Is the CCP conquering Taiwan from within?
It is often forgotten that the victory of the CCP over the KMT was not so much a result of military action, but also primarily due to their intelligence activities and the infiltration of the KMT. The classic by Roger Faligot and Rene Kauffer “The Master of Shadows. Kang Sheng and the Chinese secret service 1927-1987″, Jung Chang’s „Mao“ biography, as well as Rainer Kloubert’s recently published book „Warlords“ about Zhang Xueliang illustrate this very well.
It was Zhang Xueliang who was recruited by the CCP’s intelligence agency and carried out a coup against Chiang Kai-chek, forcing him and the KMT into the CCP’s united front against Japan. In addition, Sun Tze’s classic „The Art of War“ and the use of the 8 types of agents described a method with which one can also win a war by means of infiltration and 5th column without a shot being fired
A writing that, by the way, not only known to the Chinese Communist Party and the Asians, especially since the first BND boss Reinhard Gehlen also quotes it in his book “The Service”/“Der Dienst”. In the Western media and in the security policy discussions about Taiwan and China, this seems to be an aspect that is almost ignored, a kind of blind and white spot, but which can be decisive for the war. However, the report by the Japanese Nikkei Asia seems to indicate that this is still an issue for few, at least in Japan. Well, they also had Richard Sorge at that time in Tokyo, even if Stalin didn’t take his information seriously.
The headline in the Taipei Times yesterday: „Retired officer guilty of recruiting spies for China“. Obviously a warning shot to former Taiwanese ex-military officers. After the Japanese Nikkei Asia published a report that allegedly 90% of the Taiwanese ex-military members had been in China in the last few decades and that many were doing business there and were said to have generously given information for money, it seems that this is now being investigated. Apparently, under the 3-no policy of the KMT and Ma Yingjiu, the flow of former military “tourists”and vistors was careless, to say the least. Ideal for China’s secret service to cultivate a wide network of agents in Taiwan. A 5th column, also with regard to the KMT. The US believes that after the democratization of Taiwan and its military, together with its reforms and depoliticization,there could not be such a threat in terms of loyalty and readiness to defend itself. That is the somewhat naïve premise that US Joint Chief of Staff Milley also has, who only sees the military equipment and the Taiwan Strait, the enemy from the outside, but not from the inside.
In the 90s it was rather the other way around. China’s PLA had its own economic empire, leading to the PLA becoming increasingly drown in business activities with incoming smuggling rings in Canton and South China and the Golden Triangle, corruption and also business with Taiwan and also the USA, until the then Defense Minister Chi Haotian and Jiang Zemin then pulled the ripcord after the Taiwan crisis at the end of the 90s and in a programmatic speech Chi Haotian saw the PLA’s ability to defend itself in danger, given these signs of disintegration, especially the infiltration by Westerners secret service was feared. Since then, the economic empire of the VBA has been reduced to a minimum, business contacts with the USA and! Taiwan canceled, the military districts were redefined and a rotation system introduced so that no type of local warlordism andlocal or regional entanglement, including with triads and smuggling rings, was possible anymore. Taiwan’s renewed hunt for Taiwanese spies in the service of the CCP and the discussion about the death penalty for espionage for China show that a certain sensitivity for the topic is now apparently emerging, although the topic is not aired too loud, so as not to sow panic or uncertainty, and as above all the KMT whose loyalty ia in question is still powerful.
A Monthly Journal of the IDSA
Rise and Fall of the PLA’s Business Empire: Implications for China’s Civil-Military Relations
By Swaran Singh *
The profit-seeking commercial business empire of China’s People’s Liberation Army (PLA) represents a unique example in the present day world. The PLA is the only agency that singularly controls the largest number of China’s business firms which span not only traditional sectors like agricultural and animal farms or mining raw materials but also high-tech areas like transportation, telecommunication, launching satellites, as also carrying out mass-production of popular consumer goods like bikes and television. The PLA has also built an important presence even in service sector industries like hotels, discotheques as also real estate, shares and securities. More than this, the PLA also controls a vast ocean of technical infrastructure, skilled manpower and other resources and it enjoys special privileges that make it not only extremely successful but also extremely attractive as a partner for joint ventures by other entrepreneurs both from home and abroad.
