China's Technology Modernizationrogress Report
A Research Paper
China's Technology Modernizationrogress Report
A Research Paper
China's Technology Modernization Program:
In/aimaitan available asanuary IQK8med in Ihii report
Deng Xiaoping down. Chinese officials have identified scientific and technological progressey to modernizing industry, agriculture, and national defense. But the impact of technology on specific national development priorities has varied considerably;
military has filled several key gaps in areas such as ground force weapons, communications, remote sensing, and tactical and strategic missile systems by acquiring Western equipment and productionand through indigenous development. Although China's defensive positionis the Soviet Union or the United Slates will remain largely unchanged, China's improved capability to project powerChina's roleegional military power.
The impact of the science and technology) reform program on the civilian economy is harder tois one of many factorsto the economic progress of thisit can be seen clearly in certain sectors. Beijing's success in improving technology in such areas as textiles, petroleum, consumer goods, and light industry hasajor factor in increased foreign exchange earnings from lextilcs, oil. and arms. It has also begun to alter China's imports and exports, as China has developed domestic substitutes for foreign consumer goods and has even begun to export production lines for black-and-white TVs and pharmaceuticals.
The importation of production lines and military production of civilian goods has also increased the quality and variety of consumer goods available, contributing lo ihe improved standard of living of the average Chinese.
The impact on agriculture has been less bul advances in plant and animal breeding, new cultivation techniques, and increased applications of pesiicides and fertilizers hold the potential for greater gains in the future.
China has had liule success in civilian applications of high-priority, advanced-technology sectors such as semiconductors, computers, and telecommunications. This failure will in our view hold back advancement in other high-priority areas, such as Ihe development of automated production capabilities and communications networks for business and government.
has increased ihc number and skills ofersonnel, and iscienlilic community thai is more capable and responsive io national needs, although these improvements are occuring more slowly lhan Beijing would like.
odernization program lhat has produced these results has seven interrelated goals that have evolved
Improve personnel management.
Reform research management.
Increase acquisition of.
Break down the barriers between civilian and military research and production.
Promote regional development.
Wc believe China has made significant strides toward rebuilding its scientific community, which was devastated by the Cultural Revolution, reforming funding and personnel procedures, and acquiring foreignProgress is less evideni in breaking down the barriers between organizations and in promoting regional development. Working conditions tend to be poor and keyas computerstill in short supply.
We believe additional progress will depend on China's leaders coming to gripsumber of interrelated problems, including:
Differences over priorities and the allocations of resources.
The balance between military and civilian needs.
The relative priority of basic and applied research.
Reliance on imported, versus the development of domestic, technology.
The proper role of economic incentives and market mechanisms toevelopment and use.
In addition,odernization program also suffers from infraslruc-tural shortcomings and problems of its own making. The Chinese have often imported advanced equipment ill suited to their needs. Compared with the production of older electronic goods, moreover, the use of new electronics technologies often requires different types of knowledge, more stringently controlled environments, and more competent managers and
assembly line personnel. Beijing's decision ai points to rely on indigenous technology has in some cases wasted resources, delayed completion of projects, and added lo thesocial costs, as when China decided to develop on itsepatitis vaccine when one was already available abroad.ommunity also has been guilty of setting unrealistic goals and making promises il could not keep.
Despite these problems, we believe the sheer size of China's investmentnd Chinese achievements to date indicate progress in research and commercial applications will continue. Only in the last few years have the key elements of the reform program begun to have an impact. Only now are students returning from overseas in sufficient numbers lo improve the educational system and research capabilities. Other long-term technology programs that have been slow to bearas joint projects between research institutes andbegin lo raise the technological capabilities of traditional industries. On the basis of programs already under way, wc foresee potential successes in military areas including lasers, optics, and space launch vehicles, while commercial development in areas such as biotechnology is promising.
odernization program creates both opportunities and problems for the United States. On the one hand. China's policymakers as well as individual scientists retain favorable altitudes toward the United Stales, which in some cases translatesreference for cooperation with US suppliers. Wc expect the returned students to strengthen this bias, although they will nol necessarily prevail over those who favor non-US or indigenous technology. On Ihc other hand, China's desire to protect domestic industries, diversify sources of imports, and obtain concessionary financing will compound the difficulties of selling US equipment to China. Moreover, Western technical assistance has increased the competitiveness of Chinese firms in such products as textiles and small manufactured goods.
