¹ Melman, Seymour and Dumas, Lloyd J., “Planning for economic conversion,” The Nation, 16 04 1990, p. 509Google Scholar;

² Commission on Science, Technology and Industry for National Defence (COSTIND), Science and Technology Intelligence Agency (ed.), Shijie junshi gongye gailan (Survey of World Military Industry) (Beijing: National Defence Industry Publishing House, 1990), p. 107Google Scholar; COSTIND's origins and role in conversion are discussed later in this article.

³ Miggiano, Paolo et al. , “Arms production,” in Stockholm International Peace Research Institute, SIPRI Yearbook 1992: World Armaments and Disarmament (Oxford: Oxford University Press, 1992), Table 9.5, p. 375Google Scholar; The military industries referred to throughout this aricle are those under the six present or former industrial ministries and departments: nuclear, aerospace, aeronautics, electronics, ordnance, shipbuilding. Weapons-producing plants under the PLA are not included, although many also produce civilian goods. For further discussion of the definitional problem of the term “military industries,” seeFolta, Paul Humes, From Swords to Plowshares? Defense Industry Reform in the PRC (Boulder, CO: Westview, 1992), pp. 112–13Google Scholar;

⁴ While some Western accounts exaggerate China's conversion programme by omitting to mention the expanding production of armaments, others fail to mention Chinese efforts at all. An example of the latter isAdelman, Kenneth L. (former director of the U.S. Arms Control and Disarmament Agency) and Augustine, Norman R. (chairman and CEO of Martin Marietta), “Defense conversion: bulldozing the management,” Foreign Affairs, Vol. LXXI, No. 2 (Spring 1992), pp. 26–47CrossRefGoogle Scholar;

⁵ These goals have usually been cast in terms of GNP ($1 trillion) and per capita income ($800) by the year 2000. For example, seeXiaoping, Deng, Fundamental Issues in Present-Day China (Beijing: Foreign Languages Press, 1987), p. 47Google Scholar;

⁶ Zhude, Jin and Benliang, Chai, “China's experience: a case study,” paper prepared for the United Nations Conference on Conversion, Moscow, 13–1708 1990Google Scholar;

⁷ SeeSu, Chi, “Sino-Soviet relations of the 1980s: from confrontation to conciliation,” in Kim, Samuel S. (ed.), China and the World: New Directions in Chinese Foreign Relations (Boulder, CO: Westview, 2nd ed., 1989), p. 117Google Scholar;

⁸ Levine, Steven I., “Sino-American relations: renormalization and beyond,” in Kim, , China and the World, pp. 91–92Google Scholar;Xiaoping, Deng, Fundamental Issues, pp.4, 46–47Google Scholar; Deng Xiaoping, speech of 16 January 1980, quoted inBarnett, A. Doak, China's Economy in Global Perspective (Washington, D.C.: The Brookings Institution, 1981), p. 72Google Scholar;

⁹ The period of gradual Sino-Soviet rapprochement is roughly framed by the 1981 visit to China of I. M. Kapitsa, head of the Far Eastern Section of the Soviet Foreign Ministry, and the visit of the first deputy chairman of the Soviet Council of Ministers, I. V. Arkhipov, at the end of 1984. SeeMedvedev, Roy, trans. Shukman, Harold, China and the Superpowers (Oxford: Blackwell, 1986), pp. 156–168Google Scholar; andLevine, Steven I., “Chinese foreign policy in the strategic triangle,” in Dreyer, June Teufel (ed.), Chinese Defense and Foreign Policy (New York: Paragon, 1988), pp. 70–72Google Scholar;

¹⁰ Huan Xiang, director of the Center for International Studies under the State Council, was one of the main articulators of the new strategy, although it has been suggested that Zhao Ziyang was its originator. SeeXiang, Huan, “On Sino-U.S. relations,” Foreign Affairs, Vol. LX, No. 1 (Autumn 1981), p. 47Google Scholar;Dezhi, Yang, “A strategic decision on strengthening the building of our army in the new period,” Hongqi (Red Flag), No. 15 (1 08 1985), trans. Joint Publications Research Service (JPRS)/CRF, No. 85–020 (17 September 1985), p. 4Google Scholar;Dezhi, Yang, Xiang, Huan et al. , Guofang fazhan zhanlue sikao (Thoughts on National Defence Development Strategy) (Beijing: PLA Press, 1987)Google Scholar; For an analysis of the re-evaluation of these previously sacred doctrines seeShambaugh, David, Beautiful Imperialist: China Perceives America, 1972–1990 (Princeton: Princeton University Press, 1991), ch. 2Google Scholar;

¹¹ An early statement of this position was Premier Zhao Ziyang's Report on the Work of the Government, 15 May 1984; in Beijing Review, No. 24 (11 June 1984), pp. x–xii.

