Article Posted on : - Nov 27, 2014

BEIJING (PTI): In an "unprecedented move" China has opened its arms industry to private sector to optimise its hefty USD 132 billion defence budget and modernise the army.

The People's Liberation Army, (PLA) is inviting private enterprises to bid on its training-related contracts, a move to optimise the military budget, official media reported on Wednesday.

The PLA General Staff Headquarters recently published 108 military items for "advanced training technologies and equipment", encouraging private companies to take part in their research, development and manufacturing.

The move indicates that the military is moving away from a monopoly of state-owned defence contractors in training logistics and lowering the eligibility threshold for military procurement, the official PLA Daily reported.

It said that as the PLA makes its combat exercises more realistic, training technologies and equipment have become increasingly incapable of meeting the military's requirements, so it is necessary to tap into private businesses' expertise.

The 108 items being sought include dummies used by medical personnel and simulators for early warning planes and aircraft carrier operators and technologies such as short-distance wireless positioning and cloud computing.

"These public procurements are unprecedented in their openness, transparency and wide coverage. They will help lift the effectiveness of our military spending and optimise resource distribution, thus boosting the PLA's modernisation drive," the newspaper quoted an unidentified officer from the PLA as saying.

According to PLA Daily, 117 defence industry companies and private enterprises have submitted proposals covering 106 of the 108 procurements.

The new policy to open up to the private sector through competitive and transparent bidding came in the backdrop of major anti-corruption campaign in which some of the top Generals are being investigated.

Plush with the second highest defence budget after the US, China is currently carrying out a massive modernisation drive of its military with constant increase of its defence budgets, which this year touched USD 132 billion.

China has been gradually opening the defence market to private enterprises since 2005. By May 2013, more than 500 private companies had received permission to develop and produce weapons or other military equipment for the PLA.

A report published by PLA National Defence University in July said that some private companies had even played an important role in the country's top-tier projects including the Shenzhou-10 spacecraft, Chang'e lunar exploration and the CNS Liaoning aircraft carrier.

Currently, businesses bidding for PLA contracts must obtain government-issued licenses on confidentiality and technological capability.