Executive Summary from "Pulling Back the Curtain on China's Military-Civil Fusion"

Over the past several years, China has worked to transform the People’s Liberation Army into a sophisticated, highly capable force that can compete with the U.S. military. In so doing, Beijing has reformed the PLA and rolled out various policies to fast-track military modernization. Key to the Chinese government’s aims is the use of artificial intelligence (AI) and related technologies to boost the Chinese military’s development and adoption of advanced capabilities to outmatch rivals in future conflicts. To accelerate military modernization, Beijing has encouraged the PLA and state-owned defense conglomerates to work more closely with the civilian sector under its military-civil fusion (MCF) strategy. By fostering closer coordination between the defense and civilian sectors, China’s top leaders believe that the PLA can match and eventually surpass U.S. military capabilities. This report leverages a novel dataset of 2,857 AI-related contract award notices published by the PLA between January 2023 and December 2024. From these documents, we identified 1,560 different organizations that won at least one such AI-related contract. We focus our analysis on the 338 entities awarded at least two AI-related contracts, collecting open-source information on each to shed light on China’s AI-related defense industrial base. Furthermore, we assign each entity to one of three categories: state-owned enterprises (SOEs), research institutions, and nontraditional vendors. Our analysis shows that SOEs and research institutions with longstanding ties to the PLA continue to lead AI-related military procurement. Of the fifteen top awarded entities in the dataset, eleven were either SOEs or defense-affiliated research institutions. The SOEs that won the most contracts were China Electronics Technology Group Corporation (CETC), China Aerospace Science and Technology Corporation (CASC), and China North Industries Group Corporation (NORINCO). The Seven Sons of National Defense—a group of universities closely affiliated with China’s defense sector—and various affiliates of the Chinese Academy of Sciences were also among the top awarded entities in the dataset, reflecting their importance in supporting China’s military modernization efforts. In short, many of the same organizations that have historically driven Chinese defense technology advancements are also the top suppliers of AI-related goods and services within our dataset. Nonetheless, the dataset reveals that an emerging class of firms and universities appears to also play a consequential role in China’s AI-related military procurement. Close to three-quarters of the 338 entities analyzed in this report are nontraditional vendors (NTVs), or firms with no self-reported state ownership ties. NTVs won 764 contracts, the most of any of the three categories. Most NTVs