Several aspects ofodernization program may pose more serious threats to US interests, China's aggressive armsdemonstrated by the Silkworm sales locomplicate the Sino-US relationship and undermine US foreign policy goals in other regions. The acquisition of advanced telecommunications equipment improves Chinese command and control, increases force projection Capabilities, andUS efforts to monitor civilian and military networks. China is
developing and should deploy7 mobile missile systems thai will add lo the uncertainly over the size and location of China's sirategic forces, and lhat couldactor in US-Soviet arms negotiations; Moscow has said negotiations on deep50strategic nuclear forces would have to consider third-country systems. And while China's defensive postureis Ihc Soviet Union or the United States will not change significantly, China'sapabilities and accompanying military improvements will increase Beijing's ability to project power against the nations on its periphery.
Science and Technology Promam
Meciing ihc Goal...
a long Way To Go
on Ihc Economy
fot Cautious Optimism
for th* United Suit*
Bibliography of Rcl.ileei Similes
Chronology of Chinese NAT
Technology Modernizationrogress Report
Scirmr unit Technology Procram Although China'* leadership has idcniificd piogrcss in science ind technology (SAeT)ey lo developing industry, agriculture, and national defense, ihccommunily hu had poor facilities, too few skilled personnel, insulnciem incentives for qualityand heavy politicalproblems thai were aggravated by the Cultural Revolution. In addition, iheof Chinese scientistshave been largely confined lo military needs. Chinese officials increasingly criticized bolh military and civilian rcseaich for ovcremphati7ing theoretical work, duplication of effori and waning resources, and an inability lo apply research results to improvingdtxti-fily.|
ellingroad program calling for basic and applied research in these priority areas: agriculture, energy resources, materialpace, high-energy physics, and genetics wilh China's other reforms,odernization program focused on broad goals rather than specific measures. And it contained littlethai Beijing had weighed thepohtical. andgiven great thought lo Ihe mechanics ofuch of this Jailer responsibility was subsequently delegated lo various stale council oversight organizations and lo individual enterprises and institutes.8 National Science Conference, which established the priority areas,that, if China was to close ihe gup wilh Ihc West as quickly ;i* possible, China would have to rebuild its SAT establishment and rcfocui scientific work to better meet national needs Beijing called an its scientific community lo.
Improve personnel skills and management Beijing recognized that new mechanisms were needed to upgrade and expand training, provide incentives, improve working conditions, and more ellcclivclyorkers.
Reform research management. Beijing called for replacing parly appointees with qualified scientists, and Increasing Ihe authority and rcsponsibilty of research direclors for planning research.
Change funding procedures Research insiitulcs were encouragedeek outside support form order to belter link research lo production.
Commercialize technology. Beijingommodity to be boughi and sold, subject lo market influences,ncourage research and innovation.
Acquire greater amounts of foreign science and technology Beijing recognized lhal technologywere key lo meeting immediate needs and io upgrading indigenous capabilities.
Break down ihe barriers between civilian andresearch and production By merging ihcisolated research systems. Beijing sought to improve ihc use of advanced technology in both sectors, and to increase the military's contribution io the civilian economy by using excess military production capacity ta produce civilian goods.
Promote icgional development. Beijing sought lo speed development of rural and remolc areas through Ihe dissemination of
Toward MeetMtg the Coal...
