1.3 billion, the latest deal in the consolidating chip sector. Portland, Oregon-based Lattice makes programmable chips used in the fast-growing market for connected cars.
PLA Reforms and China's Nuclear Forces | Joint Force Quarterly
China is in the midst of sweeping military reforms that will affect the force structure, administration, and command and control mechanisms of the People's Liberation Army (PLA). The reforms have the dual goals of tightening political control and improving the military's ability to conduct joint operations. Among the major steps is the creation of the new PLA Rocket Force, which replaced the former Second Artillery in controlling China's nuclear forces and land-based ballistic and cruise missiles. Despite much attention paid to its new name and higher organizational status, the Rocket Force appears to be the service least affected by the reforms.
The Chinese government, which operates more nuclear power plants than all but a handful of other countries, this week began discussing a draft law on safety standards for its facilities. The draft, which addresses the safety of facilities, employees, and their environment, as well as emergency planning and response, could become the first comprehensive law to ensure safety at nuclear energy plants.
Construction of China's first floating nuclear power plant has officially begun, China General Nuclear announced. The demonstration unit is expected to be completed by 2020.

China's biggest developer and manufacturer of land armaments, China North Industries Corporation, has for the first time publicly displayed an export version of a new lightweight main battle tank (MBT), dubbed VT5, at the China International Aviation & Aerospace Exhibition in Zhuha, IHS Jane's reports. According to IHS Jane's, the new MBT has a combat weight of between 33 to 36 tons, relatively light weight in comparison to other MBTs such as the 43-ton ZTZ-96. The tank's weight indicates that it could be used for mountain warfare operations to operate in terrains that are inaccessible to heavier MBTs. Like most other light tanks, the VT5 will most likely be used for reconnaissance and infantry support operations.
China's Industrial and Military Robotics Development | U.S.-China Economic and Security Review
To support the needs of analysts and policymakers, this report assesses the history, current status, and trends of China's robotics industries and unmanned systems. It characterizes the policies, leading entities, and the economic and technical challenges they face. Analyses of different sectors also consider how foreign developments shape China's choices on robotics, such as global developments in advanced manufacturing, US deployments of unmanned systems, and advances in AI.

A dozen US senators asked the Obama administration to block a Chinese company's $1.1 billion bid to take over a US aluminum manufacturer, a deal that had surprised many US aluminum-industry officials who have grown concerned about competition from China. In a letter sent Wednesday to Treasury Secretary Jack Lew, the senators said the deal should be rejected because it would "directly undermine our national security, including by jeopardizing the US manufacturing base for sensitive technologies."

On October 21, China's first CMI insurance company was established in Mianyang, also referred to as China's Science City. The CMI Insurance Company has entered into an agreement with consumer electronics companies Changhong ( 长虹 ) and Jezetek ( 九州 ). The development is expected to increase the amount of funding the companies invest in civil-military integration projects.
Nanyang Technology is seeking a public listing, displaying a further step of China's defense industry into private capital. Last summer, the company acquired the company responsible for the Caihong Rainbow UAV from state-owned defense company China Aerospace Science and Technology Corporation. The company manufactures air-to-surface missiles popular with Middle Eastern and African buyers.
China to Surpass US R&D Spend |
The Chinese Government is committed to driving "innovation"--and in this context that largely means technology--and has set a target for R&D spending of 2.5 percent of GDP by 2020, up from 2 per cent in 2015. It may not sound like much 0.5 percent, but the quantum is massive. China's R&D spending is expected to be 73 percent higher by 2020 than in 2015, surpassing the US in PPP terms, according to the information. Credit Suisse identifies the telecom equipment and Internet sectors as ones that have been successfully driven by substantial levels of R&D investment.

