China allows pvt investment in defence

BEIJING: As part of its ambitious military modernisation, China has allowed its private business entrepreneurs to invest in the country's defence industries, including weaponry production.

Private enterprises will be allowed to invest in military infrastructure, construction, conduct scientific research for national defence projects and weaponry production, participate in the regrouping of military firms and cooperate with military firms to develop technology for military and civilian use, the Commission of Science, Technology and Industry for National Defence (COSTIND) said yesterday.

The move aims to facilitate a better use of government outlay for national defence and take advantage of private firms' financial and technological resources, the circular said.

To enter the military industry, private enterprises will have to acquire security, quality and production safety certification. The guideline also says private firms can apply for taxation exemptions from defence authorities.

The Chinese legislature approved in March a 17.8 per cent hike in the national defence budget for 2007 fiscal year, which reached USD 350.92 billion.

China's defence weaponry sector, once largely a State monopoly, has been opened up to private businesses and foreign-funded ventures since 2005, allowing them to vie for licenses to develop certain categories of weaponry.

China has been gradually removing the long-standing monopoly of state capital on its military industry since 2005 when private firms were allowed to produce unimportant military products.