During the early 1980s, for example, in the face of successive reductions in its annual financial allocations, the registered PLA enterprises had peaked at over 20,000. The number had since, however, stabilised at over 15,000 enterprises — employing over 600,000 civilians. All this had made the PLA’s business empire the financial guarantor for China’s military modernisation drive thereby enabling it to virtually emerge into an independent force that was becoming increasing immune to the tradition of civilian political control. 1 Besides, the large number of unaccounted non-registered seasonal and part-time enterprises were always too difficult to keep track of and profits from these could only be speculated upon. The accounting was further complicated as much of the profits from these enterprises were utilised towards improving the living standards of PLA troops. This also resulted in the evolution of strong vested interests within China’s armed forces that not only believe in sustaining but promoting these business enterprises. All this further strengthened the PLA’s clout in China’s decision-making thus making it a most formidable political force.
It is necessary to clarify at the very outset that there was nothing originally very special about the PLA’s economic activities and, like many other armed forces, those of China had also been traditionally involved in certain industrial and agricultural sectors. This was permitted to generate self-sustaining resources and, thereby, reduce the defence burden on the masses. Instead, what made PLA business operations unique (and controversial) was its more recent involvement in purely profit-making commercial activities. This profit-seeking had led to increasing incidents of the PLA top-brass using their special privileges to promote their business interests which had gradually begun to subvert the military’s priorities and, thereby, emerged as a major predicament for China’s leaders. 2 This process, apart from undermining the PLA’s professionalism, soon resulted in the PLA coming under repeated charges of bribery, fraud, embezzlement, smuggling and other forms of corruption which led to controversy and problems in China’s civil-military relations. 3 The issue is further complicated by the fact that the post-Deng “third generation” leadership of China happens to be led by a civilian technocrat, President Jiang Zemin. Unlike China’s earlier two paramount leaders—Mao and Deng—President Jiang does not have any direct military background. Accordingly, in an effort to propitiate the armed forces, for a long time, Jiang continued to play soft on PLA’s activities. This only further complicated the challenge of rectifying the PLA’s business ethics as it began to impinge on China’s tradition of the military being subordinate and subservient to the Communist Party.
Besides, it was the sheer magnitude of the PLA’s business operations that made it so formidable for the future of China’s civil-military relations, portends of which had begun to sound during the last few years. To say the least, this danger was vividly reflected in the PLA’s continued apathy towards President Jiang Zemin’s repeated calls for streamlining and professionalising China’s armed forces since the early 1990s. Since 1993, President Jiang had, in fact, begun to clearly stress on the issues of conspicuous consumption and corruption amongst the armed forces. Accordingly, as a last resort, to rectify his equations with the PLA, President Jiang Zemin’s anti-corruption crusade took a historic decision in July 1998 in which he directed the armed forces to completely shun all their business operations. This directive not only disallowed the PLA any involvement in any form of economic enterprise but also directed China’s armed forces and other law enforcing agencies to surrender their existing business operations before the end of last year (1998). Special agencies were also set up under the State Commission on Trade and Economy—known as China’s new superministry under its State Council—which were expected to effect these transfers as per schedule.
However, whether or not these transfers have been effected until the last detail remains an open ended question. Reports about the initial process of implementation of this decision have highlighted the inherent lacunae and pitfalls of the process. It is said that despite all the type attached to this campaign, it is not going to put an end to all the PLA’s enterprises nor is it going to be implemented in the time-bound and comprehensive manner that was projected by China’s official statements. At the same time, however, going by the vigour and commitment of China’s top leaders, this is not likely to become just another slogan—a mere formality with little action. In the end, therefore, given the larger context of President Jiang being the first non-military leader at the helm, even partial success of this campaign will have important implications for the future of China’s civil-military relations.
Genesis and Growth: Doctrine of “Self-Reliance”
To understand the process of the rise and fall of the PLA’s business empire, it is imperative to first explore the historical process of its evolution as also the theoretical underpinnings of this business tradition amongst China’s armed forces. And here, amongst others, it the “Doctrine of Self-Reliance” that perhaps lies at the core of this unique experiment. Also, historically, the army’s engagement in production activities can be traced to its very inception during the early 1930s when this tradition was fostered by Mao Zedong himself for he took pride in casting as little financial burden on his people as possible. Indeed, this “Doctrine of Self-Reliance” was to gradually evolve as the integral part of Mao’s later agrarian Communism that differentiated it from other brands of Communism. Later, this witnessed the PLA emerging as the strongest pillar of Mao’s experiment with the commune system. Still later, during the early 1980s, Deng Xiaoping was to use the PLA once again as a major catalyst for his experiment with opening up and economic reforms, thus, encouraging the armed forces to become an integral part of China’s economic boom during these recent years.
