December 28, 2009:
China has sixteen modern Russian warships (12 Kilo class subs and four destroyers) that are in need of a midlife upgrade. Most of these ships were delivered in the 1990s. Russia offers overhaul services for these ships, in Russian shipyards. But the Chinese want the work done in Chinese yards, with Russian personnel coming in to train and supervise Chinese personnel to do most of the work. The Russians are reluctant to do this, because they fear the Chinese just want to get the work done cheaper, and steal Russian equipment designs and shipyard techniques.
The Chinese want to get the work done right, and have noted the often slapdash efforts by Russian shipyards when doing overhauls. The Indians have had problems with this lately, especially with their Kilo class submarines and the refurb of a Russian aircraft carrier being done for them. China has tried to do some refurbishment themselves on their Kilo class subs, by getting technical information from Ukrainian shipyards. This did not go well, mainly because the Ukrainians did not have information on the latest Kilo upgrades. So the Chinese want the latest data and gear from the Russians, and they want it all brought to China.
Right now, both sides are deadlocked over the matter, although the Chinese appear to be moving ahead with their own refurbishment of their Kilo boats, using new Chinese equipment and an all-Chinese workforce.