Myths and Realities of China’s Military-Civil Fusion Strategy

The intense attention that Chinese leaders have dedicated to MCF, along with forceful rhetoric, reflects concerns that reforms have not progressed rapidly enough. MCF aims to promote deeper integration of China’s civilian and defense economies and their respective technological ecosystems. This effort is intended to create and leverage synergies between economic development and military modernization, allowing the defense and commercial enterprises to collaborate and synchronize their efforts through the sharing of talent, resources, and innovations. MCF is startlingly expansive in scope, including everything from efforts in big data and infrastructure to logistics and national defense mobilization.

The success of this strategy is hardly a foregone conclusion. The “fusion” that MCF intends to create remains primarily aspirational, such that this phrasing is not yet a true reflection of realities on the ground in China. Over the past 30 years, China’s defense sector has been primarily dominated by sclerotic state-owned enterprises that remain walled off from the country’s dynamic commercial economy. At its core, MCF is intended as a remedy to this problem. However, years of reforms and policy initiatives have had limited efficacy in reducing those barriers. Still, only a small proportion of private companies have participated in defense projects, and enterprises that are developing technologies relevant to the military have found cutting through the red tape involved in procurement to be cumbersome, not unlike the frustrations of their American counterparts.