To recall, this began in the days when Communist Party leaders were holed up in the Jing gang shan mountains (1927-34) in southern China. It was here that Mao encouraged his Red Army troops to grow grain and vegetables to supplement their supplies. Later, during his days in Yun’nan as well, at the time of the Sino-Japanese War (1937-45), Mao had launched the so-called “Great Production Campaign”, ordering troops to cultivate abandoned land, grow grain and spin and weave cloth. This was also the period when some basic arsenals were set up. After the Communists seized power in October 1949, the tradition was further glorified by declaring that the Communist forces had won wars through “self-reliance”. In fact, with the establishment of New Delhi, these military-run farms were soon to be seen everywhere and this tradition became an integral part of China’s later efforts at modernisation.
Also, at the core of Mao’s agrarian Communism was the ancient Chinese idealistic social code: “All under Heaven are equal.” And this thinking was clearly reflected in his vision of China where the armed forces were seen not only as integral part of society but equal partners in all societal endeavours for development. On May 7, 1966, on the eve of China’s Cultural Revolution, Mao had written an important letter to the then defence minister, Marshal Lin Biao, whom Mao had already handpicked as his successor. This letter clearly showed Mao’s thinking on this subject and it said:
The PLA should be a great school…In addition to fighting battles (the troops) should do all other works. In this great school, (the troops) can learn politics, learn military skills, acquire education, as well as engage in agricultural and sideline production. At the same time they should be also able to run certain small and medium-sized factories making products that meet their own needs and for exchange with the state for other goods of the same value. 4
This was followed by the onslaught of the Cultural Revolution that further enhanced the military’s societal entrenchment by allowing it to penetrate into all social sectors, including the economic sectors. And during his later days, as Mao began to lose control over the state of affairs, the mid-1970s witnessed these vested interests growing from strength to strength. The merging clout of the PLA over the civil state-of-affairs and the consequent conflict in civil-military relations reached its climax in the bizarre Lin Biao affair—the alleged attempt by an increasingly beleagured defence minister and his colleagues to assassinate Mao and seize the state power. 5 Accordingly, taming the PLA’s rising influence in economic matters had, in fact, presented an equal important challenge to post-Mao leaders. Added to this were the five difficult years of transition between Mao’s departure and Deng’s arrival at the helm, and during this critical period of transition, these vested interest had further consolidated their positions. However, instead of ousting them, Deng put them to full use once again in his process of opening up and reforms in China’s economic sectors.
Deng Xiaoping’s Economic Reforms
Contrary to the popular belief that Deng allowed the armed forces to indulge in profit-making commercial activities, this process had, in fact, preceded his economic reforms. 6 Also, contrary to the view that the PLA’s economic operations were allowed to go berserk and virtually hijack the economic reforms, Deng had perhaps conceived a well-measured role for the PLA in China’s economic reforms. He may have visualised the PLA either as the fundamental compulsion or catalyst for the success of his economic reforms and definitely provided the PLA the role of what Yang Baibing called “an imperial escort”—baojia huhang—to his economic reforms. 7 Deng, a long-time military leader under Mao Zedong, fully understood the PLA’s key role both in keeping society stable as also in initiating any social transformation. In more specific terms, in creating this role for the PLA, Deng may have conceived it as a device to deal with the monstrous bureaucracy that he himself had helped create.
For the PLA, the boom period of the 1980s, had its own ups and downs and the increasing orientation towards civilian production had its special costs and benefits as well. Especially, some of the PLA’s production lines had to be recast and its advanced military technologies had to be honed for appropriate civilian levels that also resulted in relative neglect of some of its important projects. 8 Indeed, the PLA already had a stake in Deng’s future as it had helped him to fight his first ideological campaign to end the rule of Maoist dogmatism in the 1978-79 debate over the criterion of truth, thus paving the way for his return to the helm. As a result, when, in the face of strong opposition and criticism, Deng set up his first Special Economic Zone (SEZ), he ordered the PLA engineer troops to march into the then small town of Shenzhen bordering Hong Kong. And it was the hard work and dedication of these engineering troops that built the entire infrastructure that was responsible for Shenzhen’s economic boom during the early 1980s. Therefore, the PLA had actually played a critical role in the success of Deng’s reforms.
