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China yesterday released a guideline for private businesses to research and develop weaponry and equipment.

The national defense authorities also said they were considering similar regulations for foreign-funded companies.

Private enterprises must apply for permits to conduct research and development on specific weaponry listed in a special catalogue from the Commission of Science Technology and Industry for National Defense (COSTIND) and its provincial branches, according to the guideline.

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It says that to apply for weapon manufacturing licenses, the private enterprises must be qualified in secrecy-keeping standards, and certified in quality and safe production conditions.

Private enterprises already in the weaponry industry should register with the authorities and report the progress of their research and development.

The defense weaponry sector, once largely a State monopoly, has been opened up to private businesses and foreign-funded ventures since 2005, allowing them to vie for licenses to develop certain categories of weaponry.

But there have been no detailed implementation measures.

The latest guideline states businesses can get information either from the commission and its local branches or its website www.costind.gov.cn.

It says private businesses are allowed to invest in weaponry production projects and infrastructure in collaboration with military enterprises or by bidding, and to participate in restructuring military firms.

They are encouraged to develop and industrialize high technologies for both military and civilian use.

The guideline also says private firms can apply for taxation exemptions from defense authorities.

Before the release of the guideline, there had been only a vague regulation on private business involved in the weapons manufacturing sector.

According to Zhang Huipeng, section chief with the department of policies and regulations under COSTIND, the regulation was not clear enough for either applicants or the executives.

"The newly-published implementation method is like a roadmap for private investors," he said.

"They will understand clearly which government agency to go to and what documents to submit."

Zhang declined to disclose the number of private businesses that had been awarded licenses for weaponry research and production.

He said the commission was working on similar policies on foreign-invested businesses and was likely to come up with a separate arrangement.

(China Daily 08/07/2007 page1)