Dissecting the National People's Congress: The PLA and Independent Innovation

In the Hutong

Looking for the burnout cream

1641 hrs

Even the most focused minds and incisive bladders must collapse under the weight of a 15,000 word address, and apart from our hyperlinked and multitasked MTV attention-spans, we in the West lack the tolerance for protracted oratory. We think, my Lord, if Lincoln could move a nation with 272 words in the Gettysburg address, what possible good could come of much more?

By now, China's leaders know this, and I've developed a theory that they intentionally structure their speeches to hide the good stuff in the back half. So when I got the text of Wen Jiabao's 2009 Report on the Work of the Government (i.e., The State of the Nation with Chinese Characteristics) I went straight to the back.

And I was not disappointed.

The Army's Buried Lede

Hidden there, not far from the end, was an interesting little piece that grew in significance over the past week.

"In the coming year, we need to make our army more revolutionary, modern and standardized, focusing on enabling it to fully carry out its historic missions in the new stage and in the new century. We will strengthen ideological and political work in the army. We will effectively transform our military training based on mechanized warfare to military training for warfare under conditions of greater IT application, and continue to enhance the army's ability to respond to multiple security threats and accomplish a diverse array of military tasks. We will modernize weapons, equipment and logistics support across the board. We will improve defense-related research, the weapons and equipment production system, the military personnel training system, and the army's logistics support system that integrate civilian with military purposes and combine military efforts with civilian support."

[Emphasis mine]

There are two points of interest in this brief but important paragraph that are worth noting which, when related, speak to the future of China's technology industries.

Information Warfare by Any Other Name

First is China's plan bring the PLA into the 21st century, easing the emphasis on mechanized forces that has guided global military thinking for the past 90 years, shifting instead to an approach with a greater emphasis on information technology. The details of what exactly this means is unclear. There are few aspects of modern warfare that are not suffused with chips and networks, and "greater IT application" can mean anything from computers in tanks, to the ability to disrupt the information infrastructure of other militaries and nations, to the emerging concept of "network-centric warfare."

I'm betting that China will dive into all of the above.

Mind you, the change will not happen overnight. Even if it seeks to leapfrog the U.S. and other military powers, the PLA like most armies is led by men and women who think of war in terms of infantry assaults, tank battles, and missile attacks. These folks will not be anxious to surrender the more visible (and intimidating) proofs of military strength: after all, armies (and navies, and air forces, and space forces) will always need to bear a nation's credible threat of physical destruction.

Premier Wen's statements are, however, a clear message to the leaders of the PLA that while they will get upgraded toys in the near term, the PLA's destiny is to become a force capable of winning battles without firing a shot.

Getting to the PLA of Tomorrow

The implications for China's technology industry should be obvious in that first bolded sentence, but that's not enough for Wen. Two sentences later he hints further at his vision for a new Chinese military industrial-complex, noting that defense related R&D, manufacturing, and "the integration of military and civilian purposes" are also at the core of China's vision for its military.

Now, I emphasized that last bit because by itself this is an important policy statement, but in combination with the IT-led direction of China's military, it points to more than just military procurement policy but the future of China's technology industries.

Bear with me.

When it comes to modernizing the PLA, China has a choice of developing its own technology or buying from others. That choice is going to go away. In most cases, China will be largely left with having to develop its own.

First, the number of nations willing to sell military technology to China will decline, with countries ratcheting back sales either because they see China as a rival in the defense business (Russia, maybe France), they see China as a potential threat to themselves or an ally (United States, Japan, India), because Washington doesn't want them to (Germany, Britain, and Israel), or because they don't have anything to offer Beijing (most of everyone else.)

Second, the Central Military Commission (China's combined equivalent of America's Joint Chiefs of Staff and the National Security Council) will be unwilling to leave control over critical national defense systems in the hands of foreign nations or foreign companies. This is understandable: the United States, Russia, and a dozen other countries operate under the same principles.

Third, some intelligent and opportunistic policy makers in Beijing will realize that if the country invests in developing its own technologies, the entire exercise strengthens the country's civilian commercial sector. And this is where Wen's throwaway comment about "the integration of military and civilian purposes" gets interesting.

It is no secret that the United States' much-vaunted technology industries were founded on innovations that came from projects funded by the Department of Defense. In effect, America's aviation, aerospace, computer, electronics, software, wireless communications, and the Internet sectors owe much of their global success to the breakthroughs and profits brought by defense contracts.