There is also the view that Deng had opened a pandora’s box by allowing the military to get involved in business in exchange for military support for his reforms. There is some element of truth in this argument but it is an oversimplification of the issue and represents only part of the complex truth. The fact of the matter is that when Deng started the economic reforms in the late 1970s, the military had already emerged as an inevitable part of China’s economic life. Apart from its farms and other industrial activities, there was this mammoth defence production industrial complex that had the nation’s best human and technical resources. Amongst civilian enterprises as well, most of China’s major airports were under the control of the military. And this was especially true of sensitive regions like Tibet where, right from beginning, many more sectors also were being controlled and administered by the armed forces. China’s railways, for example, had to give priority to the military’s orders. As a result, the PLA troops during the early 1980s had peaked at 4.1 million in number and as a pointer towards their priorities, their registered business firms were triple their antiquated main battle tanks.
However, it was the follow-up trends since the late 1980s that made the PLA’s business empire appear more like a liability than an asset. Part of this shift can be understood in terms of Deng’s priorities that seemed to neglect the funding problems of China’s armed forces. One most visible contradiction was that in the face of China’s economic boom since the mid-1980s, the PLA’s budgetary allocations were not allowed to grow in equal measure. In fact, there was negative growth in the PLA’s official budgets for some of these years. Accordingly, it was quite understandable why their traditional Doctrine of Self-Reliance gradually slipped down towards increasing Self-Indulgence and why the armed forces could not indefinitely restrict their activities to only raising hogs and vegetables. Even then, what made the PLA difficult to deal with was not their increasing indulgence in profit-making, but the fact that armed forces gradually began to use their advantages of vast technical infrastructure, skill manpower and other prerogatives to obtain undue advantage in their commercial competition with civilian entrepreneurs. And not too soon this unequal competition reached a scale where it began to threaten the very credibility of China’s economic reforms. 9 To many commentators, it seemed like a reincarnation of China’s traditional warlordism that the Communist leaders had pledged to fight and eliminate.
PLA’s Growing Economic Clout
Though in matters of governance, the Communist Party’s army had always been part and parcel of China’s state administrative structures, it was their new role of money-making managers that began to disturb the fabric of China’s power-sharing arrangements. Taken to their extreme, some of these military-run enterprises gradually became completely immune to civilian controls thereby making them the most awkward obstacles in the process of China’s economic reforms that the PLA’s business empire had once sought to accelerate and strengthen. Also, as the process of economic reforms deepened, it began to assert pressures for creating basic requirements of marketisation, things like rule of law, transparency and fair competition. The 1990s, in fact, witnessed growing international pressure on China on some of these issues, with its membership to the World Trade Organisation (WTO) becoming subject to these conditions.
The PLA, on the other hand, had increased the use of its uncontested special privileges, that was the very antithesis of marketisation that requires free and fair competition. Also, unlike other armed forces which run defence production units or export weapons and other defence equipment, over two-thirds of the PLA’s business was geared towards civilian production and services. Going by the simple yardstick of quick and easy profits, the PLA had begun to run hotels, restaurants, pharmaceuticals, night-clubs, karaoke halls and even begun to give army ports and airplanes on rent to civilians. So much so, that 165 firing ranges were open for tourists where high-ranking officers “enthusiastically welcome” not only visits but shooting by private persons. 9 This misuse of their special privileges increased to a degree crossed all lines special position.
Also, over the years, the PLA business empire had grown both in actual size and numbers, and the armed forces had come to acquire monopoly in some specific categories of popular consumer items like bikes, televisions and refrigerators, and so on. Accordingly, the sheer magnitude of the PLA’s business empire made China’s leaders apprehensive about attempts to control what looked like the irrepressible economic enterprises of their armed forces. In addition to typical defence production sectors, the known non-defence areas of the PLA enterprises were reported to span over 72 industries, including some special industries like night clubs and dance halls where the PLA’s special position seems to have greatly facilitated its dominance and flourish. The other areas included real estate, transportation, tourism, pharmaceuticals, munitions and other industrial and mining enterprises where profits are quick and more likely to come by. 11 Apart from their use in improving the living standards of their troops, some of the profits are believed to have been diverted to socalled perks and even personal accounts of the PLA’s high and mid-level leadership, thus, sowing the seeds of nepotism as also resentment within China’s armed forces.