¹² See, for example, Huan Xiang's essay, “The future international environment and our national defense construction”, inDezhi, Yang and Xiang, Huan, National Defence Development Strategy, pp. 6–26Google Scholar: “Concentrate on the Four Modernizations,” Hongqi, No. 3 (1 February 1980), in JPRS, No. 75425 (2 April 1980), pp. 12–16;Mouhong, Xue, “The new situation in our country's diplomacy,” Hongqi, No. 6(16 03 1986), pp. 19–24Google Scholar;Xiang, Huan in Renmin ribao, 2 01 1988, p. 6Google Scholar; Foreign MinisterQichen, Qian, “A year in which the international situation seems to have improved,” Renmin ribao, 17 12 1988, p. 2Google Scholar;

¹³ The figure is fromLi, Nie and Guomo, Huai (eds.), Huigu yu zhanwang: xin Zhongguo de guofang kejigongye (Retrospect and Prospect: New China's National Defence Science-Technology Industries) (Beijing: Guofang gongye chubanshe, 1989), p. 125Google Scholar; I am indebted to an anonymous reviewer for providing this source. A different set of figures on defence firms is provided byZhude, Jin and Tiejun, Guo, “An exploration of the multiplier effect in national defence,” in Beijing Association of Defense Economic Research (ed.), Guofang jingji fazhan zhanlue lunwenji (Essays on National Defence Economic Development Strategy) (Beijing: PLA Press, 1987), p. 46Google Scholar; They state that China's military-industrial complex includes nearly 1,000 enterprises that specialize in the production of weapons and military equipment, over 200 research institutes, over 300,000 engineers and technical personnel, and nearly 3 million staff and workers. For comparison, the typical estimate of military enterprises in the former USSR is around 5,000. However, China's military industries constitute only a small proportion of all industrial enterprises, which (in 1983) was given as 393,000. SeeDong, Lu, “Uphold and speed up reform, attain better economic results,” Hongqi, No. 19 (1 12 1984), pp. 25–28Google Scholar; in JPRS-CRF-84–022 (4 December 1984), p. 3. Lu, formerly Minister of the Ministry of Aviation Industry, was Minister of the State Economic Commission at the time of this article.

¹⁴ The interior development strategy and its economic costs are examined byNaughton, Barry, “The Third Front: defence industralization in the Chinese interior,” The China Quarterly, No. 115 (09 1988), pp. 351–386Google Scholar; “Third line” or “third front” (sanxian) industries are located in all or parts of ten provinces in China's west and south-west, the main ones being Sichuan and Shaanxi.

¹⁵ “Defence industries in hinterland areas need restructuring,” China Daily (Beijing), 26 07 1989, p. 4Google Scholar; The figures given by this source are 483 third-line military industries (not including 92 research institutes) employing 1,350,000 engineers and workers.

¹⁶ Based on an interview ofChangqing, Zhou, deputy director of the Third Front Office of the State Council, in “Yige judadi jingji wutai” (”A giant economic stage”), Renmin ribao, 8 06 1987, p. 3Google Scholar;

¹⁷ Naughton, , “The Third Front,” p. 379Google Scholar; calculates that “China's annual industrial output is currently 10–15% below what it would have been if the Third Front had never been undertaken.”

¹⁸ Dajiang, Yu, “On third-line construction and establishment of a third-line development zone,” Junshi jingji yanjiu (Military Economic Research), No. 1 (1988), pp. 64–67Google Scholar;Shanchang, He (ed.), Guofang jingjixue (Defence Economics) (Hubei People's Press, 1988), p. 162Google Scholar; “Defence industries in hinterland areas need restructuring,” China Daily, 26 July 1989, p. 4.