Progress toward realizing these goab has beenbut in our judgment China hat made significant strides in the lastears. Wc cannot quantify ihc progress, nor is it all due toreforms and China's broader political lies lo (he West are importantexamples of China'sSAT capabilities aboundhina
hronolojy ol Ihc key dcciWm jwl CiOcIhiukfH inxilvin* SAT mulctnidation
analysis of china '*odernization program incorporates information from the chinese press, statements by chinese officials, informalion from reliable leporting. and our knowledge of chinese political behavior and technological and industrial development. in our /udgmenl. public statements are useful sources of informalion. but like otherihey mutl be carefully scrutimied. chinese public statements serve many purposes, froma scientific contribution for worldnide knowledge and seeking enhanced inteerutional peestige. todomestic emus oj the value ofeforms or encouraging further indigenous technologythut. tome chinese statements on sdt achievements are remarkably candid about progress and remainingnd most reflect chinese intentions for technological development inr.mm>amm
someowever, arecapabilities or ignoring foreignachieve certain goals.
uclear-powered submarine, offered satellite launch services in other countries, andcivilian aircraft. China has developed more advanced producis in areas such as computers,eleeironics, medicine, and telecommunications, and knowledgeable foreign observers report research progress in bioicchiiolOEy. composite materials, and other fields. Chinese researchers have submitted0 patent applications since Chinaaicni la*5 (sec inset "Examining China's sat Claims" and figure Ufl
Wc believeeforms are also rebuilding Ihe scientific communily inio one thai is more capable and more responsive lo national needs (See inscirofile ofy rebuilding the domestic educational system and using overseas training, China is improving bath the number and skills of scientists. Students and scholars returning from study abroad arc working in every field China
China's Technology Cap'
designatedriority many of which are important for military purposes -and many have been promoted to positions where Ihey will have aimpact on China's future capabilities through both leaching and research. The Chinese pressfor example, that, at the Chinese Universily of Science and Technology, returned studentsew courses andeturnees now bead departments Similarly, to revitalize research management China has removed many unqualified party cadre from scientific work, and replaced overhinese Academy of Sciences (CAS) institutewilh younger, more Qualified persons. China alsoew basic science research foundation that seeks to improve research quality by choosingompetitive basis after peer review.
The introduction of funding changes, incentives, and commercial mechanisms are stimulating technology dcvelopmenl and transfer, according to Chinese and foreign observers (seeo prompt research institutes to work more closely wilh enterprises,is requiring Ihat institutes involved in technology devcioptnent become sell-supporting and is gradually reducing iheir state funding, many institutes will be required io merge with businesseso provide further incentives, collectives and individuals have been permitted to set up scientific or technical service organizations for profit Fven ihc prestigious Chinese Academy of Sciences,astion of basic science advocates, has set up some SO technical companies, with moreersonnel of high and middle rank engaged in technology development and transfer activities. Beijing is also setting up informationto make buyers awurc of available technology, offering paient protection for inventions, and drafting other legislation lo govern sales. |
These activities have been complemented by China's acquisition of foreign technology.hina has acquired more thanillion worth of foreign cquipmeni and technical assistance ihroughjoint ventures, and some illegal ncquisilions. It
A Profile ofcientific Community
The slit ofontingent hax doubted in eight yean, according to Chinese statistics.56ersonnel increased2 million7 million, including scientific researchers,nd agricultural,and engineering technicians.hinaecondary technical school* Icoenparednstitutes of higher'upnstitutes offeringtraining (compared with |
Organisations involved inlanning and owe sight alto have proliferated in recent years. To Improve coordination between China's five previously isolated research systems, Beijing established supra-ministerial leading groups lhal bring togetherresearchers, and technology users (see figure 2i. Policies encouraging Joint projects, such asresearch institutes to look to industry foe funding, are reducing the barriers between researchand between research and developmentorganisations and production enterprises |
7 million figure for scientific personnelwith minimal or no training, hut whose Jobs neverthelessesearch or technology componenl the number of skilled scientist* and researchers is far fewer. Withinivilian HAD o'tanirattons above the county level, forthere arecientists andccording to Chinese statistics. Moreover. Beijing defines scientists and engineers as persons who have the equivalentollege undergraduate degree ot higher at well as thoseenior middle school education. China particularly lacks technicalin sectors designated as priorities under the Seventh Five-Yeartransportation, and communications Agricultural technicians tire In short supply as well; on ihe average, of0 agricultural workers, only nine are scientists or(seend
has greatly expandedooperation with other.nvited0 foreign experts to visit China, and sent0 students and scholars abroad for training. Almost two-thirds have come to the United States.
