This article seeks to explain China’s defence conversion programme. There are inherent structural difficulties encountered in the beating of swords into ploughshares. China sought to resolve problems associated with its defence‐conversion programme with grand strategic planning involving concerted efforts from all three pillars of power ‐‐ the party, the state and the army. A review of the defence‐conversion programme suggests that the role of the military can be extended to encompass non‐traditional missions during peacetime in order to reduce the burden on the national economy of defence spending, not only by diversification out of defence production but also by integration of the armed forces into more development‐oriented activities.