¹⁹ Yu Dajiang, “On third-line construction”; Shanchang, He, Defence Economics, p. 162Google Scholar;

²⁰ Zhude, Jin and Tiejun, Guo, “The multiplier effect,” p. 46Google Scholar;

²¹ Shanchang, He, Defence Economics, p. 162Google Scholar;

²² See The New York Times, 27 August 1981, I-B p. 2.

²³ Luye, Wang, “The purpose of national defence technology industries in the national economy,” Renmin ribao, 29 12 1989, p. 2Google Scholar;

²⁴ The other major objective is to sell weapons and other military-use items. SeeGillespie, Richard E., “The military's new muscle,” China Business Review, Vol. XVI, No. 5 (09–10 1989), pp. 30–31Google Scholar;

²⁵ Folta, , From Swords to Plowshares, pp. 3–4Google Scholar;

²⁶ See his speech to the Chinese Communist Party (CCP)'s Central Military Commission in December 1977, inSelected Works of Deng Xiaoping, 1975–1982 (Beijing: Foreign Languages Press, 1984), p. 94Google Scholar; In the speech Deng emphasized budget limitations and said: “Our national defence can be modernized only on the basis of the industrial and agricultural development of the country as a whole. However, if we do our work well, we can speed up the improvement of our military equipment within the country's present capabilities.”

²⁷ Shambaugh, David L., “China's defence industries: indigenous and foreign procurement,” in Godwin, Paul H. B. (ed.), The Chinese Defense Establishment: Continuity and Change in the 1980s (Boulder, CO: Westview, 1983), pp. 50–51Google Scholar; Shambaugh's article remains one of the best scholarly writings on Chinese defence organization and economics, a field that still has only a scanty literature.

²⁸ See, for example,Shangchang, He, Defence Economics, pp. 139–142Google Scholar;

²⁹ China Daily, 31 July 1988, p. 1.

³⁰ Xinxiong, Jiang, president of China National Nuclear Corporation, in State Planning Commission and COSTIND (eds.), Zhongguo guofang gongye junminjiehe shizhounian zhuanji (Special Edition on the Tenth Anniversary of Military Conversion in China's Defense Industries) (Beijing: Ordnance Industry Publishing House, 1990), p. 20Google Scholar;

³¹ Dingfang, Li, vice-chairman of the China National Nuclear Corporation, in China Daily, 8 August 1990, p. 1Google Scholar; Li's greatest concern is that civilian output can be developed fast enough to create jobs for 40,000 industry workers idled by reduced military production. In 1990, civilian output continued its rise as a proportion of nuclear-industry production - to 48%.Miggiano, , “Arms Production,” Table 9.5, p. 375Google Scholar;

³² China Daily, 25 February 1992, p. 1. The actual figure is 54%.

³³ See China Daily, 19 August 1989, p. 2 (which refers to 121 military industries), and Renmin ribao, 4 December 1991, p. 1 (which refers to the same number of “projects”). The cost of this relocation is given at over 3 billion yuan byCheung, Tai Ming, “On civvy street,” Far Eastern Economic Review, 6 02 1992, p. 43Google Scholar;

³⁴ Interview of a member of the Shaanxi Province Office of Science, Technology and Industry for National Defence, Department of Civilian Products, 6 August 1989. For similar conclusions based on the experience of Sichuan province, see Renmin ribao, 9 July 1987, p. 3.

³⁵ Renmin ribao, 8 June 1987, p. 3, interview of Zhou Changqing, deputy director of the third-front office of the State Council.

³⁶ Shambaugh, , “China's defense industries,” p. 46Google Scholar;

³⁷ Frieman, Wendy, “China's military R&D system: reform and reorientation,” in Simon, Denis Fred and Goldman, Merle (eds.), Science and Technology in Post-Mao China (cambridge, MA: Harvard University Press, 1989), p. 256Google Scholar;

³⁸ Ibid. p. 266.

