China's Defense/Military Breaking News Thread

Blackstone

Brigadier
well, @Blackstone ..."unprofessional" according to who? ... it seems you believe what you want to believe (selected)
PLA pilots acting in unprofessional manners came from the DoD, and I believe it over PRC counterclaims, unless they produce hard evidence to the contrary. Counterclaims by PLA pilots isn't enough, because I believe US pilots over PRC ones.
 

antiterror13

Brigadier
PLA pilots acting in unprofessional manners came from the DoD, and I believe it over PRC counterclaims, unless they produce hard evidence to the contrary. Counterclaims by PLA pilots isn't enough, because I believe US pilots over PRC ones.

yeapp, thats your opinion .. thats fine, but it is not necessary the truth though. btw is DoD a govt body?

and do you really believe that DoD would announce that that were doing "unprofessional" to public voluntarily if it is the case .... go figure my friend :p

I also trust Trump that the sky is red and all medias are wrong and fake news ;)
 

lucretius

Junior Member
Registered Member
Depends if you class flying upside down over your rival as unacceptable or not :)

birdie-shot-top-gun.jpg
 

broadsword

Brigadier
Beijing denies 'unprofessional' intercept of US plane



Beijing (AFP) - China has denied US allegations that two Chinese fighter jets acted unprofessionally in intercepting an American military plane earlier this week, saying that its aircraft were acting in accordance with the law".

"Related remarks from the US side are inconsistent with fact," the Chinese Ministry of Defense said in a statement posted to its website late Friday.

"On May 17, a US reconnaissance aircraft was carrying out an operation in airspace over the Chinese Yellow Sea (the northern part of the East China Sea), and Chinese aircraft acted to identify and investigate in accordance with the law," the statement said, calling the action "professional" and "safe".

The US Air Force said in an earlier statement Friday that its plane, a WC-135 Constant Phoenix, was conducting a "routine mission" in international airspace when it was intercepted by two Chinese Sukhoi SU-30 fighter aircraft.

The WC-135 is a so-called "sniffer plane" designed to scan the atmosphere for signs of nuclear activity.

"The WC-135 was operating in accordance with international law. While we are still investigating the incident, initial reports from the US aircrew characterised the intercept as unprofessional," the Air Force said.

The statement out of Beijing came as Chinese State Councilor Yang Jiechi discussed preparations for the first round of the China-U.S. diplomatic and security dialogue in a phone conversation Saturday with US Secretary of State Rex Tillerson.

China's Ministry of Foreign Affairs noted in a statement that Yang and Tillerson "exchanged views... of common concern such as the Korean Peninsula," but did not say whether the aircraft incident was discussed.

Mid-air interceptions occur routinely in international airspace, but the US military will often call out foreign pilots if it judges the manoeuvres to be risky or unprofessional.

Meanwhile, China urged the US to halt such reconnaissance exercises in order to prevent future incidents.

"The American military's frequent reconnaissance operations are the root cause of security issues between the Chinese and US navy and air forces," the Chinese defence ministry's statement said.
 

Hendrik_2000

Lieutenant General
China need to loosen up control on defense industry and allow private company to get involve in defense related industry But it is not easy
Privatizing China’s Defense Industry
China hopes to create its own military-industrial complex, but it won’t be easy.
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By Zi Yang
June 07, 2017

The Chinese defense industry has once again become the focus of world media after a string of attention-grabbing headlines this year. On April 25, the Thai government approved a $393 million
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with China. The day after, China’s first domestically built
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was launched at Dalian port. The following week, China’s first civilian airliner, the
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took its maiden flight, another feat for the defense corporations involved.

Now the world’s second-largest spender on national defense, China is advancing reforms in its defense state-owned enterprises (SOEs). Xi Jinping, as commander-in-chief, has long been vocal about
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, a sentiment shared by his colleagues on the Central Military Commission (CMC). In 2015, General
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, vice chairman of the CMC, “called for China to develop a military-industrial complex like the one in the U.S.”—where the private sector and the invisible hand assume the leading role.

Hungai (混改), or mixed-ownership reform (MOR), is the vehicle for reaching this goal. Why is MOR needed? How does the state intend to implement MOR? What are the obstacles facing MOR? Will MOR succeed in helping China catch-up with the U.S. defense industry? I propose that MOR will have limited success because of the structural restrictions of the Chinese defense industry.

Why MOR

In 2016, China had a
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of $146.6 billion, and the
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of its defense industry was estimated to be around $362 billion. Yet despite the astronomical figures, the Chinese state-owned defense industry has many underlying challenges common to corporations of its type. (Wholly or partially state-owned
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share strikingly similar problems.) With soft budget constraints and shielded from competition, it is not a surprise that inefficiency, lack of innovation in certain areas, and mounting debt are prevalent among defense SOEs.

MOR hopes to remedy these problems by drawing in funds, expertise, and methods of operation from the non-public sector. One of MOR’s twin goals is to relieve the state’s financial burden by broadening access to capital market financing — from 2010 to June 2016, the defense industry raised
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from issuing bonds and equity. The other, perhaps more important long-term objective is to introduce market forces into the industry and pressure company executives toward reform along market lines — hence the emphasis on mixed-ownership.

How to MOR

There are three main methods for implementing MOR. Securitization, a critical mean of fundraising by transforming assets into securities, is one leg of the tripod. The current Chinese defense industry securitization rate is comparatively low, at
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, when U.S. counterparts stand at 70 percent. Although the state would like to have more defense assets go public, national security remains a concern because the most productive assets (i.e. research institutes) generally hold classified state secrets. For years there have been talks of injecting research institute assets into publicly traded companies.
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surfaced in January 2017 about plans to reorganize secret and non-secret research institute assets, and a March article confirmed that research institute reform plans have been
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.

