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Israeli defense companies are worried by China’s new policy meant to dramatically increase the number of local defense equipment manufacturers.

“While Israel is not allowed to sell military hardware to China, this country is going to swamp the market with relatively low priced systems,” an Israeli defense source told I-HLS.

Around a thousand private companies have received permission to develop and produce weapons or other military equipment, accounting for about 40 percent of defense equipment contractors in China.

Xu Dazhe, director of the State Administration of Science Technology and Industry for the National Defense, said in July that the government would open more fields in the defense sector to private enterprises and lower the entry threshold for them, Xinhua reported.

China has been gradually opening the defense market to private enterprises since 2005, when the central government issued a series of instructions encouraging private sectors to plunge into the arms and equipment market.

Currently, any business entity can bid for the People’s Liberation Army (PLA) contracts after gaining four government-issued licenses on confidentiality and technological capability.

In Nov 2014, PLA General Staff Headquarters published a total of 108 procurement items titled “advanced training technologies and equipment”. Those items were published to encourage private companies to take part in training apparatus’ research, development and manufacturing process.