More numerous contacts between military .indorganizations, and between universities undinslititct. arc, in our judgment, helping breakbaniers between segments of China's SitT communiiv, ihereby eliminating some of the duplica-Ison of effort, wasted resources, and isolation lhal have long characterized the science sector. Military enterprises have slowly begunhc civil sector. Wc also sec increasedlhat greater cooperation between ihc miliiary and civil scciors is contributing to technical education. Far example, Ihe Beijing Industrial University0ecretive military collegeign marking ils cxisicnce.ccording lo Chiiiese press repot is. it wasightorrespondence school withtationsnd throe branch academics in Beijing for training technical personnel needed by industry- And miliary production of civilian goods slatedeachercent of total miliiary production byincreased considerably. For example,ercent of nuclear industry production was for civilian useccording to press
jmg Way To Oa. Significant personnel management problems remain, however. Although the growing number of trained personnelersonnel shoilages. visitors and China's own scientific communityut.
Specificas those of computer-continue to be in short supply.
Low wages discourage scientists Althoughto increase incomes through consulting and other outside activities have increased, some scien-lists arc not given permission to engage in such
riWi number excludes research groupslattariri. and the defense esiobtiihinen' China dies aw publish informalion oa research In In defense mduilriol lysiem. We miniate that there are moreesearch fattboei under national defense establirhnienls. including same of ihe nt>si adioncrd fatiltitrs in China. h
Element; ofstablish men!
'icchac'osr leidtrw Group ffilMSgf
Groupihe InTigoniion ot"'
Other Leading Grout* includ-nis Titles, rcchootojr Mjikcu. .nd Technology Irattorti
Comrmuloo .Slat* Machine. .Suilding .
wit ouiiijnd engineers (SAP)
> group-hc county lewl)
f JCO research in Dilute* 'SAi (laurei
Thii figure thous the mwoirsaniutico* under ihe Stair Council The part) alio uiuu<ate* SAT acuviUd through ihe ptrty Central Commlnee, the Central Military Commiif>on. and pany cadres in each institution.
and in some cases local administratorsut of their earnings -despite regulations to the contrary.
Poor working facilities and lack of equipment hinder research, despite some equipment imports andto develop indigenous equipment, lividence
suggests that returned scholars arc functioningressure group for forcing belter working* conditions.
Distribution of Science and Technology Personnel
Agriculture and Foreitn>
Scientific Re ware h
iod PoWechnical Service
Government. Polilical Parly, and Social Agencies
Timtp-nrlalion, Polls and Telecommunication!
GcoJoE'^'l Surrey and Prospect! ni
Source: SLiliilicjl ycatbook
SAT community has only recently turned its attenlion to regional development programs. Projects such as ihe Spark Plan and the Bumper Harvest Plan
have been developed lo provide funding and know-how io rural areas to improve agricultural produciion, develop equipment for rural commodity production, and improve the skills of rural workers. Problems in funding and choosing projects, however, arcimplementaltunJ
Nationalajor Beneficiary In our judgment, ihe impact ofprogram is most clearly seen in ihc national defense sector (seeur analyses of Chinese military capabilities indicate substantialin such areas as ground force weapons,remote sensing, and tactical and strategic missile systems during the lust nine years as China has acquired Western technology and filled key gaps through indigenous developments. The table listsimprovements lo specific weapon systems.
The military is also benefiting from ils expanded SAT lies lo Ihe civilian sector, principally in greater access toxpertise. Although we believe Ihe most important military projects and facilities have always had access to theesources,now suggests that less prestigious military projects also arc benefiting. The Chinese press reports, for example, thai the Lanzhou Miliury Region has hiredxperts and specialized techniciansthe chairman of the Chinese Optics Association -In fields such as computers,chemistry, optics, and cartography
Impact on the Economy
The impact ofodernization program on the economy is more diHVcult io gauge, largely because ii is one of manybroader economica relatively stable polilical leadership, goodomparatively peaceful inlcrnaiionalaccount for the demonstrablein ihc quality of life (or most Chinese.progress varies considerably by sector. Beijing claimsillion spentmport technology during ihc Sixth Fivc-Ycarncreased oulpul byillion.and increased taxes and profits byillion. Wc believe such claims (or a
Technology Development and Transfer Activities, Selected Indicators
IOM tS** Tout: !w
Pnvjt* SitT Institutes
TerhivuloD Eichtnuc Centers
Technology Srrvlcc end
China's slow progress in these high-priority areas has held back advancement in olher high-priorityr example, development of an automatedcapabiliiy depends on ihe use of electronics and computers,imned telecommunicalions system hampers daia nciworking plans for research, business.
