ABSTRACT
The formulation of the European Union’s policies of “constructive engagement” with the People’s Republic of China (PRC) cannot avoid issues of national security. Indeed, the development of economic strength is one of the key components of the Chinese conception of “comprehensive national security”. More concretely, one element of the Chinese national security context – the defence industrial complex – is particularly pertinent to EU concerns as it is an important part of the state-owned enterprise (SOE) system. Just as the Chinese economic reform program attempts to transform the SOEs, so too it attempts to reform the Chinese defence industrial complex (CDIC). While the CDIC in many ways represents a substantial accomplishment – China has produced a full range of mid-technology weapons, from small arms to ICBMs – it is also troubled. Faced with falling domestic procurement and the collapse of second and third tier suppliers, and caught between policies of economic liberalisation and the People’s Liberation Army’s (PLA) modernisation drive, the CDIC has been subject to a wide variety of policy solutions, from reorganisation and “conversion” to consolidation.
