Private companies still need level playing field: expert
A total of 155 out of 194 military-related stocks gained on Monday in the Chinese mainland stock market, as investors rallied after the nation launched a central commission for integrated military and civilian development headed by President Xi Jinping.
Nine stocks rose by the daily limit of 10 percent, according to calculations by the Global Times based on data on financial news portal sina.com.cn.
The benchmark Shanghai Composite Index edged up 0.44 percent to 3,136.77 points on Monday.
The newly formed commission has been launched as China expands its military hardware and hopes to better tap into innovation, investment and production capacity in the civilian sector, according to media reports.
China announced a top-down policy in July 2016 on the integration of economic and military development, calling for relevant law improvement, synchronization and sharing between the two by 2020.
"High-tech private-sector companies with products that have military applications can benefit from the national policies and their implementation. Those already listed on the stock market stand to reap more benefits, although there are also a few matters to be solved," Han Pu, co-founder of Beijing-based jmrh.cn, a decade-old website that has boosted the integration of civilian and military investment and technology.
"These policies will allow private companies to better take part in military procurement. Particular sectors that stand to benefit include artificial intelligence, material science and communication systems with potential military applications," Han noted.
China has 2,000 private-sector military-industrial companies with the credentials that allow them to engage in the research, development and production of military hardware, according to Han. And about 60 percent of these companies have cooperated with Han's website at least once and more than 200 private companies have provided products and services via the platform to the Chinese military.
Despite continued progress, Han said that the government still needs to focus on providing a level playing field for the private companies with an interest to "join the military."
Issues such as biased attitudes held by traditional players still limit the scope of involvement by private companies. For instance, some (military) procurers will doubt private companies' reliability, fearing that they might go bankrupt someday and therefore be unable to maintain their products and services as needed by the military.
"State-owned military-industrial companies also have perks, putting private competitors in a disadvantaged position," he said.