Structure and Process

This chapter examines the structure and process mechanisms of the Chinese military-business complex prior to divestiture in 1998. In this discussion, definitions are of central importance. One of the most common mistakes in the analysis of Chinese military commerce is the blurring of the distinction between military and defense-industrial companies, based on the incorrect assumption that the Chinese military and defense-industrial systems are one and the same. In Chinese, the PLA’s internal economic units are known as jundui qiye, or “military enterprises,” while the enterprises subordinate to China’s defense-industrial ministries are known as jungong qiye. ¹ The latter include the civilian industrial ministries related to ordnance, aviation, space, shipbuilding, nuclear weapons, and electronics production. Each of these ministries has its own affiliated corporation, which concentrates on selling civilian and military-related output to both domestic and international markets. These corporations are officially civilian in nature and operate within a chain of command that proceeds vertically from the enterprises through the ministerial leadership to the government’s State Council, headed by the premier. By contrast, the military-business complex at its height consisted of three broad categories of enterprises: primary industries (factories and mines); farms; and tertiary industries, such as hospitals, hotels, and telecommunications. These enterprises were controlled by military units at all levels of the system.