Mianyang-Science at the Epicenter:
The Shaken Foundations of Mianyang’s Quest to be a Dual-Use and Hi-Tech Hub

August 2008

Tai Ming Cheung

The massive earthquake that devastated Southwest China in May 2008 briefly drew international attention on Mianyang, a dynamic city of 600,000 people near the epicenter of the disaster. Although tucked away deep in the rural backwaters of Sichuan Province, Mianyang is a prominent center for civilian, military and dual use science and technology (S&T) research and home to a booming electronics industry.

Before the earthquake struck, Mianyang had high hopes of solidifying its position as a key hub in the technological development of Sichuan and the national economy. In the aftermath of the quake,in which nearly 22,000 residents were killed, 8000 listed as missing, and 168,000 injured[i] the city faces a difficult, prolonged and expensive task of rebuilding the shattered foundations of these S&T ambitions.

Cold War Stepchild

Mianyang though is no stranger to adversity. The city emerged as an important strategic location in the 1960s when the Maoist central authorities transferred key military industrial facilities deep into the country’s remote interior to shield them from foreign attack. This stepchild of the Cold War became a closed center for nuclear weapons research and military electronics development and quickly grew.

With the onset of economic reforms, opening up to the outside world and sharp cutbacks in defense spending in the 1980s, Mianyang faced its first big challenge of shifting from military to civilian work. Many other places in China’s deep interior faced the same predicament and struggled to make this transition, but Mianyang had the good fortune of having several entrepreneurial military industrial enterprises that were able to find lucrative commercial niches for their civilian output.^[ii]

The most successful is Sichuan Changhong Electronics Group, a former military electronics enterprise that has become one of the country’s biggest producers of televisions and household appliances. The Mianyang municipal and Sichuan provincial governments are the majority owners of Changhong, which is also listed on the Shanghai stock exchange. Another is Sichuan Jiuzhou Corp., a major producer of optical cables, power cables, electric lines, and cable TV wideband information systems.

Mianyang’s Ambitions to be at the Center of China’s Emerging Dual-Use Economy

Mianyang has sought to build on the success of the defense conversion process that took place in the 1980s and 1990s by positioning itself to be in the vanguard of the next stage of the development of the dual-use economy. Since the end of the 1990s, the Chinese authorities have broadened the focus from military-to-civilian ‘spin-off’ to emphasize the importance of cultivating civilian-to-military ‘spin-on’ applications as well as the development of technologies that are applicable to both civilian and military functions from the outset.

In its quest to be a leader in the building of this dual-use economy, Mianyang’s municipal leadership lobbied hard with the central authorities. As a result, the Commission for Science, Technology and Industry for National Defense (COSTIND) and the Ministry of Science and Technology (MOST) in September 2002 designated Mianyang as the country’s first military-to-civilian S&T park.^[iii] While the principal focus of this park is on the commercial exploitation of spin-off activities, there is also considerable interest in promoting civil-to-military spin-on benefits, especially in areas such as defense electronics, optical technology, composite materials and space, and aviation-related technology.^[iv]

Mianyang is home to 18 key defense and dual use R&D institutes involved in nuclear physics, engineering physics, aerodynamic research, and gas turbine development, an assortment of universities, and around 100 research academies involved in high-technology R&D. The city claims that it has more than 100,000 scientists and engineers, or one out of six of its urban residents.^[v]

Among the most prestigious of these facilities is the Chinese Academy of Engineering Physics (CAEP), the equivalent of the Los Alamos, Lawrence Livermore, and Sandia National Laboratories rolled into one entity with nuclear weapons research, development and testing laboratories. CAEP has nine research institutes with several thousand personnel scattered in and around Mianyang.  One research reactor, two nuclear fuel production sites and two nuclear weapon facilities are located in the vicinity of Mianyang. They include the No.821 Factory near Guangyuan that is China’s principal complex for making nuclear warhead fuel from spent plutonium, and was was in the earthquake zone, as  as well as a hidden complex of large tunnels in a rugget mountainous region in Northern Sichuan that reportedly stores nuclear weapons.