Problems in Streamlining PLA Business
Apart from dealing with the PLA’s known powerful business empire, the most intractable challenge lay in detecting and pursuing the large number of small, seasonal and part-time unregistered enterprises by PLA units that had remained completely unaccounted for. Secondly, there are also business enterprises that have evolved under state patronage and operate as front-agencies to camouflage China’s intelligence gathering and other secret operations. 12 Detection and closure of such business enterprises would pose a major threat for China’s intelligence gathering and other secret operations. Thirdly, even in pure financial terms of the PLA business being the source for China’s military modernisation, transfer of these enterprises is likely put a heavy burden on the state that will have to compensate the PLA by increasing its budgetary allocations. And considering that this exercise is not limited to the armed forces alone but extends to other government departments like those of public security, state security, procuratorial department, courts and police forces, this exercise is going to present a monumental challenge for the government even in pure monetary terms.
According to one report, the total annual revenue earned by PLA-run business for 1997 exceeded $18 billion with exports alone accounting for $7 billion of foreign exchange earning. 13 With the apparent economic slowdown, there is no possibility of the providing these various agencies of the government that are involved in business sufficient funding to ensure that they do not look for loopholes to protect their business interests. The challenge becomes especially formidable because of repeated reports regarding the alleged involvement of various high-ranking leaders. There have been accusations, for example, of the highest level officials or their relatives being involved in unaccounted and illegal activities like smuggling. It is well known that there are prized postings within the PLA and princelings of the big party bosses are said to be often controlling these positions. Deng’s son-in-law, for example, has been reported to be holding some such positions, thus, controlling some of the major PLA-run business corporations. On a more regular basis, the PLA officers have been accused of overspreading in the name of perks and entertainment during business deals and other meetings and trips.
Also, the PLA’s success has inspired others like the police and judiciary to follow in the military’s footsteps and enter similar business in a major way. Compounding the difficulty of dealing with these enterprises is the fact that all of them have been virtually immune from China’s struggle to weed out corruption from state structures. Especially, in the face of recent measures towards restructuring China’s State Owned Enterprises (SOEs), their inability to stand in competition with the PLA’s privileged business firms had threatened China’s economic reforms. Besides, there have also been persistent reports of the PLA’s increasing involvement in smuggling. There have been reports of the PLA on various occasions even challenging the customs and other border security agencies in undertaking such activities. 14 Accordingly, despite all anti-smuggling measures, China’s prosecutors handled over 100,000 corruption cases and confiscated over $30 billion worth of smuggled goods—cars, computers, oils, mobile telephones and cigarettes—which were smuggled into China during 1998. 15 And finally, it was the PLA’s failure to respond to this negative publicity and increasing criticism from the Party leadership that made it the target of President Jiang’s anti-graft campaign.
President Jiang’s Directive
President Jiang Zemin announced in July 1998 that “the Army and armed police are henceforth to cease all business activities.” 16 This announcement was unexpected and to begin with, many officials and commentators simply ignored it as one not likely to be pursued seriously by the Party leadership. This is partly also because this announcement by President Jiang was, in fact, totally out of tune with the traditional way of taking decisions where any such historic policy-change was first presented in the form of a suggestion from the highest level of the political leadership. This was generally followed by the Central Committee, the State Council and the Central Military Commission deliberating on the proposed changes, either endorsing or rejecting the proposed policy changes. However, President Jiang’s aforesaid announcement did not come as a suggestion, instead it came as a blunt policy directive. So much so, that it took some time to be fully understood and accepted even by the concerned authorities. As a result, while China’s top leaders seemed confident of carrying out this anti-graft campaign, according to most estimates available, it was expected to affect not more than one-third of the PLA’s enterprises. 17 First of all, this was not to affect the PLA’s defence related industrial activities. Secondly, most of the industries converted to civilian production were also likely to be kept outside the realm of this directive on the plea that these were being reconverted for defence production activities. Besides, it was said that the PLA seemed only too happy to dump some of these enterprises for they are reported to be running in losses. As regards the major profit making enterprises like Polytechnologies or XinXin Corporation, media reports of resistance have continued to tickle in.