lipgrjdioeeapon Snuim and Fxporls: Sources ol" Technology (continued I
government. Theo achievein key components forced factories dependent on imported chips to hall production when China ran into foreign exchange problemsfijj
On the brighter side. Beijing has been more successful in adapting and absorbing technology in less advanced industries, such as textiles and light industry, as indicated by China's national invention awards.wards9 for discoveries ihat "have proved useful inearly two-thirds were rclaied to textiles and lightil, foodshipbuilding, and chemical sectors have also had noticeable success in adopting [ethnologicalLargelyesult of foreign technology acquisitions, for example. China currently is the world's fifth-largest builder of commercial ships
announced, for example, thai imports ofroducts, including electronic calculators, tape recorders, and refrigcralort. decreased by almostctceni during Ihe first halfompared with ihc previous year. According to the Chinese preu, the growing domestic tech oology market is also comribuliog lo reduced foreign exchange expendituresfactories discover domestically available technologies andimpori plans The Ministry of Machine Building, for example, canceledmport projectsn pari because similar technology was available in
China ha* also begun to export produciion lines for consumerss black and white TVs -and pharmaceuticals In addition, technologicalhave contributed significantly to earning* of much-needed foreign exchange in several key areas:
growing capabililici in these areas haveto alter its imports and exports Imports of consumer electronic goods and produciion equipment, for example, dwindled us domestic firms became better able lo mcel consumer needs, and as Beijing instituted impori controls5 lo protect Chinese producers from competition China recently
Foreign textile plant purchases, supplemented by transfers of indigenous technology, were key factors in increasing exports;6 this industry became China's leading foreign exchange earner.
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Durable Consumer Goodsouseholds
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1 Rural liguici noi available
Sou.ce Suuiueal Ywrboc* of China, mi.
of new oilfields and (he inlroduclton of enhanced recovery techniques by both foreign and Chinese experts helped China increase its oilOvererccni of the additional oil was exported, reinforcing oil's role as China's second-leading foreign exchange earner.
Arms sales, although small in comparison with textiles and oil exports,ajor source of funds for China's military. We estimate that,eijing hasHarms abroad and is aggressively ptTrsuni^KwsaicsDy offeringupgraded with Western technology!
advances in plant and animal breeding, theof new agricultural technology, and increased production of fertilizers and pesticidesesull of technology imports in the chemical industry have contributed, in the judgment of foreign experts, and may have significant long-term impact. According to Chinese statistics, for example, the introductioneparate crop strains over the last five years has increased annual grain output byillion tons. The rural sector has also benefited from improvedbreeds and breeding techniques: fine-wool sheep are now competing on international markets, and peasants arc increasing produciion andprofits by raising leaner livestock more quickl>|
rogram's contribution lo agriculture is clearly less imporiani than government economic policies and several years of good weather. But
Unsolved Problems. Although China's leadersagree on the need too mcei naiional needs, we believe they differ on what China's needs are and how bcsl to meet them. Given China's limited resources, competition between civilian and military leaders, heavy and light industry, andand regional enterprises is intense. For example.
