Throughout the 1990s, Russian arms exports to China were brisk, peaking at $2 billion a year. But three years ago, it all stopped. Well, for all practical purposes, with the flood shrinking to a trickle. The reason was Chinese theft of Russian military technology. For example, earlier this year, Russia refused to sell China any Su-33 jet fighters, for fear that the Chinese would steal the design and manufacture illegal copies. The Su-33 is a modified (for use on aircraft carriers) version of the Su-27. For several years now, China has been discussing the possibility of buying 50 Su-33s. But when the Chinese said they'd like to just buy two initially, for "evaluation purposes," Russia recoiled and said they would not sell the Chinese any of the 33 ton Su-33s. Russia uses two dozen of them on its carrier Kuznetzov, although these are being replaced by navalized MiG-29Ks.
The reason behind this refusal is Russia's recent admission, that China is producing unlicensed copies of the Su-27 fighter. Russia has known about this theft for some time. It all began in 1995, when China paid $2.5 billion for the right to build 200 Su-27s. Russia would supply engines and electronics. But after 95 of the Chinese built aircraft were built, Russia cancelled the agreement. They claimed that China was using the knowledge acquired with the Su-27 program, to build their own copy of the Su-27, the J-11. Russia kept the piracy issue quiet, and warned the Chinese that simply copying Russian technology would produce an inferior aircraft. Apparently the Chinese do not agree, and are continuing their work on the J-11, using only, what they claim is, Chinese technology. China also recently announced that it was offering for export their HQ-9 anti-aircraft missile system. This system is believed to contain technology from similar Russian (S-300) and U.S. (Patriot) systems.
Late last year, Russia and China signed an agreement, in which China promised to stop stealing Russian military technology. It appears that the main function of the new "military technical cooperation" agreement was to stop China from exporting their copies of Russian equipment, and competing with the Russian originals.
This agreement has borne some fruit. Russia has agreed to sell China six Helix anti-submarine helicopters. This may be connected with a deal for China and Russia to jointly develop a large transport helicopter, based on the existing Mi-26T (a 20 ton aircraft that can carry 80 passengers). There may be other joint development deals to produce updated versions of existing Russian helicopter designs. This sort of thing could be mutually beneficial.
Its about time. For the last six years, the Russian government has been trying to deal with the growing problem Russian defense manufacturers have had with China tolerating, or even encouraging, Chinese manufacturers to steal Russian military technology. It's not usually entire weapons systems the Chinese are stealing (like aircraft or ships), but components. Radars and electronic systems in particular were being copied, often using samples and technical data provided by Russian manufacturers, in anticipation of a sale. What often happened was that there was no sale, and then, a few years later, the Chinese came out with a copy, often a blatant copy, of the Russian radar, missile or electronic warfare gear.
All this is ironic for the Russians. During the Cold War, much Western military and civilian technology was blatantly copied by the Russians, including microprocessors and computers themselves. Since the end of the Cold War, Russia has been more careful about this, because the collapse of the Soviet Union opened up the Russian defense labs, and their large store of discoveries that had not been developed into anything useful yet. American manufacturers were eager to get rights to this technology, once they got a good look at it. The Western firms paid, and the billions of dollars that entered the Russian economy that way forced the Russians to reciprocate, and pay for Western technology they wanted.
The Chinese have been forced by the West to cut back on some of their blatant theft of foreign technology, except for Russian military stuff. The Russians are getting fed up, and the government is under growing pressure to crack down on the Chinese theft. But there's not a lot the Russians can do, and the Chinese know it. Stealing foreign technology continues to be a major Chinese activity.