According to statistics from Mianyang’s Defense S&T and Industrial Office, the city in 2003 had 60 enterprises that were categorized as dual-use enterprises with annual industrial production of Rmb 19 billion. Nearly half of these firms were in the electronics and information engineering sectors.[vi] The contribution of converted defense industrial enterprises to Mianyang’s industrial activities is significant, accounting for between 30 and 50 percent of the total value of annual industrial output between 1994 and 2003.[vii]

Changhong is the biggest enterprise in Mianyang’s dual use sector. However, as the firm became successful in the civilian market from the mid to late-1980s, it paid little attention to military production. But in the past few years, Changhong has steadily moved back into the military arena, which was highlighted by its establishment of the the Sichuan Electonics Military Industrial Corp. Group last year that will spearhead its expansion into the military and dual use markets. 

The Economic Impact of the May 2008 Earthquake on Mianyang and Sichuan

The road to economic recovery for Mianyang and Sichuan is likely to be long and difficult, although the military, dual use and S&T sectors may be better placed to return to normal more quickly. At a seminar held in June by the Sichuan Academy of Social Sciences, leading local economists estimated that Sichuan, and especially the 100 km long Chengdu-Mianyang economic belt, would require five to seven years to return to pre-earthquake levels of prosperity. This is because the province is estimated to have sustained nearly Rmb 500 billion in economic losses from the earthquake, much of which was in the Chengdu-Mianyang corridor. The heaviest hit industrial sectors included the electric power generation and chemical sectors, while 14 percent of the province’s farmland was destroyed.

There has been conflicting reports on the scale of damage inflicted on the province’s defense industrial and dual-use apparatus. Chinese government and military officials have sought to downplay the impact, while foreign media reports have suggested that the damage on defense-related facilities has been far more extensive.

One of the biggest tragedies from the earthquake was the collapse of scores of poorly built schools that led to the deaths of an estimated 10,000 schoolchildren. Universities and other institutions of higher education located in and around Mianyang also suffered extensive damage, although the loss of life was limited because of better construction standards. One of the worse-affected was the Southwest University of Science and Technology, one of the leading S&T universities in the province with close ties to the nuclear weapons and defense industrial establishments. A quarter of its buildings were severely damaged along with a significant amount of scientific equipment at a total cost of $72 million.

Concern was widespread that the earthquake may have damaged some of the province’s nuclear facilities, but the Chinese government declared that all the province’s nuclear installations were safe and under control a week after the quake. U.S. and other foreign officials also said that there were no immediate concerns, although the international community was closely monitoring the situation.  Environmental Protection Minister Zhou Shengxian did admit on 20 May that 32 sources of radiation had been buried by the earthquake, although they were all subsequently accounted for. This apparently referred to materials used in hospitals, civilian factories, power plants and laboratories.

Disruption to the province’s military industrial infrastructure appears to have been less extensive than first feared, which may have been because of the sturdy construction of many of these facilities. There had been initial reports of severe damage to manufacturing lines at the Chengdu Aircraft Corp. (CAC), which is a major maker of frontline fighter aircraft such as the J-10 and FC-1.  But the People's Daily reported that there had been only minor and superficial damage and production work at CAS had resumed after a five-day safety and repair check.

The earthquake’s impact on Changhong was also limited, according to company executives. They estimated that the firm suffered economic losses of Rmb 149 million (US$21.3 million), equivalent to half of its profits for 2007. But all of the company's factories were back in full production by mid-June and the firm expected to meet its original target of RMB 30 billion in operating turnover for this year. One reason why Changhong escaped relatively lightly was the diversification of its R&D and manufacturing apparatus. While the company’s headquarters is in Mianyang along with a major R&D and production facility, it has major facilities in several other locations around China.

This suggests that while Mianyang’s aspirations to establish itself as a leading dual-use and hi-tech hub has been shaken, it has certainly not been derailed. Indeed, the local authorities may use this rebuilding process as an opportunity to accelerate its plans to transform the city into a thriving center for S&T and dual-use innovation.