Beijing’s Technology-Driven Agenda Benefits China’s Defense Sector

The decisions of the recent Third Plenum of the Central Committee of the 20^th Congress of the Chinese Communist Party (CCP) prioritized China’s technology-driven policy agenda, despite the country’s struggling economy facing structural challenges such as an aging and declining population, a real estate bubble, and high youth unemployment. The Ministry of Industry and Information Technology (MIIT) and the Ministry of Science and Technology (MOST) have begun implementing these top-level decisions by introducing policy guidance and launching new government research centers. 

China’s accelerated pursuit of technological advances will undoubtedly benefit China’s defense sector, enabling the Chinese military to maintain and even expand its operational capabilities in the Indo-Pacific region, notably in the Taiwan Strait and South China Sea. These technological advances are likely to contribute to China’s military diplomacy, especially aiding China’s material support to Russia’s war effort in Ukraine. Pamir assesses that the continuation of this supply-side policy will likely exacerbate China’s excess production capacity, which in turn will likely intensify China’s economic tensions with the United States and European Union.

The Third Plenum of the Central Committee of the 20^th CCP Congress fully affirmed the Chinese government’s achievements under the leadership of CCP General Secretary XI Jinping. It also indicated the party’s support for continuing Xi’s development roadmap. This support is reflected in the plenum’s “Decision on Further Deepening Reform Comprehensively to Advance Chinese-Style Modernization,” which states, “High-quality development is the primary task in comprehensively building a socialist modern country.” 

According to the Decision, promoting “high-quality development” requires “fostering new quality productive forces [NQPF].” The concept of NQPF was first proposed by Xi in September 2023 with the aim of advancing the Chinese economy. The Decision states that fostering NQPF requires “revolutionary breakthroughs in technology” and “in-depth industrial transformation and upgrading,” among other tasks. 

• The plenum’s Decision states that China will “strengthen [the pursuit of] innovation key common technologies [that can be employed across industries], cutting-edge technologies, modern engineering technologies, and disruptive technologies….”
• The Decision also calls for China to “establish input and growth mechanisms for future industries and improve policy and governance systems for developing strategic industries such as next-generation information technology, artificial intelligence, aviation and aerospace, new energy, new materials, high-end equipment, biopharmaceutical, and quantum technology….” 
• The Decision also calls for improving and upgrading the “resiliency” of China’s industrial and supply chains as well as their security. To this end, China will “pay attention to building autonomous and controllable industrial and supply chains.” China will also improve and “strengthen the institutions and mechanisms for developing key industrial chains such as integrated circuits, industrial machines, medical equipment, instrumentation, basic software, industrial software, and advanced materials.”

To support these objectives, the Decision calls for establishing institutions and mechanisms to support “comprehensive innovation” and specifies five types of organizations and institutions that should be involved in this effort:

• National laboratories
• S&T social organizations
• Colleges and universities
• Research institutes
• Commercial enterprises, specifically small- and medium-size enterprises

The Decision further indicates that S&T personnel should be “allowed” to have “even greater autonomy” with respect to the allocation of dividends resulting from the commercialization of scientific achievements. Moreover, it calls for the government to strengthen its financial support for major S&T tasks and small- and medium-size technology enterprises. Furthermore, the Decision calls for the “expansion of international S&T exchanges and cooperation” to support China’s drive for technological advances.

Responding to the Third Plenum’s guidance, MOST held a meeting on promoting international S&T cooperation on 29 July. The official readout on the meeting is short on detail. However, it notes that Minister of Science and Technology YIN Hejun provided the keynote. A vice president of the Chinese Academy of Engineering and a vice president of the National Natural Science Foundation of China, as well as subnational officials in charge of international S&T cooperation, were also in attendance.

• According to the MOST website, three ministry-affiliated new centers were also recently formed: 1) MOST Center for International S&T Cooperation, 2) MOST Center for the Promotion of NQPF, and 3) MOST Center for New Technologies. There was no official announcement on the centers’ establishment and no additional information has been provided regarding the centers’ personnel and operations.

Prior to the Third Plenum, at a 5 July press conference sponsored by the State Council Information Office, JIN Zhuanglong, Chinese Minister of Industry and Information Technology, discussed Beijing’s plans for developing strategic emerging industries. During the conference, Jin mentioned that in January 2024 the MIIT led several Chinese central government agencies in rolling out a guidance document on promoting China’s future industries.