Briefing: The $60 billion bill for Chinese modernisation

The Chinese government announced in January the introduction of an economic stimulus programme for its leading military aerospace and shipbuilding conglomerates that have so far resulted in more than USD60 billion being transferred to three state firms.

As well as tax relief and other subsidies, China's Aviation Industry Corporation (AVIC) has received a series of advances worth USD36.7 billion. State media revealed on 8 April that the China State Shipbuilding Corporation (CSSC) and the China Shipbuilding Industry Corporation (CSIC) "recently" received loans valued at USD14.6 billion and USD8.8 billion respectively.

The groups - which, along with the land-focused China North Industries Group (Norinco) dominate the Chinese industrial base - have revealed only sparse details as to how the funds will be utilised. State media speculated that loans extended to AVIC would be used to fund a restructuring programme and to assist a drive to promote exports; and that credit provided to CSSC and CISC would be used to assist the companies tackle "the deteriorating shipbuilding industry worldwide".

In analysing the stimulus programme and its likely impact, a leading Chinese defence analyst, TaiMing Cheung - a senior fellow at the University of California Institute on Global Conflict and Co-operation - told Jane's on 13 April that he believed the funds were designed to drive forward modernisation in alignment with the China government's long-term military development plans while at the same time consolidate the primes' economic stability.