St. Petersburg Times

JULY 14-20, 1997

RUSSIA TOO BUSY ARMING CHINA TO CARE ABOUT CONSEQUENCES

By Pavel Felgenhauer

Pavel Felgenhauer is defense and national security affairs editor for the Moscow-based daily Segodnya.

LATE last month, Russian Prime Minister Viktor Chernomyrdin visited Beijing to "reinforce strategic partnership" with the People's Republic of China and to announce new important arms deals that will provide the Chinese People's Liberation Army, or PLA, with additional Su-27SK fighter jets and Sovremenny-class destroyers with Sunburn cruise missiles. Several days later, the PLA marched in force into Hong Kong, returning the former British colony to Beijing's control.

The next main objective of PLA-led unification of China under Beijing's communist rule can only be the fiercely anticommunist Republic of China. But to project force over the Taiwan Straits to press Taipei into submission, Beijing needs much enhanced maritime and air power capabilities. And, apparently, only Russia is able and willing to provide the outdated Chinese military with the required modern technologies.

China and the Soviet Union were very close communist allies in the '50s and joined forces to support North Korea in the Korean War. The entire Chinese conventional defense industry was built with Soviet help and equipment. Even today Chinese industry is producing cloned old-fashioned, Soviet-style arms systems.

Attempts to Westernize the Chinese defense industry in the '80s were not very successful, and after the vicious suppression of the pro-democracy movement in 1989 by the Beijing authorities, Western military transfers were stopped. So when Russian arms traders and arms makers reappeared the same year in Beijing after 30 years of absence, they soon became very welcome guests: Moscow was also ready to take part of the payment in the form of "barter" shipments of Chinese-made, low-quality clothing, electronics and food.

Three quarters of the first contracts to supply Su-27SK jet fighters and Kilo-class submarines were covered by barter, which helped the People's Republic to economize on hard currency. Later Moscow managed to rewrite the submarine contract to get only 50 percent paid by barter.

Today almost none of the new arms deals with China, especially modern technology transfers under licensing agreements, have any "barter" component. China's growing trading surplus (especially with the United States) has allowed Beijing to be more liberal with its hard currency reserves and to pay Russian defense contractors in dollars. Beijing has invested substantial amounts of money, but the main goal - technology transfers and lucrative licensing deals that should boost Chinese defense industry and armed forces into the next century - has been clogged up for years by the Moscow bureaucracy.

The agreement that was announced last week to transfer know-how and equipment to China, enabling it to build 200 Su-27SK fighters under license was actually finalized in 1994 in Beijing after fierce bargaining over the price between Chinese officials and a Russian delegation led by the then general director of Russian arms exporter Rosvooruzheniye, Viktor Samoilov, and the head of the Sukhoi aircraft company, Mikhail Simonov. Moscow first asked for $1.6 billion, the Chinese offered ten times less, and the final price of the Su-27SK license is reported to be $450 million.

By the beginning of the next century, China will have up to 300 modern long-range Su-27SK fighters as well as warships armed with the world's most vicious supersonic anti-ship cruise missile - the Mosquito, or "Sunburn" as it is known in the West - to deploy against Taiwan. The forceful reunification of Taiwan could become as "inevitable" as the reunification of Hong Kong has been for the past few years.

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Johnson's Russia List

#1056

17 July 1997

djohnson@cdi.org