china arms buying spree

ARMS

Buying Some Major Muscle

The People's Liberation Army is shopping for foreign arms and the latest military technology with a vengeance. Costing tens of billions of dollars a year, this drive will change the face of its forces at war and is unsettling some foreign governments

By David Lague/HONG KONG

Issue cover-dated January 24, 2002

IN THE FIELD of frustration and broken dreams that for many foreign firms is the China market, arms dealers and suppliers of technology to boost military firepower have discovered their El Dorado.

International arms-trade monitors estimate that China is now the world's biggest arms importer as it steps up a drive to re-equip the People's Liberation Army so that, if necessary, it has the strength to recover Taiwan by force and can deter intervention by the United States in a cross-strait conflict.

From supersonic fighters and missiles to computer-aided-design software, the PLA and its associated civilian agencies are filling order books across the world.

"In my view, practically every area of PLA modernization is affected by the acquisition, utilization, absorption or development of foreign technology," says PLA watcher Richard Fisher of the Jamestown Foundation in Washington.

The Stockholm International Peace Research Institute in its 2001 yearbook noted that China had become the world's biggest importer of arms in 2000, mainly through deliveries of ships and combat aircraft from Russia. These imports were valued at close to $3 billion, more than twice any other buyer's tally. In the secretive world of the international arms trade, the true value of Chinese offshore orders is difficult to uncover. Defence experts estimate up to half of Russia's $4 billion in military sales last year went to China. When combined with imports of so-called dual-use technology-equipment and know-how with military as well as civilian applications-most analysts expect the total to be much higher.

To pay for what Fisher describes as its international military "spending spree," Beijing announced in March last year that its published defence budget was jumping more than 17% to $17.2 billion. Real annual spending, including payments for foreign weapons and technology, is estimated by many analysts at more than $60 billion. The government is already signalling that it plans further defence-budget increases this year.

The main beneficiaries of Chinese spending: Russia and Israel, since the West imposed an arms embargo in retaliation for the 1989 Tiananmen Massacre. U.S. and European makers of nonlethal military hardware and dual-use technology are, however, eager suppliers.

The independent U.S. Wisconsin Project on Nuclear Arms Control calculates that Washington approved some $15 billion in strategically sensitive exports to China in the decade up to 1999. These included advanced computers needed to design and test nuclear weapons, machine tools for making missile parts and specialized equipment used for making military semiconductors.

Some key customers for U.S. technology are the China Precision Machinery Import-Export Corp., a maker of anti-ship missiles, the National University of Defence Technology, which designs weapons, and Huawei Technologies-accused by Washington of helping Iraq improve its air-defence system.

In recent years, much international attention has focused on sensational allegations of Chinese espionage at U.S. nuclear-arms laboratories. But far from having to steal much of the latest military technology, Beijing is simply buying it.

"Western companies want to get into this market," says Taipei-based PLA analyst Tsai Min-yen of the Taiwan Research Institute. "The way they can build contacts with China is to sell these dual-use or nonlethal technologies."

Even such top Western firms as British engine-maker Rolls-Royce are looking for a piece of the action. It sells defence equipment as part of its broader aerospace, marine and energy business in China-though it is reluctant to give details of its military sales.

Rolls-Royce confirmed to the REVIEW that it recently supplied up to 90 Spey jet engines and spares to China that defence analysts believe the PLA intends to fit on to its JH-7 fighter-bombers-also being modified with modern radar and long-range missiles.

Rolls-Royce spokesman Martin Brodie says that the company first supplied this engine type to China in the 1970s and continues to support that original deal. "The details of our support are, as with most companies, a matter of commercial confidence," he says.

The PLA needs more of the reliable Spey engines because it failed to copy those it received earlier and hasn't designed a local replacement. Rolls-Royce argues its Spey engines incorporate 1960s technology, implying they will not significantly boost PLA power. In contrast, Asia-based Western defence officials say the Pentagon objected to the latest deal on the grounds that it would enhance the PLA's capabilities.

Rolls-Royce indicates more defence-related business in on its mind. On a visit in October, Chief Executive John Rose discussed "current cooperation and opportunities for the future" with officials from China's Commission on Science, Technology and Industry for National Defence, according to a company statement.

Earlier British technology sales proved a boost to the PLA. In 1996, Racal Corp., now part of the French Thales Group, sold up to eight Skymaster long-range airborne radars to be fitted on PLA Navy Y-8 aircraft. Britain at the time justified the sale by saying it would help Beijing against rampant smuggling. Since then, the specialist defence press has reported that these aircraft are used to assist Chinese missile warships locate distant targets.

Other British sales are aimed at civilian use but seem to offer clear military advantages. Surrey Satellite Technology, perhaps the world's leading micro-satellite maker, has played a major role developing China's infant micro-satellite industry with technology transferred to China through a joint venture with Beijing's elite Qinghua University. Specialists have warned that this type of technology is vitally important for the Chinese military to mount combined air and sea operations in the Taiwan Strait.

