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APPENDICI Al Centro Militare di Studi Strategici APPENDICI al Rapporto di Ricerca - STEPI AF-T-01 Chinese Aerospace progress in XXI century. Situation, perspectives, criticalities. Never ending race or a process with an epilogue? del T.Col. SEMBENINI ing. Giovanni This APPENDIXES Section closing date: November 2012 Contents Chinese Aerospace progress in XXI century. Situation, perspectives, criticalities. Never ending race or a process with an epilogue? Appendix a-1: China Pag. 1 Appendix a-2: Chinese aviation primer Pag. 15 Appendix a-3: Chinese Space primer Pag 50 Would like to know, also: China at a glance Pag. 130 Wong Tsu Pag. 166 Quian Xuesen Pag. 174 China a-1 China – Introduction. The nation of China has had numerous historical incarnations. The ancient Chinese civilization—one of the world's earliest—flourished in the fertile basin of the Yellow River in the North China Plain. China's political system was based on hereditary monarchies, known as dynasties, beginning with the semi-mythological Xia of the Yellow River basin (approx. 2000 BC) and ending with the fall of the Qing Dynasty in 1911. Since 221 BC, when the Qin Dynasty first conquered several states to form a Chinese empire, the country has expanded, fractured and been reformed numerous times. The Republic of China, founded in 1911 after the overthrow of the Qing dynasty, ruled the Chinese mainland until 1949. In 1945, the ROC acquired Taiwan from Japan following World War II. In the 1946–1949 phase of the Chinese Civil War, the Communist Party defeated the nationalist Kuomintang in mainland China and established the People's Republic of China in Beijing on 1 October 1949, while the Kuomintang relocated the ROC government to Taipei. The ROC's jurisdiction is now limited to Taiwan and several outlying islands, including Penghu, Kinmen and Matsu, and it has received limited diplomatic recognition. Since the introduction of economic reforms in 1978, China has become the world's fastest-growing major economy. As of 2012, it is the world's second-largest economy, after the United States, by both nominal total GDP and purchasing power parity (PPP), and is the world's largest exporter and second-largest importer of goods. China is a recognized nuclear weapons state and has the world's largest standing army, with the second-largest defense budget. 1 Ch_Sp_201311_Appendices.doc The PRC has been a United Nations member since 1971, when it replaced the ROC as a permanent member of the U.N. Security Council. China is also a member of numerous formal and informal multilateral organizations, including the WTO, APEC, BRICS, the Shanghai Cooperation Organisation, the BCIM and the G-20. China has been characterized as a potential superpower by a number of academics, military analysts, and public policy and economics analysts. http://en.wikipedia.org/wiki/China (last accessed 15 November 2012) 2 Ch_Sp_201311_Appendices.doc Economics elements in support of China’s future military It is somehow difficult to resume in a short form the overall economical situation of China. A possible reading, functional to the purpose of this essay is to look at how resources can be made available to the military structure, or part of it. As already mentioned, aerospace development in China is intimately connected with the militaries. It is driven by military needs, dictated by a new level of ambition for China to stand out not simply as a regional power but a true super power; and in turn aerospace drives the new military might of a country that has enourmous military resources in terms of personnel but still lags behind many western powers in terms of sheer technological contents. Hence reading the economics system in its entirety and focusing on how the resources can be made available to the military can provide added value to the overall picture of the country. The following excerpt from a Center for Strategic and International Studies (CSIS)1 dcocument gives a brief overview of how the Chinese system economy can support key advancements in the military and thus in the aerospace sector. Underlying Resources for China’s Security Capabilities China has recorded comparatively high GDP growth rates during the past two decades and there is currently no indication that economic growth will significantly slow in the near future. In 2011, China‘s nominal GDP stood at $6.99 trillion (based on exchange rate) while its purchasing-power parity (PPP) GDP stood at an impressive $11.29 trillion. Moreover, China‘s economy is predicted to continue its robust expansion into the middle of the decade: the International Monetary Fund (IMF) predicts that China‘s economy will grow at rates of 8.2% and 8.8% for 2012 and 2013 respectively. The Economist Intelligence Unit, taking a longer view, predicts: ―economic expansion will moderate in 2012-16 to an average of 8.1% a year as net exports subtract from GDP growth.