Beijing called Tor closer coordination of military andesources as earlyut resistance from the national defense sector preventedof such reforms for several years. Criticism from the military sector diminished after Beijing
impediment toumber of weapon systems. Similarly, the Ministry of Public Health reportedly decided China would develop its ownB vaccine rather lhan license or buy the vaccineS suppli
assured military leaders that defense programs would continue to beigh, if nol Ihe highest, priority in decisions regarding resource allocation and access to technology acquired for the civilian sector?-
Disagreements over whether to develop technology indigenously or purchase tt abroad have also slowed key projects In ihc, for example, bickering between the projected usersirect broadcast UtcKiK system over whether lo developjointly develop, or buy the satelliteajor factor in the decision to suspend negotiations with foreign suppliers Indigenous development, in some cases, exacts high cents from military and civilian users Wc believe, for example, tbat overconfidcncc in the ability of Chinese designers hasajor
The SeVT community continues lo debate ihe proper balance between applied and basic research. China's leaders have pressed fur greater emphasis on applieddecision made when economic problemsorced China to reassess itsaccordingariety of reports, some scientists continue to resist working on applied topics. By emphasizing market oriented, quick-turnsroundin our opinion, China risks shortchanging the development of more complex technology thai may be more difficult to introduce, but offers more growth opportunities in the long run |
Moreover, despite Beijing's efforts lo reduce Ihe role of the party in scientific affairs, ihc SATprogram remains subiect lo politicalInor example, Ihe President and Vice Presidcni of the Chinese University of sat were fired for Iheir handling of student riois. The riots, which then spread lo other universities, ulll-mately servedrctcxi for the ouster of parly Secretary Hu Yaobang and tbe kickoffational campaign against "bourgeoishao Ziyang and other leaders specifically and publicly reaffirmed (be importance of science and technology, but we suspect that the potilical debate may make some scientists hesitant to take advantage of market-orienied reforms; critics have charged thai letting scientists "gel wealthy" ahead of others is unsuiubkocialist society. The recent program of sending students to rural areas during (heiribe one hand, part of China's transfer of technology to the countryside; on (he other, reminiscent of theof intellectualsural aicas during ihereinforce their hesitation. |
Trying To Improve Technology Vie
has been hampered by the low level of lis indigenous technology. Compared with production af older electronic goods, for example, the acquisition of new electronics technologies often requires different types of know/edge, more stringently controlledand more competent managers andline personnel. Imported semiconductor orlines have been more difficult to put into operation than, for example, whole plant imports in the textile industry. Restrictions on sales of Western technology to China also obviously affectedsuch as electronics more heavily than other industries. Factoriesin same cases wastedconsiderable time and effort trying tothe most advanced technologies, which were often subject to delays caused by COCOM review.
China has recognized these problems and begun to tackle them by:
Improving technology choices. The technologyand new technology information systems are providing more Information to enterprises about what technologies are available. Both Chinese
source* and foreign observers note thai managers have become more interested in doing feasibility studies.
Providing technical support for using technology. Government regulations now require foreignpurchases to be accompanied by transfers of know-how and technical support. Also, research institutes are providing help to Chinese factories by installing, integrating, and maintaining both foreign
upportive environment for usingBeijing is adjusting tax and investment policiesncourage efficient use of equipment China also is introducing more training to improve
conditions within the factory for organizing and using technology and is adopting Western quality-control techniques,ationwide quality inspection network.m
advocates ofodernization program must also come lo grips with legitimate criticism. The reformers have been guilty of wasting resources by importing technology thai could not be used (see inset -Trying To Improve Technologylso, Chinese officialsrograms havcoflcii made promises Ihey could noi keep, raised expectations, and exacerbated existing problems. For example, official statements about oneSpark Plan for rural technologicalpromised to improve the quality of life in China's rural areas, but the benefits of technology accrue unevenly across sectors and geographic locations with the richer areas gelling richer, according io ihe Chinese press.such as the Spark Plan may even perpetuate disparities, and contribute io existing tensionsrich, coastal provinces ihat have theand the poorer, interior ones. i
Cease for Cautious Optimism. These problemswe believe ihe impact ofeform program is only beginning to be felt, and is likely to increase. Only in (he last two or three years has the bulk of (he sciemific community really begun redirecting resources toward helping industry. Many recent research successesfor example, in fibercomposites, andachieved in the old way, through marshaling resources under military
cn-crsighi io mcci militaryilh foreignbong uxilavailable Only now ateprotect* between factories and researchand between military and civilianto bear fruit. Other mean* orinformation, such as neiworks sci upstudents to facilitate ihe exchange ofrcsulis, arc alsoie early stages ofTbe full impacl of ihc returned students isbe felt and. in addition to improsiagwc espect them io contribute loimprovements andainingewof SAT
On the basis of programs now under way, wc believe progress is probableumber ol areas Military research in lasers, optics, and space arc likely to produce commercial spinoffs, at ihe military's conin-bution io civilian industry inert*Development of biotechnology productsotential growth area.
