ELECTIONS '98
COMMENTARY
SPECIALS
INTERVIEWS
CAPITAL BUZZ
REDIFF POLL
DEAR REDIFF
THE STATES
YEH HAI INDIA!
ARCHIVES

Jiang orders closure of PLA's commercial empire

In a bold move aimed at transforming the world's largest army into a modern fighting force, Chinese President Jiang Zemin has ordered China's military to close its vast commercial empire.

The directive, part of a widening week-old government campaign to eradicate pervasive smuggling and the army's role in it, was another signal of president Jiang's growing stature as China's pre-eminent leader.

Taking on the entrenched business interests of the politically powerful People's Liberation Army was once considered too risky for Jiang, who lacks the military experience of his revolution-hardened predecessors.

PLA businesses fund an estimated one-third of the military's operating expenses and are a pervasive force in China's commercial life, from cellular phone networks to Karaoke halls.

In a sign of his hard-won support among PLA brass, state-run television on Wednesday night showed President Jiang, flanked by senior generals of the Communist Party's military commission, ordering the shutdown at a closed-door meeting this week. Top commanders from the PLA and the People's Armed Police -- a uniformed internal security force -- took notes as Jiang spoke.

"All military and armed police forces must earnestly check all kinds of commercial enterprises set up by subsidiary units and from today on must not engage in business activities,'' the official Xinhua news agency quoted Jiang as saying in a report published in major national newspapers today.

Despite the statement's sweeping implications, the reports gave no indications how the PLA is to divest its business interests.

"They're breaking a lot of rice bowls,'' said Bates Gill, a specialist on China's military-industrial establishment at the Monterey Institute of International Studies. "This raises some very serious questions on dealing with the deeply vested interests of individuals who are making a tidy profit.''

The smuggling campaign appeared to give President Jiang and his supporters in the PLA a politically convenient excuse to advance a drive to modernise the force and make its 2.9 million members more professional. "Who can argue that you shouldn't stop smuggling?'' Gill said.

Smuggling -- everything from oil to luxury cars and cigarettes -- to evade high taxes has frustrated government efforts to set up capitalist-style free markets. Xinhua, quoting a general administration of customs official, estimated that the illegal trade costs the government and enterprises as much as $ 12 billion in lost revenues.

Jiang's order confirmed suspicions that PLA members were involved in smuggling and that their enterprises were a major conduit for the endeavour. He told the assembled officers that the PLA's reputation was at stake and demanded their co-operation.

By shaming the PLA, Jiang may be trying to overcome the kind of resistance that foiled attempts in the early 1990s to get the military out of business.

Since then, Jiang has gathered around him a coterie of career PLA officers determined to upgrade the military. They have recognised that military enterprises, many of them money losers, need to be spun off and have set up a procurement division to oversee development of weapons.

UNI

Tell us what you think of this report