In August 2024, the former chairman of the Aviation Industry Corporation of China (AVIC) was investigated as part of China’s ongoing anti-corruption campaign targeting the military-industrial sector. Reports indicated that this crackdown, which began in 2023, could impact the operational readiness of the People’s Liberation Army (PLA) and the broader defense industry.
However, the scope of the purge may be less severe than publicly perceived. Instead, it likely serves as a strategic move by top leader Xi Jinping to further strengthen China’s military power.
After the 20th Party Congress, Xi’s key military and defense goals centered on developing “integrated national strategies and strategic capabilities” to boost China’s military strength by unifying various sectors. To achieve this, Xi has built a military-industrial complex that previously did not exist, and the purge of the defense sector is a crucial step toward realizing this goal.
The Essence of the Purge
Why is a purge in the defense industry essential for establishing a military-industrial complex in China? Over the past decade, China’s military has made significant advancements, evolving from being decades behind the West to being considered a global military power, now close behind the United States in certain domains of warfare. This progress is largely attributed to substantial investments in the defense industry and Xi’s push for military-civil fusion, which has significantly boosted production capacity. However, China’s defense industry still faces long-standing issues, as Xi has not been able to root them out successfully.
For instance, after years of effort, only one out of 41 research institutes has successfully completed the reform of defense S&T institutes. Contributing factors may include the reluctance of hundreds of institutes to participate and the hesitation of government agencies to coordinate or approve the reform plan, with only one institute receiving approval. This highlights unresolved administrative and innovation constraints within core defense S&T institutes, which are crucial to China’s military technology development and yet continue to resist the full optimization of operational efficiency.
Another example is the defense industry certifications. Since the 1980s, China’s defense reforms have focused on two different facets: spin-off (the defense industry entering the civilian market) and spin-on (civilian involvement in defense). While spin-off has been successful in making the defense corporations profitable, spin-on has struggled due to the sensitivity of the industry and internal protectionism. Certifications are required for civilian enterprises to engage in defense-related activities. However, Chinese officials have admitted that, despite policy efforts, civilian entities still face barriers and restrictions in entering the defense sector.
These examples show that while Xi aims to integrate various sectors, he faces the same issues – such as vested interests and protectionism – that hindered previous reforms. Many changes have been superficial. Recent advancements in military equipment and technology are likely due to massive resource investments, but the processes remain inefficient. While this may be sustainable in a strong economy, economic challenges could strain China’s resources moving forward.
In this context, Xi must address the root causes of stalled reforms, including resistance from officials within the defense sector.
A Controlled Cleansing
An overly extensive purge in the defense industry could hinder the development of China’s defense technology and military capabilities. Therefore, Xi’s crackdown must be carefully restrained, and current actions seem to reflect this caution. While the purge netted high-profile officials – most notably former defense ministers Li Shangfu (previously the head of the Equipment Development Department from 2017 to 2022) and Wei Fenghe – the impact has been more constrained than it first appeared.
Since 2023, at least 15 officials in the defense industry have been formally investigated for corruption. Among the highest-ranking officials, only Tan Ruisong, chairman of AVIC, and He Wenzhong, vice general manager of China Electronics Technology Group Corporation, have been implicated. In other sectors, such as shipbuilding, ordnance, and the nuclear industries, investigations have involved only senior officials from subsidiaries or institutes.
Notably, the chairman of China Aerospace Science and Technology Corporation (CASC), the chairman of China North Industries Group Corporation (NORINCO), and the deputy general manager of China Aerospace Science and Industry Corporation have not been formally investigated, although their roles in the Chinese People’s Political Consultative Conference have been revoked.
Zhang Kejian, head of the National Administration of Science, Technology, and Industry for National Defense, has held his position since 2018 and, despite not securing a promotion to the Central Committee during the 20th Party Congress, has not been involved in any major corruption cases. Similarly, Jin Zhuanglong, the former executive deputy director of the Central Military-Civil Fusion Development Committee Office from 2017 to 2022 and the minister of industry and information technology (MIIT) since 2022, remains untouched by corruption probes and continues to oversee industrial affairs.
Finally, recent anti-corruption investigations have not led to a structural reorganization of the defense industry, unlike the overhaul in the late 1990s. This suggests that the industry could continue to operate as usual.
The Extent and Impact of the Purge
To evaluate the severity and potential impact of the current defense industry purge, a comparison with the purge in the shipbuilding industry after the 19th Party Congress may provide valuable insights.
Soon after the 19th Party Congress, the chairman and general manager of China Shipbuilding Industry Corporation (CSIC) were investigated, leading to its merger with China State Shipbuilding Corporation (CSSC). After the merger, leadership roles in the new CSSC were filled by executives from the original CSSC, signifying leadership rotation and structural changes. Despite these changes, the shipbuilding industry’s ability to expand the PLA Navy fleet was not hindered and even grew significantly.
After the 20th Party Congress, while the purge has extended to nearly all major defense corporations, no chairperson and general manager from any corporation have been simultaneously investigated, and there have been no major structural changes within the industry. If the current purge is less extensive than the one in the shipbuilding industry following the 19th Party Congress, it is reasonable to expect a lesser overall impact.
Therefore, based on these observations, Xi has shown restraint in purging the defense industry. This suggests his primary goal is to enhance China’s national defense capabilities, rather than focusing solely on anti-corruption. Specifically, the purge targets forces resisting military-civil fusion, enabling the newly envisioned military-industrial complex to function more effectively.
