Revisiting Chinese Defense Conversion: Some Evidence from the PRC`s Shipbuilding Industry

Abstract

Since the early 1980s, the People`s Republic of China (PRC) has been involved in a large-scale program of defense conversion to boost the civilian output of its ailing defense industries. However these conversion efforts have experienced problems due to a lack of access to foreign capital, technology, and expertise, as well as indigenous factors. In contrast to many of the PRC`s other defense sectors, the shipbuilding industry has developed into an internationally competitive, highly diversified, and relatively profitable entity producing a wide range of civilian goods. In examining this anomaly, the article considers several possible reasons such as the industry`s rapid conversion and export orientation, and highlights some potential spill-over effects on the PRC`s naval modernization efforts.