A Drone of Their Own: US Eyes China’s Drone Program

Do you recall last month when Islamic terrorists took over a mall in Nairobi, Kenya? They shot the place up and killed 67 innocent people — butchering innumerable unfortunate souls among them. Then the Islamists held their ground and fought off the Kenyan army for several days. In the end, fighting set the mall on fire and the whole place burned down.

You had better believe that governments and security agencies across the world took notice of what happened in Kenya. It’s bad enough that passing through airports has become an anti-terror drill. But if daily activities like going to a mall are now fatal, then the modern world is paddling pretty near the edge of the waterfall. Society could collapse in a hurry.

Thus, it’s no surprise that just last week we have word that two of the top Islamist terror guys from the Nairobi attack met their fate in the course of a drone strike in Somalia. There’s no “official” U.S. confirmation on the details, but evidently, the terrorists’ Suzuki SUV had an encounter with a Hellfire missile. Kaboom.

Chinese leadership is on a crash program to catch up with the rest of the world in terms of military capability.

Now consider what happens as this kind of military technology spreads out across the world. And consider the moneymaking opportunities that savvy investors have in terms of this new domain of warfare.

Imagine a remote region of central Asia. In a small village, Islamist militants are hard at work preparing an improvised explosive device (IED) based on a surprisingly sophisticated design. The perps are more or less relaxed, because they know that the nearest threat to their efforts is hundreds of miles away — at a Chinese army base. It’s way too far to be of any real concern to these bomb builders.

Their plan is simple: In a week, their IED will be placed next to a Chinese government building and detonated remotely. The target is the regional governor and his entourage, including several high-ranking officials on a show-and-tell tour in the countryside. It’s a major target, and the groundwork for the attack has been all but laid.

But then, without warning, the rude house that serves as the terrorists’ base of operations explodes — BOOM! — and the plot vaporizes with them. Villagers hear the explosion and see the fireball rising. Neighbors pour in from the fields to see what just happened. They look up into the sky, but nobody can see or hear the small black dot nearly 15,000 feet up. It’s the platform from whence came the missile that just streaked straight into the terrorists’ lair.

But if the locals could discern that black dot, they’d see a red star on a red bar painted on the side of a drone — an unmanned aerial vehicle. But after a few minutes, it doesn’t matter anymore, because the aircraft has turned and begun to fly back to the Aksu Wensu air base, located in the Lanzhou Military Region of China.

Actually, this scenario isn’t quite as far-fetched or as science fiction as you might think. China has the drone.

No, China hasn’t used its drones for assassination attempts — yet, as far as we know — but it looks like China is headed in that direction.

According to analysts who follow such things, China probably has the world’s second-largest fleet of military drones, numbering in the thousands. In fact, China’s drone fleet is second only to that of the U.S., which has at least 7,000 drones in military service.

A recent report published by the Department of Defense’s Defense Science Board (DSB) noted that “in a worrisome trend, China has ramped up research in recent years faster than any other country.”

And the Chinese are doing drones more cheaply than U.S. defense contractors could ever hope. For example, the General Atomics MQ-9 Reaper, the U.S. military’s main hunter-killer drone, costs about $17 million today, and that’s a price based on economies gained from late-stage production.

By comparison, China’s “Wing Loong” drone — suspected of being a copy of the Reaper, and it certainly looks like one — costs the equivalent of about US$1 million.

Now, it’s not the airframe or conventional propeller engines that account for the bulk the of Reaper’s price tag. Instead, it’s the cutting-edge electronics and optics onboard. And while it’s unlikely that China’s drones are as electronically sophisticated as ours (we can only hope), are they really 17 times less effective?!

As Soviet Marshal Joseph Stalin supposedly once noted, “Quantity has a quality all its own.”

The Chinese are certainly keen students of military technology. There are many reasons for this, but one main driver is a collective Chinese recognition of how far the nation fell behind the rest of the world during the Cultural Revolution of the 1960s. In fact, I recall a senior U.S. military officer relating a story about an official tour of China in the early 1980s. The Chinese still included horse-cavalry units in orders of battle planning. But not anymore.

Today, Chinese leadership is on a crash program to catch up with the rest of the world in terms of military capability. They want the best, and they’ll go to any ends to get it and figure out how to make it work.

The move toward drone warfare is part of China’s larger strategy to project power over the international waters to its east and south and over its small, weaker neighbors to the north and west. (Of course, one very underpopulated area north of China is Siberia — part of Russia.)

Consider just one recent Chinese military exploit involving drones. Last month, on Sept. 9, a Chinese drone penetrated Japanese airspace near Okinawa for the first time. Japanese defense forces noted the intrusion and scrambled jets. The Chinese drone was escorted out of the area by Japanese air force F-15s.

Then in response to the Chinese intrusion, in late October, the Japanese prime minister gave the Japanese military permission to engage and destroy future drone incursions. Looking ahead, this kind of cat-and-mouse drone game between Japan and China could be a flashpoint in the ongoing territorial tensions between the two countries.

Of interest as well, in early October of this year, the U.S. and Japan renewed a mutual defense treaty and included new terms involving drones. Specially, the U.S. military will begin flying long-range drones — like Global Hawk — over the disputed Senkaku Islands in spring of 2014.

So looking ahead, what would happen if U.S. and Chinese drones met in the skies over the East China Sea?

According to current U.S. doctrine, American drones are not intended (nor designed, truth be told) to enter into contested or hostile air space. In essence, U.S. drones are not meant to fight aircraft to aircraft in any conflict with China or anyone else.

So far, China’s drones apparently mimic American designs. Thus, the odds are even. Then again, countries can do things with drones they wouldn’t do with manned aircraft. And with technological breakthroughs, advances are occurring with stunning speed. Needless to say, China’s acquisition of drones on a massive scale is a major boost to its military and overall governmental capabilities, one to which the rest of the world will have to adapt.


Byron King
for The Daily Reckoning

Ed. Note: Regardless of how you feel about it, the U.S. is not going to slow down military spending. Especially as China ramps up the production of its drone program. That means a few companies will benefit greatly from U.S. government contracts. And it also means a few savvy investors stand to make some tremendous gains in the process. In today’s Tomorrow in Review email edition, Byron gave readers a chance to discover this profit potential first hand, with access to a special video telling them just what to do. If you didn’t get it, you missed out. But not to worry… Byron will be back with a similar offer. Sign up for free, right here, and keep an eye on your email.

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Byron King

A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the editor of Rickards’ Gold Speculator and a contributor to Rickards’ Strategic Intelligence.

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