given the improved skills of China's foreign-trained biotechnology researchers, their research progress, and China's determined effortscquire production technology. China's space industry illustrates thai China, given suitable market conditions, can compete even if its technology is less advanced. China's space industry isoears behind that of Ihc United Slates, Europe, and Japan in technology, bul ii has Ihe capacity to launch more satellites than Beijing will need for its own programs. Moreover. China's launch program is functioningime when the US and French programs have suffered serious setbacks, we believe China's sales of space launch services alone could generate foreign currency earnings0 million80 million per year by Ihe mid-
The relatively small impacl so far of technological moderni/alion on the composition of China's trade is likely to increase, in our opinion. The Chinese pressumber of instances in which individual lactones and ministries have canceled imports afterechnology available locally. The Slate Machine Building Commission jusiist ofomestically producedas import substitutions Foreign equipment and technical assistance willcritical, however, for Ihc development of certain (technology sectors such as large computers '
Implication* for the United States
Chinese policymakers as well as individual scientists retain favorable atliludes toward ihc United Stales, which in al least some cases translates into afor cooperation with or equipment purchases from US suppliers. Evidence suggests that scholars reluming from study in tbe United Stales, forhave tended lo favor US suppliers.ihey do not necessarily prevail over Ihose who
'waal bumimaafl wnaH poruea at totall be eta mulctthe limituli al imirevof trterafcxaiijailer* citui
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prefer indigenous or non-US technology And China's desire to protect domestic industries and io diversify sources of technology imports, coupled with theof West European and Japanese suppliers to oiler concessionary financing, compound theUSsupplicrs will have in selling equipment to Chin;.!
Western technical assistance has crcaled economic compciiiion for the United States in several sectors, and competition is likely to grow. For example, the laic Commerce Secretary Baldridgc in7 said the biggest issue in US-China irade is textiles.
to compete commercially wiih the United Siaies include biotechnology products and small nuclear planisj
ddition. China's military modernization, in alouple of cases, may run counter to specific US interests. China's Silkworm sales to Iran havehow iis aggressive arms marketing canthe Sino-US relationship and affect tlieof US foreign policy goals in other regions. Similarly. China has offered for expoil other missiles that may prove destabilising in regional conflicts, includingobile solid-propellant missile armedonventional warhead, the HQ-2missile, thendhoulder-fired surface-to-air missiles, andissile-China's version of ihe Exocel. Sales of missile systems still under development, such as. allow China to obtain foreign fundingelp underwriteand provide an opportunity for batllcfield tcsi-ing before deployment to Chinese forces^
In addition, ihc transfer of high-capacity, high-speed, secure telecommunications equipment allows China to develop improved command, control, andnetworks. These systems can enhance China's military force projection capabilities and complicate US efforts to monitor military and civilian communi-catioiisJjJJJjM
Although China's defensive postureis the Soviel Union or the United States will remain largely unchanged, Chinese acquisition of weaponswill improve China's ability to project power againsi weaker nations on its periphery. Taiwan will feel especially threatened as Beijing's currentlycapacitylockade ihc island improves over the nextears as the Chinese Navy builds newand upgrades its technology, in pari through the
estern naval technologies. Neithernor Imkocsia is confident of (he ultimate loyalties of tbeir large ethnic Chinese populations and arc certain to grow nervous, over China's higher regional profile Al the same time, Malaysia and olher Southeast Asian countries arcout-China's naval activity in ihe Spratly Islands. As these nations become increasingly sensitive to Beijing's enhanced miliury capabilities, they will probably seek closer lies lo tbe United States, pressing (be United States to sell them more advanced US military'and to limit technology transfers to ChinaOriginal document.