To: Rolla Coasta who wrote (663 ) 1/20/2001 10:18:23 PM From: Hawkmoon Read Replies (1) | Respond to I don't think you can use the phrase "heavily involved". In July 1998, Jiang ordered the PLA to divest itself of its business empire, estimated to number some 15,000 enterprises with estimated combined annual revenues of $25 billion – well in excess of the official $9.7 billion annual military budget. Under the economic reforms of Deng Xiaoping, the PLA was allowed to expand even further to relieve the national budget, increase employment and speed industrial growth and business development. The trouble is, as the PLA’s business empire grew, so did corruption in the ranks and, more ominously, independence from Beijing’s control. ....Jiang underestimated the corruption and avarice that had permeated the PLA. He was rudely made aware of the extent of the problem when, in early April of this year, the CCP and PLA commissions, tasked with auditing PLA enterprises, reported wanton and systematic embezzlement, false accounting and bad debts. Moreover, since receiving the divestiture order, the PLA engaged in full scale asset-stripping, hiding the proceeds abroad and extensively borrowing on the expectation that they would never have to repay the debts. The government was left with deeply indebted, overstaffed shells of businesses, many committed to extensive and costly social welfare programs. The PLA, having relinquished its business empire as ordered, then had the gall to demand compensation for the businesses as well as the promised, and now necessary, increases in the defense budget. Jiang must now pay off the commanders for their "losses," while funding the PLA at a higher level and injecting funds into remaining enterprises in order to stave off massive unemployment. It is no wonder Jiang is concerned about PLA loyalty. Jiang’s first response has been to hand over the problem and a fair share of the blame to Prime Minister Zhu Rongji. Ironically, according to diplomatic and military sources cited by the South China Morning Post in July 1998, Zhu adamantly opposed Jiang’s decision to strip the PLA of its businesses. Zhu had reportedly argued that China could not spare the hundreds of billions of yuan promised to the PLA for closing down its enterprises. He could not have expected how badly the situation would evolve. The generals are reportedly also asking to be allowed back into business – one would expect new enterprises founded with their ill-gotten gains, rather than the derelicts they left the central government. The generals, remembering that the last cross-Strait crisis won them prestige and healthy budget increases, are also reportedly beating the drum with regard to the current crisis and seeking a greater role in future cross-Strait relations. Zhu has reportedly balked at this, deeming increased tensions a threat to continued Taiwan investment in China – a position derided by the generals as unpatriotic. The PLA’s battle over Taiwan policy may go far in explaining the recent oscillations in that policy.Jiang has refrained from mediating between Zhu and the military. He is letting Zhu take the heat. However, even if Zhu takes the blame for the problem and is unseated, an altogether likely outcome considering the pressure he faces for China’s poor economic performance, the problem will not disappear. Jiang cannot shirk responsibility for long, nor can he easily solve the problem. His own position may be in jeopardy. Jiang’s attempt to rein in the PLA has only made the military more assertive, threatening not only to unseat Jiang and others, but also to unhinge Beijing’s management of the Taiwan crisis. The battle between Jiang’s conservatives and Zhu’s reformers is paling in comparison to Beijing’s struggle with the PLA."stratfor.com