³⁹ The premier source on the background and activities of the COSTIND is Ostrov, Benjamin C., Conquering Resources: The Growth and Decline of the PLA's Science and Technology Commission for National Defense (Armonk, NY: M. E. Sharpe, 1991)Google Scholar;

⁴⁰ The 1990 COSTIND publication cited in n. 2 (pp. 101, 107) states that the CMC works “through COSTIND … in exercising leadership and management of R&D on the armed forces' weapons and equipment, and of testing.” On the government side, as the result of a joint decision of the State Council and the CMC in July 1986, COSTIND is “also a comprehensive office [zonghe bumen] of the State Council to manage the work of all industrial offices in national defence scientific research, military production (including aerospace), and military exports.” Since 1983, according to interviews with COSTIND officials in 1990, the role of the State Planning Commission (SPC) has been to designate the products to be manufactured by converted enterprises, and to referee conflicts between military and civilian industries over production of civilian goods. A Chinese source informed me in early 1992 that a new directive puts all military industries under the State Council, with the SPC responsible for day-to-day matters such as budgeting and manpower.

⁴¹ Ostrov, , Conquering Resources, pp. 63–64Google Scholar;

⁴² Formation of COSTIND seems clearly to be linked to resistance by some senior defence establishment officials in 1981 and 1982 to Deng Xiaoping giving priority to national economic reforms over miliary modernization. See the discussion inFolta, , From Swords to Plowshares, pp. 31–33Google Scholar;

⁴³ This includes a direct role, he writes, in budget formulation, allocations and monitoring in areas such as weapons procurement and basic and applied research. Ibid. pp. 67–68.

⁴⁴ COSTIND, Survey of World Military Industry, p. 109Google Scholar;

⁴⁵ On the last point, see Renmin ribao, 21 June 1987, p. 4. The article reports that COSTIND for the first time issued a planning document, called the “Planning Directory” (jihua zhinan), which specified the main items of technological research to be carried out by military industries. The areas covered were said to include lasers, computers, man and machine environment, the atmosphere and water power.

⁴⁶ Renmin ribao, 21 April 1987, p. 1.

⁴⁷ From interviews with Shaanxi Province COSTIND office. See the case study below on Xian Aircraft Company.

⁴⁸ Renmin ribao, 12 December 1988, p. 4.

⁴⁹ Shambaugh, David L., “China's national security research bureaucracy,” The China Quarterly, No. 110 (06 1987), pp. 282–85Google Scholar;

⁵⁰ Chunting, Zhang, “The youth movement in the top leadership of the Chinese military,” Liaowang zhoukan (Outlook Weekly, Hong Kong, overseas ed.), No. 43 (28 10 1985), p. 27Google Scholar;

⁵¹ See, for example,Zhenduo, Song and Guisheng, Ku, Guofang jingjixue gailun (Outline of Defence Economics) (Changsha: Hunan People's Press, 1986), pp. 141–42Google Scholar; 166–67; He Shanchang, Defence Economics;Zhude, Jin and Zaifang, Chen, “Several issues in China's defence economics,” in Preparatory Group of the Research Committee on Defense Economics in China (ed.), Guofang jingjixue lunwenji (Essays on Defence Economics) (Beijing: PLA Press, 1986), pp. 30–39Google Scholar;

⁵² Note, for example, the following remark: “To put it a bit unkindly, so-called planning and programming in fact was simply a matter of increasing or reducing figures sent forward by the various departments.”Zhude, Jin and Zaifeng, Chen, “Several issues,” p. 31Google Scholar;

⁵³ Zhenduo, Song and Guisheng, Ku, Outline of Defence Economics, p. 141Google Scholar.

⁵⁴ Frieman, , “China's military R&D system,” p. 268Google Scholar;

⁵⁵ Zhude, Jin and Zaifeng, Chen, “Several issues,” p. 39Google Scholar;

⁵⁶ Yongen, Liu and Zili, Sang, “Some of China's military-industrial technology secrets are turned over to civilian use,” Liaowang zhoukan (overseas ed.), No. 10 (7 03 1988), pp. 14–15Google Scholar; According to this article, the basic decision on reducing excessive secrecy for conversion was made by COSTIND in March 1987. Establishment of the newspaper, Jungongjishu minyongbao (Military to Civilian Weekly), and of the semi-official CAPUMIT (China Association to Promote the Peaceful Use of Military-Industrial Technology), which is attached to COSTIND, were among the vehicles chosen by COSTIND to speed up the application of military technology to civilian production.

