ABSTRACT
In July 1998, the Chinese People’s Liberation Army (PLA) was officially banned from commercial activities. The announcement signaled an end to a dramatic organizational experiment begun nearly twenty years earlier. Faced with the contradictory forces of a declining military budget and pressures to modernize at the end of the Maoist era, the army in the late 1970s and early 1980s reluctantly agreed to join the Chinese economic reform drive, converting and expanding its existing internal military economy to market-oriented civilian production. The hope was that the resulting profits could replace lost expenditures and help finance the army’s overdue modernization of weaponry and forces. In the two decades since those decisions were taken, the PLA became one of the most important actors in the Chinese economy, controlling a multi-billion dollar international business empire that ran the gamut from large farms to world-class hotels and transnational corporations. This amalgam of military and commercial interests, known colloquially as “PLA, Inc.,” resulted in an entirely new organizational form for a Leninist system, what I term the “military-business complex.” 1 From the beginning, the participation of the military in the economy was a mixed blessing for both the military and the civilian leadership, alleviating some of the fiscal needs of the army but spawning endemic corruption and other types of illegal behavior. Most recently, the painful divestiture of this massive economic structure has caused the most serious tensions in Chinese civil-military relations since the Tiananmen massacre in 1989.
