September 19, 2017                                   Issue No. 23
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A senior Chinese space official and military officer has been promoted to run the People's Liberation Army's key equipment development department, the military said, part of a reshuffle ahead of next month's Communist Party congress. China's armed forces, the world's largest, are ramping up their capabilities with new equipment like aircraft carriers and stealth fighters as the country pursues a more assertive stance in the disputed East and South China Seas and seeks to project power far from home shores. In a brief story on its website about a military technology exhibition in Beijing, the Defense Ministry named Li Shangfu as the new head of the military's Equipment Development Department. It gave no other details of his appointment. According to his official resume, Li was previously director of one of China's main satellite launch sites in Xichang in the southwestern province of Sichuan and has been involved in missions to explore the moon.

Lieutenant General Zhou Yaning, 59, has taken over as chief of the Rocket Force, replacing General Wei Fenghe, who retired. The Rocket Force was known as the Second Artillery Corps until 2015 when it was renamed as part of President Xi Jinping's sweeping military overhaul. Zhou made his first public appearance as its new commander this week when he attended a ceremony paying tribute to Xiang Shouzhi, a Chinese general who died early this month, reported on Saturday. Like most Chinese generals, there is little information publicly available on Zhou. According to his official biography, Zhou joined the People's Liberation Army in 1976 and was promoted to the rank of lieutenant general in July 2016. Previously, Zhou argued in a 2011 paper that the missile forces should be focusing on new technologies rather than combat strategies, according to a post on a WeChat account run by the official Beijing News. "Warfare in the future will be largely dependent on weapons. Strategy will only help to refine and supplement the technology," Zhou was quoted as saying.

China Aerospace Science and Technology Corp. (CASC), the nation's defense industry conglomerate, has vowed to answer the government's call to complete key internal corporate reforms by the end of this year. Wang Zhanyu, deputy director of the department of strategy management at CASC, said at a media briefing that in addition to responding to the State Council's timeline to complete its corporate reforms by 2017, it has vowed to accelerate the process of spinning off its social functions by 2018, which is an essential part of deepening the reform of SOEs. It also plans to promote mixed ownership reform, through raising its asset securitization rate to over 45 percent by 2020. The restructuring is included in the broader SOE reforms administered by the State-owned Assets Supervision and Administration Commission, the top SOE watchdog.

China Electronics Technology Group Corp, a State-owned technology giant, will step up efforts to optimize corporate structure and encourage innovation amid the central government's deepening of State-owned enterprise reform.  "Our goal is to lead the development of China's electronics industry and build the cornerstone of national security," said Xiong Qunli, chairman of CETC. "We will ramp up resources to cultivate innovation and accelerate structural reform." As of August, the company has successfully integrated 19 research institutes to set up seven units, simplifying hierarchy, boosting operational efficiency and saving costs. CETC has already been working to overhaul its structure, which previously consisted of 47 electronic information research institutes. Such a fragmented structure led to a slate of problems such as scattered investments, redundant construction and disordered internal competition. "We have shifted our focus to five areas - military electronics, civilian products, international management, scientific and technological innovation, and asset management and capital operation," Xiong said.

China's military is preparing a sweeping leadership reshuffle, dropping top generals, including two that sources say are under investigation for corruption. The changes would make room for President Xi Jinping to install trusted allies in key positions at a key party congress that begins on Oct. 18. A list of 303 military delegates to the Communist Party Congress, published by the army's official newspaper, excluded Fang Fenghui and Zhang Yang, both members of the Central Military Commission. The commission is China's top military decision-making body.

A world-first collaboration between the University of New South Wales and the Chinese government, celebrated as a $100m innovation partnership, opens a Pandora's box of strategic and commercial risks for Australia, according to leading analysts. These include the potential loss of sensitive technology with military capability, an unhealthy reliance on Chinese capital and vulnerability to Beijing's influence in Australia's stretched research and technology sector. The UNSW Torch Innovation precinct, the first outside China, was unveiled last year. 29 Chinese partners and one Indian one - Adani Solar, a subsidiary of the resources giant - have signed on to the UNSW Torch project. They include at least seven firms working in industries with dual use military potential such as aerospace, GPS navigation, underwater cameras and nanotechnology. The research is not funded directly by the Chinese government but by the companies themselves.

When a massive military parade was staged at Zhurihe in Inner Mongolia on July 30, Chinese citizens, as well as people worldwide, saw a military taking solid steps toward a strong army. More than 12,000 service personnel from the army, navy, air force, armed police as well as the newly formed rocket force and strategic support troops took part in the parade, which also featured China's tanks, armored vehicles, missile launchers and fighter jets. President Xi Jinping reviewed the armed forces as part of the commemorations that marked the 90th founding anniversary of the People's Liberation Army (PLA), which fell on Aug. 1. Two days later, at a grand gathering in celebration of the anniversary, Xi, also general secretary of the Communist Party of China (CPC) Central Committee and chairman of the Central Military Commission, said the Chinese military has reshaped its political environment, organizational form, system of military strength and work style over the past five years. During those five years, China has advanced the reform of national defense and the armed forces under the leadership of the CPC Central Committee with Xi at its core, making historic steps in building a system of military strength with Chinese characteristics.