⁵⁷ For example, see Shanchang, He, Defence Economics, p. 13Google Scholar;

⁵⁸ Zhenduo, Song and Guisheng, Ku, Outline of Defence Economics, p. 141Google Scholar;

⁵⁹ For petroleum, the profit margin was about 75%; for electricity, 72%; and for machinery, 21%. The year is not given.Zitong, Ye, “On the commodity character of military products and reform of the price system,” in Preparatory Group, Essays on Defence Economics, pp. 243, 246Google Scholar;

⁶⁰ Xiaoping, Deng, Selected Works, p. 154Google Scholar; He pinpointed five problems within the army-“bloating, laxity, conceit, extravagance and inertia”-and emphasized the need to “streamline the army establishment, and restructure it as a whole.”

⁶¹ Yuqi, Jiang (ed.), Zhongguo guofang jingji fazhan zhanlue yanjiu (Studies in China's National Defence Economic Development Strategy) (Beijing: National Defence University Press, 1990), Table 1, p. 31Google Scholar;

⁶² Ibid. Table 2, p. 35.

⁶³ Sivard, Ruth Leger (ed.), World Military and Social Expenditures 1989 (Washington, D.C.: World Priorities, 1990), p. 52Google Scholar; The Chinese prefer to calculate on the basis of national income. Accordingly, official defence spending, which was over 6% of national income during all the years from 1950 to 1979, dropped precipitously in the 1980s, and was only 2.29% per cent in 1987.Yuqi, Jiang, Studies, p. 39Google Scholar;

⁶⁴ U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers 1986 (Washington, D.C.: Government Printing Office, 1987), Table 1, p. 70Google Scholar;

⁶⁵ U.S. Central Intelligence Agency, National Foreign Assessment Center, Chinese Defense Spending, 1965–79 (Washington, D.C., 07 1980)Google Scholar;

⁶⁶ I am indebted to Milton Leitenberg of the Center for International Strategic Studies, University of Maryland, for having originally brought this matter to my attention. Weapons procurement alone, for example, is said to have averaged from 25 to 33% of the official military budget total between 1978 and 1986.Folta, , From Swords to Plowshares, pp. 21, 218Google Scholar;

⁶⁷ SIPRI analysts estimate that in 1991 the PLA and military industries took about $12 billion, or double the official military budget.Deger, Saadet and Sen, Somnath, “World military expenditure,” in SIPRI Yearbook 1992, p. 248Google Scholar; See alsoLewis, John W., Di, Hua and Litai, Xue, “Beijing's defense establishment: solving the arms-export enigma,” International Security, Vol. XV, No. 4 (Spring 1991), p. 90Google Scholar; n. 3. They note that “unspecified block grants” from the State Council to the CMC for dual civilian-military use are also outside the regular defence budget.

⁶⁸ Yuqi, Jiang, Studies, p. 40Google Scholar;

⁶⁹ Folta, , From Swords to Plowshares, p. 20Google Scholar;

⁷⁰ Dreyer, June Teufel, “The demobilization of PLA servicemen and their reintegration into civilian life,” in Dreyer, (ed.), Chinese Defense and Foreign Policy, pp. 304–319Google Scholar; Dreyer found many instances of rebelliousness in the PLA that frustrated the political leadership's efforts to reduce its size by any substantial amount.

⁷¹ See Xiaoping, Deng, Selected Works, p. 373Google Scholar;

⁷² See, for example, Renmin ribao, 3 April 1986, p. 1; 5 April 1987, p. 1.

⁷³ Renmin ribao, 24 July 1987, p. 1.

⁷⁴ Renmin ribao, 10 February 1987, p. 4.

⁷⁵ Folta, , From Swords to Plowshares, p. 27Google Scholar;

⁷⁶ Renmin ribao, 5 August 1987, p. 2.

⁷⁷ State Council Office, Small Group on Military Cadre Transfers and Relocations (ed.), Jundui zhuanye ganbu anzhi gongzuo yanjiu (Research on Military Cadre Transfers and Relocations) (Beijing: Laodong renshi, 1985), p. 11Google Scholar; Still other problems are recounted byDreyer, , “Demobilization,” pp. 321–23Google Scholar; Dreyer also raises questions about the claim that the one million target actually was reached.