However, going by the initial reports, at least the paperwork seems to be progressing at full speed. To do a quick recount, President Jiang’s announcement in July last year (1998) was followed by Vice-President Hu Jintao’s address to a teleconference meeting of the Central Disciplinary Commission and the Central Politics and Law Commission where he detailed President Jiang’s directive and the Party leadership’s commitment to this policy of disengaging the PLA from business activities that he said were part of the Party’s agenda for streamlining the country’s armed forces. He also promised that the leadership would compensate for the losses that the PLA would incur by giving up its flourishing business which contributes substantially towards the PLA’s budget, especially for providing an improved standard of living for its troops and leadership. In fact, as a demonstration of goodwill, some corrective measures have already been affected. From 1998 to 2000, the State Council has earmarked funds of Rmb 30 billion per year to make up for the military’s withdrawal from business activities. Local governments will also be permitted to compensate the military units for their participation in local constructions projects, etc. The State Council has already appropriated an additional Rmb 5 billion for the provinces and centrally administered cities to be used for increased expenditure on retirement and re-employment with provincial governments. The other sources have put the figure at a total of Rmb 50 billion as compensation which, of course, is to be paid in installments. 18
On October 6-7, 1998, the Central Committee, the State Council and the Central Military Commission held another enlarged meeting on this issue and their deliberations finally endorsed President Jiang’s aforesaid policy directive. They also urged the armed forces and police to fully comply with Jiang’s national policy and deadline of December 15, 1998. Also, plans were drawn up for taking over of PLA-run business, and the state media has reported this as having been completed on time. China’s State Commission on Trade and Economy—a super ministry of China’s State Council—had apparently created sixteen government agencies for to supervise the handover of the PLA’s business activities. 19 However, serious doubts remain about the authenticity of these reports as details on these transfers have not been as yet released.
The handover process was to be carried out in three distinct stages, which include preparations, enterprise transfer and restructuring of these enterprises. The first period had been wound up by the end of October 1998. And, after official registeration and asset appraisals, these enterprises are reported to have been handed over to designated government agencies by December 15, 1998, thus completing the second stage of planned transfer of PLA enterprises. In the final stage of this process, the commission is now expected to readjust, restructure, merge and transfer these enterprises along the path of the reforms taking account of their operational conditions so as to avoid over-staffing or duplication. 20 Also, measures have been taken to demonstrate their commitment to streamlining various state agencies that have been accused of misusing their privileged positions. As one of these measures, a 6,000 strong special force under the newly created Smuggling Investigation Bureau was launched nation-wide on January 5, 1999 and 4,000 more troops are likely to join this force by June 1999. 21 Similarly, President Jiang Zemin has also announced the creation of additional para-military forces that will work towards weeding out corruption from public life in general. Most of these projected 150,000 troops are likely to come from the PLA’s manpower cuts.
Problems of Implementation
There is, however, the other side of this official enthusiasm which indicates that things are not moving as smoothly as they are made out to be. First of all, this sudden announcement had caught various interest groups in the military unprepared, without enough time to develop lobbying and resistance campaign of any kind. Also, the implementation of these orders is believed to be extremely slow and has not really touched the PLA’s defence production enterprises (most of their conversion industries remain intact under this category) as also their tradition industrial and agricultural enterprises. This leaves only small number of PLA-run enterprises that are being targetted. Even here, many of them are not likely to be given up without resistance from the armed forces. What is generally being offered for surrender are the loss-making enterprises which have been in the red for years. Also, as a measure to limit the damage, the Party leadership seems to have halted all major decisions regarding re-grouping of China’s Military Regions or making any changes in China’s military leadership. Despite all this, the decision to transfer the PLA’s business has brought to light some expressions of dissatisfaction and its implementation has also been circumscribed by various other practicalities.
In a way, it appears that a weak political leadership is finding it difficult to implement its policies when it comes to taming the dragon which had also been the king-maker during the last fifty years. The thinking and planning on this policy had been apparent for the last few years, but that PLA had all along continued to ignore it. Especially, during the First Plenary Session of China’s 9th National People’s Congress during March 1998 such ideas had been floated from the highest level of China’s leadership, including President Jiang Zemin. This was followed by Zhu Rongji being selected to head China’s State Council, and China has since carried out a major exercise in streamlining its notorious SOEs. These should have ideally included also the business enterprises of China’s military, police and legal agencies but they were able to circumvent President Jiang and Premier Zhu’s policy directives. And even when these agencies have been ordered to desist from undertaking any business activities, the compliance has been experiencing its own limitations and its own difficulties. In the end, therefore, whatever may be the tenor of the political leadership, it definitely does not forecast an end of the PLA’s business enterprises.