To adapt to the requirements of adjustment and reform of the PLA scale and structure, the total numbers of graduate students and doctoral students to be recruited by the PLA colleges and institutions will be reduced in 2017, among whom the number of graduate students will be reduced to 6,000 and that of doctoral students to 1,475, a decrease of 16.7 percent and 19.2 percent year-on-year respectively. The goals of the enrollment plan in 2017 are to reduce the enrollment of students majoring in science, engineering and medicine, and to increase the recruitment of those majoring in military-related fields, especially the fields that are closely related to construction of new-type combat forces, including strategic early-warning, military aerospace, air defense and anti-missile, information-based operation, and strategic projection.
China on Monday donated two Y12E aircraft to Costa Rica to support its security forces, a move hailed as heralding "a new era of aeronautics" in Costa Rica by President Luis Guillermo Solis. The president later told Xinhua the aircraft are "essential" and "give the country great mobility in attending to two major tasks on our agenda: protecting our national sovereignty in the fight against drug trafficking and attending to our people in times of catastrophes or disasters." Prior to the handover ceremony, four SVA pilots and six Costa Rican mechanics traveled to China to learn about flying the 17-seat aircraft.
China and Malaysia Sign Wide Ranging Naval Co-operation Deal | Financial Times (requires subscription)
China and Malaysia signed several trade and investment deals on Tuesday as China denied that it was trying to buy better ties with its southern neighbor. Most significantly, the two nations agreed to a wide-ranging naval cooperation deal in which they will jointly develop coastal patrol vessels. As part of the deal, Malaysia has agreed to buy four Chinese naval vessels, Malaysian state media reported. Two will be built in China and two in Malaysia.
Fed by double-digit budget hikes, the nation's flying force, like its naval and land counterparts, has modernized its arsenal from the days when it depended on Soviet castoffs. "China's military aircraft are improving in terms of the speed of innovation and the ability to innovate," says Gao Feng, a Chinese military analyst. "Compared to some European countries, China can make new military aircraft faster. The R&D cycle is shorter and shorter." China's military upgrade may be only natural for an incipient superpower, especially one that is embroiled in various territorial disputes. But the growing military-industrial complex is also big business for Beijing.

Lieutenant General Zhang Shengmin has just assumed the position of political commissar of the newly founded Logistic Support Department under the direct leadership of the Central Military Commission--filling the void left by General Liu Yuan, who resigned 10 months ago, sources say. A mainland media source, who confirmed Zhang's appointment, said he would enjoy a deputy military-region-level status, rather than a full military-region-level status, despite succeeding Liu--the son of former president Liu Shaoqi--who held a full military-region-level status before his retirement. 

In the past 10 years, there has been a fundamental shift in the capabilities of the Vietnam People's Army, which for the first time has the ability to project power and defend maritime interests. No country in Southeast Asia has put more military hardware online in the same period of time as Vietnam. This military modernization has been driven almost exclusively by the threat posed by China over territory in the contested South China Sea.
Can Russia Sustain Its Military Capability? | The Jamestown Foundation

Given the structural economic crisis that has been aggravated by declining energy prices and Western sanctions we must also probe the question as to just how sustainable Russian defense policy is. The argument advanced here is that Putin has reconfigured the system throughout his 16-year tenure in office to produce a system resembling in critical respects the Soviet one. Therefore despite the pressures now operating on the system, it can for some time to come provide the Russian military with modern conventional and nuclear weapons even though it will probably not realize the full demands of the government. Nevertheless, and despite the strong constellation of interests favoring this militarization, it will increasingly run into difficulties given the structural problems plaguing Russia.

India's space capabilities helped its armed forces acquire actionable intelligence on the terrorist launch pads in Pakistan-occupied Kashmir that were destroyed during the recent surgical strikes by India's military. After the strikes, the Indian Space Research Organisation (ISRO) highlighted, for the first time, its role in India's national security. Its leadership declared that the organization will not be found lacking from securing the country's national interests. Although security is an integral part of the country's socio-economic development, ISRO previously held reservations against such declarations owing to the unstable political and diplomatic relationship of India with the West, particularly the United States. The changing perceptions of high-end technologies, due to the geopolitical and security circumstances of India, is the driving factor in this change.