Company spokeswoman Audrey Nice rejects any link between Surrey's technology and the Chinese military. "The PLA does not exist as far as Surrey is concerned," she says. "There are no defence applications whatsoever." However, she is unable to rule out Chinese military access to data from satellites launched as a result of the joint-venture collaboration. "The satellite is owned by Qinghua University," says Nice, adding that any questions should be directed to the university.

To reduce its dependence on foreign suppliers, China is investing heavily in research and development to build a military industrial base. In the meantime, the PLA armoury resembles an overflowing shopping trolley at an international arms bazaar-with imported arms and technology ordered before the Tiananmen embargo being gradually introduced and combined with the newer purchases.

Should China go to war in the near future over Taiwan, its air force will rely on front-line Russian-designed strike aircraft alongside locally built fighters based on an Israeli design partially funded by the U.S.

Other Chinese-made aircraft will carry Russian and Israeli missiles and find their targets with British and Israeli radar and electronics. The navy will deploy a combination of powerful new Russian warships and submarines alongside locally built ships fitted with U.S. and Ukrainian engines and Italian torpedoes. French companies have supplied air-warfare missiles, tactical command-and-control systems and helicopters.

On land, the PLA will field modern Russian tanks and artillery. Many armoured vehicles will be protected with advanced Israeli-designed armour cladding. Older Chinese tanks have Israeli gun and gunsight systems.

Overhead, satellites built with British and German help will keep watch on the battlefield, fix positions for ground forces and feed target data to ships and aircraft. Meanwhile China's nuclear deterrent will be mounted on launchers improved with assistance supplied by the U.S.

Beijing isn't shy about its growing power. When one of the PLA navy's latest class of warship, the sleek 8,000-tonne guided-missile destroyer Shenzhen, berthed in Hong Kong in November after visiting Europe, it was touted as an example of how China was capable of building world-class warships.

That may be an exaggeration compared with most Western counterparts. But by regional standards, the Shenzhen's Ukrainian gas turbines, French Crotale air-defence missiles, Russian YJ-2 anti-ship missiles and two Russian Ka-28 anti-submarine-warfare helicopters make it a formidable vessel.

While the arms merchants pile in, there are clear signs of unease in some foreign capitals about the scale of China's arms-buying bonanza and the danger to regional security. For the U.S. and regional governments, the main concern is that short-term corporate greed is overpowering Western fears of arming a potential enemy of the future to the teeth.

Reflecting such official unease, New York-based satellite-maker Loral Space & Communications agreed with the U.S. Justice Department this month to pay a record $14 million fine to settle charges that it may have illegally given satellite know-how to Beijing.

Hughes Electronics of California is also expected to settle with Washington over its role in similar technology leaks.

A U.S. Congressional committee in 1999 accused both companies of helping overcome serious shortcomings in Chinese rocket launchers following an expensive series of failed satellite launches in the mid-1990s. Since then, China launched more than 30 satellites without a hitch. There are strong suspicions in Washington that the PLA's nuclear missiles carried on the same launchers and aimed at the U.S. are now more reliable because of information from U.S. firms.

At the same time as the probes into Hughes and Loral, Washington forced Israel to cancel a $1.25 billion sale of up to five Russian-built aircraft equipped with Israeli-made Phalcon early warning radar to the PLA. Such aircraft would be crucial in coordinating large-scale operations over the Taiwan Strait.

Anxious to keep its good relations as an arms supplier with Beijing, Tel Aviv is now negotiating to pay compensation to China for backing out of the deal. Diplomats say that discussions between both sides earlier this month in Beijing also covered what other hardware may be supplied by Israel.

CHINA SEEN CLOSING THE GAP
But regardless of international pressure on sellers, tension across the Taiwan Strait is likely to prolong the feast for arms makers. As China's power grows, so does Taiwan's demand for yet more weapons to ensure parity. The Bush administration last year agreed to supply Taipei with its biggest arms package in decades, including a group of up to eight submarines that alone will cost more than $4 billion.

Watching the arms race, some analysts are questioning the wisdom of China buying hardware from such a range of suppliers. For a start, the logistical and technical support needed to maintain so many different weapons systems is a major challenge. And it takes more than just advanced hardware to be a military power. Training, military doctrine and the integration of weapons and sensors are also vital. There is also the danger that in trying to keep pace with Western firepower, China might overextend itself financially-as the Soviet Union did.

Nevertheless, analysts such as Tsai in Taipei believe that the sheer pace of its spending is allowing China to close the military gap with the U.S. and the rest of the West fast enough to pose a real security threat for Taiwan. "It is unnecessary for China to catch up with the West in all fields," he says. "They just need enough to deter the U.S. from becoming involved in the Taiwan Strait."