The PLA at Home and Abroad - Strategic Studies Institute - U.S. Army

depending on their industrial capacity and specialization,
their regional legacy of the state-owned economy
and the particular relationship between the central
and local government. 106
The first model is one characterized by consolidation
of defense assets in those regions with a strong
legacy of defense enterprises. This applies to areas
whose local economy is largely dominated by the
defense sector, and engages in dual-use activity primarily
in the form of spin-off, or military conversion
(possibly with a lower degree of two-way technology
diffusion). Furthermore, such a model is more
applicable to more remote regions—western interior
and the northeast—where there is physical distance
from centers innovation and higher concentrations of
industrial activity. This approach is a way to concentrate
formerly dispersed resources and institutes into
a spatial clustering of that allows for more complete
technology-industrial interactions and supply chains.
If such an economic base is sustainable, it will draw
in other enterprises; attract local and nonstate investment
capital and talent. This is described as a “vertical
strategy,” requiring central government guidance,
large defense SOE participation, as well as local government
funding and policy support.
In the past few years, the establishment of industrial
parks has become a popular method to attract
central funding, but many such experiments have not
been successful. The Mianyang Technology City is one
such example. 107 The reasons for its failure are complicated,
but encompass an inability to attract a critical
mass of small and medium technology enterprises to
form a larger and more sustainable and diversified innovation
and industry cluster. Its heavy reliance on
two large entities, Changhong Corporation and the
506