⁷⁸ Based on a visit in August 1989 and interviews with the executive vice-president and chief engineer.

⁷⁹ Only a few older PLA cadres have been retrained, XAC's production manager said. Retraining is a difficult task in light of their age, prior training and educational level.

⁸⁰ According to Minister Lin Zongtang, civilian products have increased from 16% in 1980 to 75% in 1988 as a proportion of output value.State Planning Commission and COSTIND, Special Edition, p. 13Google Scholar;

⁸¹ Renmin ribao, 9 December 1988, p. 5.

⁸² Sales abroad by the industry were US$294 million in 1990. Best-selling civilian items are the Y-12 (a 17-seat commercial plane), MD-82 trunkline aircraft, helicopters, and launching services for Long March rockets. The export corporations areChina Aero-Technology Industry Corporation (CATIC), Great Wall Industry Corporation (GWIC), and China Precision Machinery Industrial Economic Corporation (CPMIEC). See China Daily, 11 08 1990, p. 1Google Scholar; and Renmin ribao, 16 October 1991, p. 1.

⁸³ Based on interviews in 1990 and 1991 with Shenzhen city officials and numerous snterprise heads.

⁸⁴ Interview of the vice-general engineer, 24 August 1990.

⁸⁵ Information from interviews in Shenzhen, 22 August 1991.

⁸⁶ Based on interviews of the Languang general manager and senior staff in Shenzhen, 20 August 1991.

⁸⁷ Interviews in Beijing, August 1991, with COSTIND officials.

⁸⁸ Huai Guomo, “Open up new areas of conversion through enhanced international co-operation,” speech at the UN Centre for Science and Technology in Development international conference on conversion, Dortmund, Germany, 27 February 1992. Huai is vice-minister of COSTIND.

⁸⁹ Sneider, Daniel, “Defense industry shift in Russia is stalled,” The Oregonian (from the Christian Science Monitor), 26 11 1992, p. A20Google Scholar;

⁹⁰ In the case of dual-use products (e.g. helicopters), whether they are counted as “civilian” or “military” depends, according to some Chinese managers I interviewed, on the end-use of the product. But other enterprise officials said it depended on the funding source.

⁹¹ Tao, Li, “The strategic question of the arms industry's developing the production of civilian products,” Foreign Broadcast Information Service - China, 25 09 1984, p. K12Google Scholar;

⁹² The New York Times, 27 August 1981, I-B/p. 2.

⁹³ Bin, Zhang, vice-head of the PLA General Logistics Department, in State Planning Commission and COSTIND, Special Edition, p. 22Google Scholar;

⁹⁴ See Folta, , From Swords to Plowshares, pp. 116–18Google Scholar;

⁹⁵ Figures that would enable a judgment of the efficiency of military-industrial firms are hard to find and fuzzy. Jin Zhude of CAPUMIT says that during the Seventh Five-Year Plan (1986–90), the state “raised funds for the updating and construction of some 300 key production lines… with an investment of over 1.8 billion yuan (mainly in the form of loans).” But his text implies that this amount represents only a portion of total state support. ( Zhude, Jin, “Study on China's policies of conversion of defence industries,” paper presented to the UNCSTD conference on conversion in Dortmund, Germany, 24 02 1992Google Scholar;)Bin, Zhang (in State Planning Commission and COSTIND, Special Edition, p. 22Google Scholar) states that from 1985 to 1988 the total state investment in military industries was over 500 million yuan, which seems too low.Cheung, Tai Ming (“On civvy street,” p. 42Google Scholar) writes that “taxes paid by the [military] industry between 1979 and 1989 totalled RMB 1.6 billion, a tiny sum given the industry's civilian output of roughly RMB 60 billion in the same period.”

