Singapore Air Show

PRC Push For Defense Exports Could Backfire

 - February 11, 2014, 4:20 AM

The defense industries of the People’s Republic of China (PRC) are looking to expand their export market share beyond their traditional customer base–and for the first time are challenging some of the world-leading U.S., European and Russian firms.

The most visible example was the somewhat surprise selection by Turkey in September 2013 to procure the FT-2000 air and missile defense system from China Precision Machinery Import-Export Corporation (CPMIEC). The PRC firm won out over bids from Raytheon and Lockheed Martin for the Patriot PAC-3 MSE, the Russian Almaz-Antei air defense consortium’s S-400 and the MBDA Italia and MBDA France Eurosam SAMP/T and Aster 30 system.

Whether or not Turkey will go through with purchasing a PRC-made system remains to be seen, as several problems with a NATO nation taking on this kind of procurement remain. For one, CPMIEC remains on US and international embargo lists for having transferred ballistic missile technology to Pakistan. A U.S. State Department spokesman also told news outlets that there were additional concerns about how a PRC-made system would adversely affect traditional commonality of equipment operated by NATO nations.

“We have conveyed our serious concerns about the Turkish government’s contract discussions with a US-sanctioned company for a missile defense system that will not be inter-operable withNATOsystems or collective defense capabilities,” said the spokesman.

For decades defense industries in PRC have traditionally been known for turning out capable, near-facsimiles of Russian weapon systems that they have reverse-engineered and then produce as illegal copies. PRC defense products were not considered as competitive with US or European systems–or even as capable as the original Russian systems that many of their offerings were copied from.

This has made defense exports a traditionally small portion of the overall output of the PRC’s defense industrial base, usually no more than 15 per cent. In addition, the sales have been a short list of nations that either were looking for weapons to be delivered on favorable terms (i.e. the DPRK) or client states of the PRC defense sector like Pakistan.

But today’s rising prices of new-generation weapon systems and with a technology export control regime in Washington that “becomes more restrictive by the day,” according to more than one US defense industry representative, a number of nations have been looking to the PRC as a previously-not considered option. That Turkey, a long-time US ally, is considering a Chinese solution may not be surprising given how U.S. export policy is tightening.

An example comes from one of the U.S.’s most reliable allies in the Middle East, the United Arab Emirates (UAE), which previously purchased the Lockheed Martin F-16E/F Block 60. This is an advanced version of the long-serving single-engine fighter that included an active electronically-scanning array (AESA). The sale was one of the only times that the US Government permitted the export sale of a version of a weapons platform that was a more technologically advanced model than what the US armed forces themselves were operating.

But at last November’s Dubai air show, representatives of the UAE Air Force commented unofficially that they have been having trouble sometimes buying spare parts for this version of the F-16, creating a peculiar situation in which “the fighter was not on an export restriction list when it was originally sold but now the bits needed to keep it running are,” said one UAE Air Force officer. “ We are a reliable ally and we pay money for what we buy–we are not a charity case receiving foreign military aid–so this is not really an acceptable situation.”

With the increase in the sophistication of PRC weaponry, their much lower cost and the “no strings attached” export policy, nations that would not have considered such an option before are now looking to Beijing for technologies and systems that they need in order to modernize their air forces and air defense capabilities. These include nations in Latin America as well as in Africa and parts of Asia.

Despite all of the above factors, however, the decision by Turkey to purchase the HQ-9 (sold as the FT-2000 in its export configuration) was a surprise on purely technological grounds. The HQ-9 was largely developed from reverse-engineering the Almaz-Antei S-300s sold to China in previous years. “If Turkey had wanted this kind of a system why did they not just by the original from Russia,” was what many people asked.

An additional issue is “even after the Chinese had completed their reverse engineering of the S-300 and had the HQ-9 in production, they still continued to purchase S-300s from Russia,” said a US analyst of the PRC’s defense industry. “Which tells you–for whatever reasons–the Chinese considered their copy to still not be as good as the original [Russian design].”

What is inevitable is that the combined factors mentioned above create some significant motivations for nations normally outside of the PRC’s list of long-time customers to add Beijing’s products to their list of potential options. Ultimately, say Russian analysts, the lower cost of Chinese weapons and their advancing technological capability could displace Russian products in their traditional markets, “a process that is already underway,” said one Moscow-based specialist. “Then it is just a matter of time before the same fate befalls U.S. and European firms.”