China's defense industry is gradually forming a cluster of new armament scientific research and production enterprises. These enterprises are leading companies in military and related industries, and are gradually joining the advanced ranks of their peers worldwide. So China should establish a dynamic management system, and an access and exit mechanism for this emerging cluster.

Civilian enterprises have now the opportunity to enter the sensitive defense sectors, and they can do so in three ways. First, civilian enterprises can bid for military projects or cooperate with military enterprises in scientific research and complementary production.

Second, since civilian enterprises develop rapidly they can invest in national defense industries and become an important source of investment for the sector.

Third, civilian enterprises can participate in the development and industrialization of military and civil dual-use technologies. Non-public enterprises are encouraged to participate in research and development of military and civilian dual-use high and new technological products, especially high-tech military-civilian joint industries such as civil nuclear energy, civil aviation and space technology, and shipping.

Demonstration bases of integrated military and civilian industries can effectively boost regional economic development. Since 2009 the Ministry of Industry and Information Technology has established 24 national integrated military and civil industrial demonstration bases in several provinces and autonomous regions. And 20 provinces and autonomous regions have set up special funds, worth 1.66 billion yuan ($272 million), for the development of integrated military and civil industries.

The high-end, precise and large-scale weapons' industry is at the forefront of the industrial chain, which can directly support civilian industries' development.