⁹⁶ Folta, , From Swords to Plowshares, p. 119Google Scholar;

⁹⁷ As noted earlier, China's conversion process has been consistently informed by the experiences of other countries, including the role of technology spin-offs from military research and production (e.g. in the Reagan-Bush SDI programme). The view here is that Chinese analyses exaggerate the importance of spin-offs. This may be deliberate, to lend further support to the value of military conversion. In any case, a closer analysis is required of the actual economic benefits from spin-offs when matched against the level of expenditures and alternative investments. For critical discussions of the issue in the U.S. context, see Nathan Rosenberg, “Civilian ‘spillovers’ from military R&D spending: the American experience since World War II,” paper for the Conference on Technical Co-operation and International Competitiveness, 2–4 April 1986, Lucca, Italy; andDeGrasse, Robert W. Jr, “The military economy,” in Gordon, Suzanne and McFadden, Dave (eds.), Economic Conversion: Revitalizing America's Economy (Cambridge, MA: Ballinger, 1984), pp. 12–15Google Scholar;

⁹⁸ The comparable figure for the output of the electronics and shipbuilding industries was an estimated 17.4% (in 1988).Folta, , From Swords to Plowshares, Table 3, p. 120Google Scholar;

⁹⁹ Zhude, Jin and Benliang, Chai, “China's experience,” p. 8Google Scholar;

¹⁰⁰ To obtain this figure, I have taken the average of 1978–80 official military spending (19.47 billion yuan) as a benchmark, and simply compared the average over a 12-year period (1980–91) with the actual total of official military spending for the same period (259.71 yuan). (Figures for 1979–86 are fromYuqi, Jiang, Studies, Table 1, p. 31Google Scholar; and for 1987–91, fromFolta, , From Swords to Plowshares, Graph 1, p. 19Google Scholar;) The theoretical saving is the difference in the totals. In fact, however, we do not know (among other things) how much money was saved, how much was used to subsidize military industries not engaged in conversion, and how much went to productive non-military purposes.

¹⁰¹ Goldberg, Carey and Broder, John, “Putting ax to Soviet military,” Los Angeles Times, 10 09 1991, p AlGoogle Scholar;

¹⁰² These observations are based on personal observation in China; but most of them are also recited by Chinese enterprise managers in interviews. In addition, see similar remarks by the general director of NORINCO,Lailie, Jin, interviewed in Jungongjishu minyongbao (Military to Civilian Weekly), Beijing, 16 05 1989, p. 3Google Scholar; andTao, Li, “Outline on the development of civilian products” (unpub. lecture, Ministry of Ordnance Industry, Research Institute of Technology and Economics, 1986)Google Scholar;

¹⁰³ Speech byGuomo, Huai in Jungong jishu minyongbao, 22 08 1989, p. 1Google Scholar; The comparative profit margins of civilian and military goods produced in the same converted enterprise seem to vary quite a bit,Folta, (From Swords to Plowshares, pp. 187–88) reportsGoogle Scholar;

¹⁰⁴ Interview with COSTIND researchers in Beijing, August 1988.

¹⁰⁵ Cheung, Tai Ming, “On civvy street,” p. 40Google Scholar; citing Vice-Premier Zhu Rongji.

¹⁰⁶ Zhude, Jin, “Prospect on the peaceful use of military industrial technologies in China,” paper prepared for the International Conference on China's 2000–Oriented Scientific and Technological Policy, Beijing, 25–31 10 1992, p. 8Google Scholar;

¹⁰⁷ One senior figure involved in China's conversion made this point indirectly by contrasting China and the West. In the West, he said, military factories can be closed down and unemployed workers put on welfare in response to economic conditions. But “China is a socialist country. It tends to resolve the problem from within the military enterprise.” China cannot afford such welfare funds. Moreover, its third-line industries, which have no parallel in the West, pose special difficulties that can only be resolved through gradual conversion to civilian production rather than by bailing them out with state funds. Interview in Beijing, 1990.

¹⁰⁸ Lewis, , Di, Hua and Litai, Xue, “Beijing's defense establishment,” pp. 91–92Google Scholar; On the importance and variety of so-called ”guanxi networks” in national security bureaucracy generally, seeShambaugh, , “China's national security research bureaucracy,” pp. [280–82Google Scholar;

¹⁰⁹ SeeFrieman, , “China's military R&D system,” pp. 272–73Google Scholar; Defence think tanks such as CAPUMIT indicate in their official publications that international co-operation to promote the “peaceful use of military industrial technologies”-which I understand as increased contact with foreign military and civilian organizations to facilitate the acquisition of technology - is among their objectives. In a paper by two of CAPUMIT's scholars, in fact, conversion is referred to as a “transition” of military resources to use in both economic and military modernization.Zhude, Jin and Benliang, Chai, “China's experience,” p. 2Google Scholar;

