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China's answer to GPS spawning a $36bn industry

Beijing's promotion of military-industrial complex fuels rise of Beidou

China South Industries Group's drone on display Thursday at the technology expo in Mianyang, China.

MIANYANG, China -- Once reserved for the military, China's space-based positioning system is powering a rapidly growing range of domestic businesses that represent the fusion of the military and industry President Xi Jinping is trying to advance.

Beidou -- the Chinese name for the constellation Ursa Major -- is set to span the globe by 2020 with the launch of its 35th satellite. More than 150 million Chinese smartphones can already receive signals from its 23 existing satellites. By that year, the market for products and services that depend on the system is projected to balloon to 240 billion yuan ($36.9 billion) -- four times the size in 2016.

Rising star

The People's Liberation Army started developing the BeiDou Navigation Satellite System in 1994 to support aerial defense. The launch of the first test satellite in 2000 marked the beginning of BeiDou's military application as a homegrown version of the U.S.-run Global Positioning System.

Sichuan Jiuzhou Electric Group and other enterprises tied to the PLA continued to develop BeiDou, and in 2011 civilians were given access to the system. In the private sector, the positioning system is now mainly used for ship navigation as well as for monitoring public buses and firefighting vehicles.

China's native satellite positioning system controlled less than 30% of the domestic market last year, behind the share held by GPS. But BeiDou is expected to expand its share to 60% by 2020.

This is all part of the roadmap drawn by China's top leadership, which is putting BeiDou front and center of its efforts to expand military-industrial cooperation. President Xi -- who also heads the China's Communist Party and armed forces -- designated what is officially called "civil-military integration" as part of a national strategy unveiled in March 2015.

This policy calls for transferring military technology to the private sector and enlisting corporations in military affairs. Besides raising the country's industrial competitiveness, it is also meant to provide economic stimulus for lesser-developed inland regions, as well as a job program of sorts that could take in some of the 300,000 military personnel Beijing plans to cut by the end of the year.

Drones, harbors and gasoline pumps

A state-sponsored technology fair that kicked off Thursday in Mianyang, Sichuan Province, is showcasing the navigation system. A major purpose of this year's Science and Technology City International High-Tech Expo is to advance civil-military integration, said Li Meng, China's vice minister for science and technology. More than 200 businesses in the military-industrial complex are taking part in the trade fair.

Situated in a basin surrounded by steep mountains, Mianyang is home to a concentration of military-related development and production sites. Rocket and nuclear weapons development is said to take place in the region.

At Jiuzhou Electric's booth, the Sichuan Province-based company played up BeiDou's progress. The system has grown accurate to within centimeters, and its applications will multiply as its coverage expands, said a company representative.

Jezetek, as the company is also known, has formed a joint venture with filling station operator China National Petroleum and others to manage gasoline distribution using Beidou. The business started in Sichuan, with the goal of expanding nationwide within three years.

Sichuan Changhong Electronic Group is working on a BeiDou-based harbor security system. The company aims to reap 150 billion yuan in sales in 2020 from operations associated with civil-military integration.

A total of 19 companies at expo are touting services related to BeiDou, according to officials in charge of the trade show. Many of them involve drones, such as the ones unveiled by military contractor China South Industries Group. E-commerce giant has begun test runs of unmanned aerial vehicles in package deliveries.

The Chinese government says foreign private-sector companies are also free to use the satellite positioning system. But businesses domestic and foreign express concern about the potential for China's military to gain access to sensitive data.

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