A Chinese-Style Military-Industrial Complex
Researchers have observed the rise of a “military-industrial group” within China’s leadership after the 20th Party Congress. In fact, Xi has simultaneously established a large-scale military-industrial complex to advance integrated national strategies and capabilities.
The traditional military-industrial complex involves cooperation between the military, industry, and scientific communities to support policies conducive to the defense industry. While China lacks the checks and balances of Western democracies, its fragmented authoritarian system creates friction and protectionism between sectors, making it difficult even for a powerful leader like Xi to fully implement his policies, such as the reform of defense S&T institutes and the defense industry certifications for civilian firms. This fragmentation can make the execution of large-scale national policies in China, especially those involving vested interests, as challenging as in Western countries.
To prevent failures like those of past defense industry reforms, Xi must establish a military-industrial complex within China’s party and government circles. This complex would integrate the defense sector with military personnel, the State Council, and local officials tied to the defense industry, ensuring smooth coordination from procurement and policy planning to resource allocation, industrial operations, and local support. Xi has used personnel appointments following the 20th Party Congress to build a uniquely Chinese version of the military-industrial complex.
First, the PLA, which sets military procurement demands, is represented by Xi, who is also chairman of the Central Military Commission (CMC), and Vice Chairman Zhang Youxia. Before his promotion to CMC vice chairman in 2017, Zhang headed the General Armament Department (now the Equipment Development Department) from 2012 to 2017, overseeing the PLA’s equipment needs. His tenure aligned with Xi’s push for military-civil fusion, positioning Zhang as a key figure in coordinating military requirements within this policy framework.
Notably, Zhang Youxia was not implicated in the anti-corruption investigations following the 20th Party Congress, likely a deliberate decision by Xi. The investigation, announced by the Equipment Development Department in July 2023, targeted military procurements dating back to October 2017 – exclusively during the tenure of Li Shangfu. Zhang was promoted to vice chairman of the CMC and left the post of department head in September 2017. Given the scale of the probe, it almost certainly had Xi’s approval. The decision to limit the investigation to after Zhang’s departure, avoiding retroactive scrutiny, was likely made to shield him from past allegations.
Second, in terms of policy planning and resource allocation, key State Council officials overseeing the defense industry have significant experience in the military-industrial sector. Vice Premier Zhang Guoqing, responsible for industrial development, spent over 20 years at NORINCO, one of China’s largest defense contractors. Similarly, Minister of Industry and Information Technology Jin Zhuanglong, who oversees industrial affairs, spent over a decade at CASC and served as deputy director of the Commission for Science, Technology, and Industry for National Defense (COSTIND), which manages the defense sector.
It is vital to note that, in China’s March 2023 Ministry of Science and Technology (MOST) reorganization, authority over the management of high-tech sectors was transferred to the MIIT. This indicates that the MIIT has further expanded its control over industry affairs. Importantly, when this plan was announced, the minister of science and technology was Wang Zhigang, who has defense industry experience from China Electronics Technology Group. His tenure was deliberately extended until October 2023 to complete the reorganization, given that he would have conventionally stepped down in March.
Third, local governments managing military-industrial clusters are led by officials with extensive defense industry experience, particularly in provinces with key defense industrial units. For instance, Liaoning Party Secretary Hao Peng worked at AVIC; Heilongjiang Party Secretary Xu Qin previously served in the previous incarnation of NORINCO, the Ministry of Ordnance Industry; and Shaanxi Governor Zhao Gang was once vice general manager at NORINCO.
Fourth, the position of executive deputy director of the Central Military-Civil Fusion Development Committee Office is reportedly now filled by Lei Fanpei, former chairman of CSSC. After Jin Zhuanglong was transferred from the post in 2022, no successor was officially announced. However, Lei, a member of the 20th Central Committee who is frequently seen alongside ministerial-level party officials, is speculated to have taken the position. As Lei may be the only Central Committee member without a publicly disclosed post, this speculation seems credible, especially given the ministerial status of the role (the director position is typically held by a vice premier).
What Next?
Such a complex has never previously existed in China. In the CMC, the only other person promoted from head of the General Armament Department to vice chairman of the CMC was Cao Gangchuan. However, Cao, who had a logistics background, was critical of the performance of China’s defense industry during the 1980s and 1990s. This led him, as director of COSTIND from 1996 to 1998, to favor defense industry reform and support measures to suppress the industry. In 1998, when he was transferred to the newly established General Armament Department, military procurement powers were also shifted from COSTIND to the PLA. Equally important, during this period, there was no vice premier or ministerial-level official in the State Council overseeing industry with extensive defense industry experience.
While some officials with defense industry experience were appointed to provincial roles and the Central Military-Civil Fusion Office during the 19th Party Congress, the absence of senior officials with the same experience in the CMC and State Council made it difficult to overcome the bureaucratic friction typical of the Chinese Communist Party’s governance system.
Xi’s purge of the defense industry and the establishment of a military-industrial complex aim to advance integrated national strategies and capabilities by mobilizing resources and improving efficiency in military technology and equipment production. While resource integration is feasible, the challenge lies in effectively managing coordination and distribution. The military-industrial complex alone does not ensure success. Key factors include the extent to which entrenched practices in the defense industry can change and how well military-civil fusion can truly integrate across government sectors and industries.