¹¹⁰ Lewis, , Di, Hua and Litai, Xue, “Beijing's defense establishment,” pp. 101–103Google Scholar;

¹¹¹ See, for example, Zhenduo, Song and Guisheng, Ku, Outline of Defence Economics, p. 174Google Scholar;

¹¹² Evidently, the Russian government has also come to the conclusion that conversion should not exclude an active programme of arms sales. The political decisions have already been taken to boost arms sales amidst planning for conversion, and to modernize military plants so that they can be more competitive in the arms export market. See International Herald Tribune, 24 February 1992, p. 2 and New York Times, 24 February 1992, p. 1.

¹¹³ The lower estimate is inDeger, and Sen, , SIPRI Yearbook 1992, p. 248Google Scholar (based on arms sales revenue in 1988 of about $1 billion). The higher estimate is by Paul H. B. Godwin, “Soldiers and statesmen: Chinese defense policies in the 1990s,” inKim, , China and the World, p. 196Google Scholar;

¹¹⁴ “China invents the entrepreneurial army,” The Economist, 14–20 May 1988, p. 68;Deger, and Sen, in SIPRI Yearbook 1992, p. 248Google Scholar;

¹¹⁵ Kaifang yuekan (Opening Monthly, Hong Kong), 09 1990Google Scholar; trans, inInside China Monthly (Taipei), Vol. XII, No. 11 (11 1990), pp. 26–28Google Scholar;

¹¹⁶ On the figures, seeDeger, and Sen, , SIPRI Yearbook 1992, p. 247Google Scholar; They note that 1990 and 1991 military spending was especially high as a percentage of central government expenditures (over 21% each year).

¹¹⁷ The following discussion is based mainly on conversations with various authorities in Beijing over the past two years. See alsoYuqi, Jiang, Studies, pp. 17–18Google Scholar; 40;Jencks, Harlan W., “The Military in China,” Current History, 09 1989, pp. 265–68Google Scholar; 291; andLewis, , Di, Hua and Litai, Xue, “Beijing's defense establishment,” p. 103Google Scholar; On announcing the 1991 military budget increase, Premier Li Peng specifically cited the need to “develop defence science and technology, focusing on research in and manufacture of new weapons and equipment to modernize” the PLA's armaments. “Report on the outline of the Ten-Year Programme and of the Eighth Five-Year Plan for national economic and social development” to the Fourth Session of the Seventh National People's Congress, 25 March 1991, in Beijing Review, No. 15 (15–21 April 1991), supplement p. xiii.

¹¹⁸ Yuqi, Jiang, Studies, pp. 40–41Google Scholar.

¹¹⁹ For example,ibid. pp. 17–18.

¹²⁰ See, for example,Dexiang, Jin, “The world in 1990s: more unrest,” Xiandai guoji guanxi (Contemporary International Relations), No. 6 (02 1991), pp. 6–7Google Scholar;

¹²¹ The PRC leadership's insecurity these days stems mainly from what it calls “peaceful evolution” (i.e. the rise to power of pro-Western moderates), especially under the “new world order” in which national sovereignty is being eroded by international regimes and new global political values. Beijing's fear seems to be that foreign powers (especially the United States) may attempt to “impose” new standards of human rights and democracy on China. SeePeng's, Li speech to an Afro-Asian meeting of lawyers, in Renmin ribao, 13 03 1990, p. 1Google Scholar;

¹²² Gillespie, , “The military's new muscle,” p. 27Google Scholar;Cheung, Tai Ming, “Basic Marxist Training,” Far Eastern Economic Review, 23 08 1990, pp. 46–47Google Scholar;“An analysis of 'de-politicization of the Military',” Qiushi yuekan (Seek Truth Monthly, Beijing), No. 2 (1991)Google Scholar; trans, inInside China Mainland, Vol. XIII, No. 5 (05 1991), pp. 1–2Google Scholar; andShambaugh, David, “The soldier and the state in China: the political work system in the People's Liberation Army,” The China Quarterly, No. 127 (09 1991), especially pp. 551–568Google Scholar;