China Precision Machinery Import-Export Corp., the firm that was awarded the Turkish contract, had plenty of competition. Other firms in contention included a U.S. partnership of Raytheon and Lockheed Martin, which offered the Patriot air defense system; the Italian-French consortium Eurosam, which offered the SAMP/T Aster 30; and Russian firm Rosoboronexport, which offered the S-300. Turkey chose the HQ-9 system. (Technically, it chose the FD-2000, the export version of the HQ-9, an effective system in its own right but no more effective than the other options.)
But it was not an easy choice, and the HQ-9 presents several challenges to Ankara. The United States and NATO have warned Turkey repeatedly that because of capability issues, the HQ-9 would be difficult to integrate with the rest of Turkey's NATO aligned air defense architecture — specifically the NATO Air Defense Ground Environment. More important, there are political and security concerns involved in integrating Chinese software and hardware into the network. Should the HQ-9 be excluded from the network, Turkey would have to build up its own independent air defense network.
Despite these disadvantages, the HQ-9 offers two key advantages, which ultimately secured the contract for China Precision Machinery. The first was price. China Precision Machinery reportedly set the price at $3 billion, undercutting the competition by some $1 billion. Ankara already is considering a very costly military modernization program, so it wants to save some money where it can.
The second advantage was the deal's supplementary benefits. China Precision Machinery offered Turkey technology transfers and even agreed to co-produce the system. These were particularly enticing for Turkey, which has been trying to develop its defense industry.
Notably, Turkey has been able to pursue a more independent arms policy of late. In previous decades, the United States had much more influence over Turkey's weapons acquisitions than it does now. Since the ascendance of the ruling Justice and Development Party — and its subsequent political subjugation of the military — Ankara has been able to develop and structure its own defense industry as it becomes a more prominent regional power.
An Exception
For China, the HQ-9 selection — if it actually goes through — would be a huge success for its arms export industry. This is not the first arms deal China has made with a NATO member — it sold Turkey WS-2 and B-6111 rockets in the late 1990s — but it is certainly the most important. China typically exports arms to Africa, Latin America and other Asian countries such as Pakistan, but providing munitions to NATO could provide opportunities beyond these traditional markets. China already is the world's fifth-largest arms supplier, and it is expected to supply even more arms as it increasingly competes with Russia in markets that cannot afford the arms produced by NATO members, which are typically more expensive.
But even though the success in Turkey bodes well for the Chinese, Beijing may not be able to maintain its rapid export growth. China still has to purchase some equipment from Russia to compensate for its shortcomings in the arms industry. And it will probably be unable to enter the more lucrative high-end arms export markets, which has long been dominated by the United States.
There are several technological and political reasons it will remain outside these markets. For example, China touts the J-31 fighter aircraft as a much more cost-effective alternative to Lockheed Martin's F-35, but no country seriously considering purchasing the F-35 is likely to buy the J-31. Moreover, China has tense relations with some of its neighbors, such as Japan and India, that potentially would be interested in buying its products. Last, military equipment must be relatively uniform throughout NATO countries, so introducing new arms to the alliance tends to be difficult for any potential supplier.
Because the acquisition of the HQ-9 presents as many challenges as advantages, the deal between Turkey and China is fairly anomalous. China could well see more success in its arms trade — even in high-end markets, should it ever access them — but this would be more the exception than the rule in the global arms trade.
