Chapter 14 Legal Analysis of the PRC’s Defense Industry in Recent Years under the Military-Civil Fusion Strategy
Chapter 14 Legal Analysis of the PRC’s Defense Industry in Recent Years under the Military-Civil Fusion Strategy.pdf
China’s military industry has emerged as a rising power in recent years. The Military-Civil Fusion1national strategy and other measures in conjunction with the technology development and requirements of the country started to take off at the end of 2020. These actions have many implications for some countries, particularly the U.S., as the global leader in the defense industry. For instance, the then U.S. President, Donald Trump, signed an executive order in November 2020 to prohibit U.S. companies and individuals from investing in Chinese military firms. Trump indicated that China adopted the national strategy of Military-Civil Fusion to enable private enterprises to support military and intelligence activities and expand the scale of its defense industry. While these companies appear to be privately owned or operated, they directly support China’s military, intelligence and security institutions. Investing in such firms is essentially funding them with American capital for its development and modernization. On June 3, 2021, the U.S. President Joe Biden signed the Executive Order 14032 to expand the prohibition of U.S. individuals from investing in Chinese defense companies even further. A total of 59 entities, including Huawei, China Aerospace Science and Technology Corporation (CASC) are listed as China military-related companies. Biden said in a statement that the extended ban is a response to the threat posing by Chinese defense firms. This paper provides an analysis regarding the development and the strategy of China’s defense industry in the context of legal and policy aspects in recent years.
“Military-Civil Fusion and the People’s Republic of China,” U.S. Department of State, May 28, 2020, https://www.state.gov/wp-content/uploads/2020/05/What-is-MCF-One-Pager.pdf; “China’s Military-Civil Fusion Strategy: a View from Chinese Strategists,” China Aerospace Studies Institute, June 10, 2020, https://static1.squarespace.com/static/5e356cfae72e4563b10cd310/t/5ee37fc2fcb96f5 8706a52e1/1591967685829/CASI+China%27s+Military+Civil+Fusion+Strategy-+Full+final.pdf; Military-Civil Fusion is not a unique con- cept to China. However, “MCF” is currently the term specifically for China’s national strategy of Military-Civil Fusion. It was called Civil-Military Integration (CMI) under the Hu Jintao administration and replaced by the term “Military-Civil Fusion” under the leadership of Xi Jinping. The two terms share many similarities.
“Executive Order 13959 of November 12, 2020,” November 17, 2020, https://home.treasury.gov/system/files/126/13959.pdf; “Trump Issues an Executive Order to Prohibit U.S. Nationals from Investing 31 PLA Firms,” Commercial Times, November 13, 2020, https://ctee.com.tw/news/global/369281.html.