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China to open defence sector to private investments: official

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BEIJING (PTI): China, the world's second largest defence spender after the US, will allow more private enterprises to take part in its arms sector for development and production of weapons and other military equipment, a top official has said.

"The government will open more fields in the defence sector to private enterprises and lower the entry threshold for them," said Xu Dazhe, director of the State Administration of Science, Technology and Industry for National Defence, which oversees China's defence industries.

Dazhe's remarks came as China opened the First Military and Civilian Industries Integration Expo in Beijing.

Private enterprises' military technologies and State-owned defence companies' civilian products are on display at the 10-day event, which began on Thursday.

"The administration will gradually reduce restrictions on private businesses in the military equipment industry and offer more favourable policies to encourage State-owned defence contractors to increase the use of parts made by private companies," Dazhe was quoted as saying by state-run China Daily on Monday.

China which has a defence budget of about USD 145 billion is gradually opening the defence market to private enterprises since 2005.

Businesses can bid for contracts from the PLA after obtaining four government-issued licenses that cover confidentiality and technological capability.

According to Xu Zhanbin, deputy director of the administration, nearly 1,000 private companies have been given permission to develop and produce weapons or other military equipment, accounting for about 40 per cent of defence equipment contractors in China.

"However, many factors still hinder the integration of defence and civilian industries. For instance, private companies have poor access to the large experimental instruments and testing facilities of state-owned defence enterprises," Zhanbin said.

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