China faces major obstacles in developing its defence-industrial capabilities. These stem from its structural basis and its political requirements, which will continue to encourage extensive reliance on autonomous national industries under the close supervision—if not the direct control—of the State. China can, however, be expected to continue to seek foreign technological inputs to help address particular equipment requirements and even to import arms when these could be developed locally, in cases where this is seen as justified by the capability difference involved.

The transformation of China’s defence-industrial sector likely will continue to be a gradual, incremental process that is beset by major difficulties. The principal features of China’s emerging defence-industrial model are continued strong state direction and a continued reliance on SOEs for a considerable amount of R&D and production, but some acceptance of a defence-industrial role for private enterprise, in terms of meeting China’s requirements and those of other states.

China could, in the long term, be in a much better position to provide the PLA with the advanced arms it requires, and to do so in a much more timely manner than currently is the case. How successful its efforts are will depend in no small part on the extent to which it is prepared to adhere to established objectives of defence-industrial autonomy. Opening up defence-related R&D and production to market forces holds great promise, but this will force political authorities in China to carefully consider which sovereign capabilities are crucial and which are not.