By all indications, the Premier seems to be pointing China in a direction where it, too, will pursue defense spending with a twin agenda - a more secure China, and a technology industry heavily fertilized with profitable defense projects. And China would not only be wise to follow America's lead, they would be within their rights - the WTO makes wide provision for protectionist practices in industries deemed vital to national security and defense.

The World is Theirs

There is a qualitative difference between dumping a lot of money onto Chinese tech researchers and imploring them to go forth and innovate, versus giving them a contract to fix a specific problem or develop a specific system. At the very least you get a product out the back end. If you are lucky, you get something that works for the military, and if you are really lucky, you wind up with a development that has huge civilian potential.

Just one example of many: Boeing's entire commercial jet airliner business owes its existence to a set of technologies created to build the largely-forgotten B-47 bomber. That one project begat the prototype for the Boeing 707, which begat the hugely popular 727 and 737, and the rest is history.

It is easy to see how the path from a few high-tech defense projects to the creation of global tech powerhouses may not be a smooth one for China. But one only need look at companies like Huawei to appreciate that the more robust China's defense industries become, the more of these sorts of international competitors will emerge from the murk of military work with competitive - and perhaps innovative - products.

Caveat Inventor

I have said elsewhere that China will try to forge its own path as it seeks to create an economy based on innovation. I expect that part of that model will involve the peaceful application of technologies created for the purpose of national defense.

But I also know that I would be naive if I believed that China would steadfastly insist on creating its own military innovations when it would be easier, faster, and cheaper to "borrow" those created elsewhere. The pressure for results and the urgency of the goal will cause many companies to take what could be politely called "R&D shortcuts." This is to be expected - history has proven that an uptick in industrial espionage is a natural side-effect of the emergence of a new world power, particularly in the case of one still wrestling with the concept of intellectual property rights.

An pound of prevention is in order. Those companies with technology to protect would be doing themselves - and ultimately China - a great service by recognizing the potential for industrial espionage and taking aggressive measures. You get to keep your technology, and China enjoys the deeper benefits of doing the basic spadework that genuine independent innovation would require.

Comments

[Bill]

Ultimately and eventually China will have to invent their own. However, in the mean time, borrowing the Japanese model of beg, buy, borrow, steal, rob and copy, at least for now, is the easiest, cheapest, fastest and safest way to make better weapons.

[David]

Bill: Absolutely, and such has been the case with weaponeers since homo erectus discovered the homicidal properties of the rock. And my biggest problem with US DoD for years has been that they do not beg, buy, borrow, steal, rob and copy enough.

Yet history has proven that there are "war dividends" to those who innovate by their own blood, sweat, toil and tears. As my first boss once said, in the long run, there is no such thing as a good shortcut.

[Will]

Interesting stuff. It's not hard to foresee a Chinese military investment in technological development paying civilian dividends. But it seems to me there are hurdles as well. Defense-related spending in the US was responsible for a great deal of practical technological innovation, but much of that spending went to companies that were in a good position to commercialize the resulting innovations. Internal, creativity-driven R&D cultures, as with the old Bell Labs and similar outfits, had a lot to do with it as well. Many of the technologies that proved so valuable were ridiculed at the outset. (Lasers? Useless crap!)

So the question I have would be whether some of that spending will find its way into the right R&D culture and from there into companies that can effectively commercialize the results. I suspect there are a few institutional and even cultural hurdles to get past. That's not to say that such endeavors can't or won't be successful, just that obstacles exist.

[David]

Will, you make a good point. It is worth noting that a goodly number of defense contractors in the US failed to draw civilian dividends from military contracts, hence the wave of creative destruction in the defense and aerospace industries after the Berlin Wall was turned into 10 million paperweights.

Making that shift requires a unique combination of circumstances and at least one moment of uncontained inspiration. (I'm thinking of Irwin Jacobs' I-5 epiphany that led to CDMA, but there are others.)

The difference for China is that it has the U.S. experience to draw from as a guide. Armed with that hindsight and the example of Huawei, I figure that we will see some defense dividends in China's tech industry at some point, but it will still only be a small percentage of the companies in question.

As we look for potential paths for Independent Innovation, I think we have to count this as one.