An employee stock ownership plan is another method. Designed to raise employees’ enthusiasm for their work, the
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caps employee company ownership at 30 percent, “with each individual employee owning no more than one percent of the total.” The state stakeholder, however, will still hold at least 34 percent of a company’s total equity. The plan is currently being tested in pilot programs.

Public-private partnerships manifested through civil-military integration constitute the third pillar of MOR. Encompassing both defense conversion (junzhuanmin; 军转民) and civilian contracting (mincanjun; 民参军), civil-military integration seeks to reduce technological redundancy and accelerate the exchange of dual-use technology. Currently, civilian goods constitute
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of China’s two largest shipbuilding conglomerates’
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.

In March 2017, the People’s Liberation Army (PLA), for the first time in its history,
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more than 3,000 dual-use technology patents and
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2,346 to the public in an effort to increase transparency, incentivize innovation, and facilitate defense conversion. The patents included a synthetic aperture imaging system, a high power pulse modulator for a medical linear accelerator, a lateral drift control method for unmanned helicopters, and a blast energy absorbing honeycomb structure, to name a few. In addition, the military opened more of its current projects to civilian contractors. However, the
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between the state-owned and non-public sectors remains, as the former still mistrusts the latter, and the latter wishes for more leverage in dealing with the former.

MOR Outlook

There are a few challenges facing MOR in China. Although eroding under the anti-corruption campaign, entrenched interests in the defense industry can always make an argument against market-oriented reforms in the name of national security. The chasm between the state-owned and non-public sectors is deep, and it will take time before defense executives are willing to share power with new owners based on fairness and mutual respect.

Chronic underperformance makes some defense assets a tough sell. Companies related to military informatization are performing well. Five out of eight subsidiaries of the
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, specializing in informatization, witnessed year-on-year net income growth in 2016. Seven out of eight have debt to asset ratio above 33 percent, while five out of eight enjoyed over ten percent ROE in 2016.

However, high debt-to-asset ratios and unsatisfactory return on equity (ROE) are common among other firms. China Shipbuilding Industry Corporation (CSIC) and Aviation Industry Corporation of China (AVIC), two of the
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defense companies behind China’s first aircraft carrier and civilian airliner, respectively, are not performing well. CSIC’s two listed arms are experiencing net income growth, but their ROEs are below satisfactory. The ROE for China Shipbuilding Industry Co. Ltd. (SHA:
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) in 2016 was 1.23 percent and 1.73 percent in 2017. China Shipbuilding Industry Group Power Co. Ltd. (SHA:
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) had a ROE of 4.22 percent in 2016 and 6.05 percent for 2017. Only one out of AVIC’s 14 defense subsidiaries has a satisfactory ROE of above ten percent. Nine are more than 50 percent in debt.
 

Hendrik_2000

Lieutenant General
(cont)
China State Shipbuilding Corporation’s three listed arms have the worst balance sheets. In 2016, CSSC Science and Technology Co. Ltd. (SHA:
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) suffered a net loss of $6.23 million, -143.49 percent year-on-year. The debt-to-asset ratio was 63.92 percent, with an ROE of -1.18 percent in 2016 and 5.12 percent in 2017. COMEC (SHA:
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) had a net income of $10.33 million, -27.56 percent year-on-year. The debt to asset ratio was 77.5 percent, with its ROE at 0.69 percent in 2016 and 1.47 percent in 2017. China CSSC Holdings Ltd. (SHA:
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) lost $377.37 million in 2016 net income, an astonishing 4314.78 percent drop year-on-year. The debt to asset ratio was 67.88 percent, and ROE in 2016 was -17.43 percent with a 2017 projection at 0.2 percent. These figures look awful to retail investors and even to state-controlled institutional investors (banks, insurance companies, and investment firms) that put profit second to strategic aims, which in part explains why the stocks of companies involved in building the first
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and
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plummeted on their launch date.

There are
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for investors, particularly private equity firms. First and foremost, China’s defense industry only accepts
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, further complicating matters for funds using USD. Second, the lack of information and transparency continues to be an issue. The Chinese defense industry is extremely secretive. If not for the CMC’s push, the defense companies will not have opened itself voluntarily. Publicly available information on the inner workings of the defense industry is scant, and knowledgeable individuals prefer to deal only with people well versed in the defense business.
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is not only the norm, but also a necessity. Finding the right investment targets and knowing the PLA’s demands as well as future trends within the armed forces require special connections that most investors simply do not have.

Lastly, the defense industry is still
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by the “plan” and the state will not surrender its leadership position since defense is considered a “strategic sector.” The
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the state has in shaping corporate governance means non-state shareholders will always be at a disadvantage. Despite renewed
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to delimit the power of Party organs, shareholders, the board of directors, the supervisory board, and management, it is wise to remain skeptical regarding this question. According to
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, MOR will not fundamentally change China’s SOEs because the state can exert influence over companies regardless of direct or indirect ownership stakes.

In conclusion, although the defense industry is heating up to be a popular investment target due to growth potential, it is a complex and risky cluster that will keep investors cautious. While MOR will probably have some success in fundraising, a complete industry overhaul along the lines of the U.S. military-industrial complex is impossible due to the state-owned structure of China’s defense corporations.

Zi Yang is a researcher and consultant on China affairs. He covers Chinese politics, security, and emerging markets. Zi holds a M.A. from Georgetown University and a B.A. from George Mason University. Follow him on Twitter
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.
 

N00813

Junior Member
Registered Member
Hendrik_2000 said:
Privatizing China's Defense Industry snip

Unlikely in the extreme, to privatize everything. Maybe get private industry involved in small-arms or something non-essential like that, but I don't see private business having the funds or the motivation to develop something like J-20 at a reasonable cost.
 
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