The last one year has been perhaps the most critical for China’s armed forces. Apart from the historical announcement of reducing the PLA by 500,000 more troops, President Jiang had taken another historic decision of curbing the PLA’s involvement in profit-making commercial activities. A series of factors will determine how far President Jiang and his team of civilian-technocrats will be able to achieve their goals. Firstly, while the military may seem to have little influence in China’s day-to-day decision-making, actually its role remains much too significant to be either ignored or overlooked. Also, the PLA represents the most conservative element within the Chinese government which itself has been often sceptical about the economic reforms, seeing them as threatening the power of the state. The PLA also has a direct stake as it has come to be a major direct player in China’s economic liberalisation. 22 But, at the same time, the political leadership also seems to know its limitations in uprooting the PLA’s business interests and operations. This is why the taking over of their business operations has been more an exercise on paper than on the ground. But whatever be the level of success or failure in this exercise, it signals the determination of China’s political leaders to keep the military subordinate in China’s civil-military relations.
*: Research Fellow, The Institute for Defence Studies and Analyses. Back.
Note 1: “PLA to Give up Only One-Third of Business,” China News, November 28, 1998, p. 1. Back.
Note 2: Xi Mi, “Reform Shapes Modern Army,” China Daily, December 26, 1998, p. 4. Back.
Note 3: David S.G. Goodman, “Corruption in the PLA,” in Gerald Segal and Richard H. Yang ed., China’s Economic Reforms: The Impact on Security, (New York: Routledge, 1996), p. 38. Back.
Note 4: “Article Views Post-Deng Xiaoping PLA role,” FBIS-CHI-95-080, April 10, 1995. Back.
Note 5: Ellis Joffe, The Chinese Army After Mao, (London: Weidenfeld and Nicolson, 1987), p. 149. Back.
Note 6: Bohdan O. Szuprowics, “The Role of the People’s Liberation Army in the Chinese Economy and Foreign Affairs,” Military Review, vol. 52, no. 12, December 1977, pp. 3-19. Back.
Note 7: Willy Wo-Lap Lam, China after the Deng Xiaoping: The Power Struggle in Beijing since Tiananmen, (Singapore: John Wiley & Sons, 1995), p. 198. Back.
Note 8: Paul Humes Folta, From Swords to Plowshares: Defence Industry Reforms in the PRC, (Boulder, California: Westview Press, 1992), p. 197. Back.
Note 9: Jie Cheng, “China Cracks Down on Smuggling,” Beijing Review, vol. 41, no. 45, November 9-15, 1998, pp. 9-11. Back.
Note 10: “Article Views Post-Deng Xiaoping PLA role,” FBIS-CHI-95-080, April 10, 1995. Back.
Note 11: Kathy Chen, “Soldiers of Fortune: Chinese Army Fashions Major Role for itself as a Business Empire,” Wall Street Journal, May 24, 1994, p. 8. Back.
Note 12: “Implementation of PLA Business Ban Viewed,” FBIS-CHI-98-231, August 19, 1998. Back.
Note 13: “Repercussions of the Ban on Business Activity by the Military and Police,” Inside Mainland China, vol. 20, no. 12, December 1998, p. 29. Back.
Note 14: “Military and Police Exchange Fire in the Yellow Sea for an Hour,” Inside China Mainland, vol. 20, no. 11, November 1998, p. 34. Back.
Note 15: Shao Zongwei, “Closer Scrutiny of Officials to Stop Corruption,” China Daily, January 21, 1999, p. 1; Shao Zongwei, “Graft Busters Induct 17,000 Corrupt Officials,” China Daily, January 5, 1999, p. 1; also “Graft Busters Target Officials,” China News, January 14, 1999, p. 5. Back.
Note 18: “Adjusting Salaries to Appease the PLA,” Inside Mainland China, vol. 21, no. 1, January 1999, p. 31. Back.
Note 19: “China Orders PLA Out of Business by Year’s End,” China News, November 21, 1998, p. 1. Back.
Note 20: Su Dan, “Curbing Military Business Interests,” China Daily November 20, 1998, p. 1. Back.
Note 21: Xu Yang, “Nationwide Taskforce to Hit Smugglers,” China Daily, January 6, 1999, p. 1. Back.
Note 22: Greg Mastel, The Rise of the Chinese Economy: The Middle Kingdom Emerges, (New York: M.E. Shape, 1997), p. 50. Back.