With its J-20 heavy fighter, China became the second nation in the world (after the United States) to field a fleet of stealthy fifth generation fighters. But until recently, there has been a key limitation for the J-20 heavy fighter, and Chinese aerospace in general: a reliance on foreign engines. That's looks to be changing, quickly. Images that just surfaced online show a new-built J-20 with stealthy WS-10 turbofan engines, which are developed and manufactured in China. These engines are distinguished by their serrated afterburner nozzles and interior flaps for manipulating the exhaust flow. Once these new J-20s enter service, China will have comprehensively mastered the major parts of fighter technology, including radars, stealthy fuselage, missiles, computers, and engines.

Last week, a court in Kiev froze a 56 percent stake in Motor Sich Company belonging to Beijing Skyrizon Aviation Industry Investment Co. amid allegations by the Ukrainian Security Service that the sale was illegal, and aimed at stripping the company of its assets and liquidating it. Commenting on the fate of the legendary company in an analysis piece for Sputnik, Russian military observer Vasily Kashin noted that the story surrounding the Ukrainian-Chinese military technology trade goes back decades.

China has put on display its first unmanned combat helicopter AV500W for foreign buyers in a bid to enlarge scope to market its military drones abroad, a media report said. Aviation Industry Corp of China, the state-owned aircraft manufacturer, has put the reconnaissance cum combat helicopter on display at the fourth China Helicopter Expo, the largest of its kind in China. The 7.2-meter-long aircraft, developed and produced at the AVIC Helicopter Research and Development Institute in Jingdezhen, Jiangxi province, has a maximum take-off weight of 450 kilograms, a maximum speed of 170 kilometers per hour, and a flight ceiling of 4,000 meters, state-run China Daily reported. 

China Aerospace Science and Technology Corporation (CASC) revealed plans for an autonomous multi-role surface vessel designed specifically for high-end naval operations at the 2017 International Ocean Science and Technology Exhibition in Qingdao. The D3000 unmanned oceanic combat vessel is capable of executing a range of anti-submarine and surface warfare missions as a standalone unit, although it can also be deployed as part of a manned fleet as a combat support element. Under development by the Beijing-based 13th Research Institute of CASC's Ninth Academy, the D3000 unmanned oceanic combat vessel is presently envisioned to be a 30 m-class unmanned surface vessel capable of operating out to a range of 540 nautical miles for up to 90 days, although its size can be further scaled up for greater range or payload capacity.

China is building the world's largest quantum research facility to develop a quantum computer and other "revolutionary" forms of technology that can be used by the military for code-breaking or on stealth submarines, according to scientists and authorities involved in the project. The National Laboratory for Quantum Information Science will be located on a 37-hectare site in Hefei, Anhui province. Some time this month developers will be invited to bid for a contract to construct the site, according to an article in the Hefei Evening News, a daily newspaper run by the city government. Pan Jianwei, China's lead quantum scientist who was playing a key role in the project, told local officials at a briefing in May that technology developed in the facility would be of immediate use to the armed forces, according to Anhui Business Daily newspaper.
Once reserved for the military, China's space-based positioning system is powering a rapidly growing range of domestic businesses that represent the fusion of the military and industry President Xi Jinping is trying to advance. Beidou is set to span the globe by 2020 with the launch of its 35th satellite. More than 150 million Chinese smartphones can already receive signals from its 23 existing satellites. By that year, the market for products and services that depend on the system is projected to balloon to 240 billion yuan ($36.9 billion)--four times the size in 2016. China's native satellite positioning system controlled less than 30 percent of the domestic market last year, behind the share held by GPS but is expected to expand its share to 60 percent by 2020. This is all part of the road map drawn by China's top leadership, which is putting BeiDou front and center of its efforts to expand military-industrial cooperation. President Xi designated what is officially called "civil-military integration" as part of a national strategy unveiled in March 2015.

If imitation is the sincerest form of flattery, then the authors of three Obama administration reports on artificial intelligence (AI) have received a heartfelt compliment from their Chinese counterparts. With China's July 2017 Next Generation Artificial Intelligence Development Plan, the country has announced that it, too, sees AI as the transformative technology that will underpin future economic and military power. China's plan calls for exceeding all other nations in AI by 2030, but the checklist for China's ambitious agenda is strikingly similar to the policies prescribed by the Obama administration's reports. The similarities go beyond the high-level objectives, even including many specific policy details and recommendations.

According to recent data released by the Stockholm International Peace Research Institute, Chinese exports of major arms increased by 74 percent between 2012 and 2016, and its share of global arms exports rose from 3.8 to 6.2 percent, making it the world's third-largest supplier in the world, after the United States and Russia. The geographic spread and number of recipients of Chinese weapons exports have also increased. In 2012-16, China delivered major arms to 44 countries. More than 60 percent of China's exports went to Pakistan, Bangladesh, and Myanmar and another 22 percent went to Africa. China also delivered major arms to ex-Soviet states for the first time, including the 2016 delivery of surface-to-air missile systems HQ9 to Turkmenistan.