‖ Consequently, in the near term, China‘s economic growth will continue and China‘s potential to support large and advanced military forces will increase. While the IMF‘s World Economic Outlook update for January 2012 predicted sustained economic problems in the euro area, which would negatively affect other regions, such spill over effects, are not predicted to significantly slow China‘s economic growth. To quote the report, ―Despite a substantial downward revision of ¾ percentage point, developing 1 http://csis.org/ Asia is still projected to grow most rapidly at 7½ percent on average during 2012–13.‖ The World Bank‘s Global Economic Prospects: Uncertainties and Vulnerabilities, released January 2012, echoes this sentiment, stating: ―Economic growth in China, representing about 80 percent of regional GDP, eased over the course of 2011, from 10.4 in 2010, to 9.5 percent in the third quarter of 2011, and is expected to dip further to a (still robust) 8.4 percent in 2012 as authorities continue to dampen ‗overly-fast‘ growth in a number of economic sectors.‖ However, it is important to also note that there still exists significant uncertainty in China‘s economic future. The Great Recession and the Eurozone‘s sovereign debt crisis could have grave implications for the East Asian region as a whole. While probable economic forecasts place the region in a positive light, the World Bank illustrates the potential economic risks facing East Asia: ―Risks and Vulnerabilities For the majority of countries in the region, the health of the global economy and high- income Europe, in particular, represents the strongest risk at this time. Trade. If the situation in Europe deteriorates sharply, global trade could fall by 5 or more percent with serious implications for the very open East Asia region. Finance. The potential freezing up of international capital flows under emerging global conditions has increased, exposing East Asian countries, notably, China, Indonesia, Malaysia and Thailand to the possibility of market disruptions, exchange rate volatility and external financing pressures. Vulnerabilities are more acute for countries with large shares of short term and maturing debt or current account deficits. Commodity Prices. A large number of commodity exporting countries in the region could experience revenue losses (notably oil exporters and especially raw materials producers) under a slower global growth environment. Remittances. Migrant remittance receipts are potent drivers for growth in countries, such as the Philippines and small island economies – these flows, as well as tourist arrivals could be stymied by sluggish labor market developments in the OECD and could fall sharply in the event of a global crisis. Real Estate in China is arguably over inflated. Should the market deflate, ensuing wealth losses and loan defaults could further weaken the outlook for China.‖ 4 Ch_Sp_201311_Appendices.doc However, despite these risks, the consensus view is that China will continue enjoying robust, if not outstanding economic growth. Figures below demonstrate differing estimates of China‘s economic performance. The key point illustrated by both Figures is the consensus, by multiple organizations, that China will continue to experience robust economic growth even if it does not experience the double-digit growth of the mid-2000‘s. Chinese percentage growth rates from 2000 to a 2013 projection. Sources: All sources accessed March, 2012. World Bank: http://data.worldbank.org/indicator IMF World Economic Outlook: http://www.imf.org/external/pubs/ft/weo/2012/update/01/ CIA: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html IMF Principle Global Indicators: http://www.principalglobalindicators.org/default.aspx 5 Ch_Sp_201311_Appendices.doc Chinese real GDP 2000-2011 Sources: Accessed March 2012. World Bank: http://data.worldbank.org/indicator CIA: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html 6 Ch_Sp_201311_Appendices.doc Comparison of defense economics trends. It shows a strong correlation between the rate of increase in GDP and a rise in official military expenditure as acceleration in GDP growth is matched by a constant defense expenditure-to-GDP ratio. Source: The World Bank, DataBank, World Development Indicators. Accessed March 2012. http://data.worldbank.org/indicator These figures need to be kept in mind when interpreting the level of Chinese military spending. As the DOD states: ―Although the military budget increases are slightly larger than the percentage increases of its overall economic growth of 10.2 percent over the same period, the actual change in the implied burden of the official defense budget on the economy appears negligible.‖ 7 Ch_Sp_201311_Appendices.doc Consequently, China‘s military expenditure is relatively constant when compared to national income. Many governments increase military spending in rough proportion to economic growth: they may find strategic rationales for doing so, but wealth seems to generate force development, particularly in developing nations and emerging powers. This tendency to consciously or unconsciously peg military expenditure to GDP magnifies the importance of trends that may augment or impede GDP growth.
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