Chinese lower their guard against army

One of the most enduring images of the Chinese television coverage of China's devastating floods is that of a woman called Xu…

One of the most enduring images of the Chinese television coverage of China's devastating floods is that of a woman called Xu Hongping squeezing her breast milk onto the bare back of a soldier to soothe a wasp sting. Another image shown over and over again is that of soldiers linking arms and physically holding back raging waters.

The role of the People's Liberation Army in flood relief has been compared to that of an army at war, with the enemy the Yangtse rather than the Japanese. Some 276,000 young conscripts were sent to the flood zone in China's biggest peace-time mobilisation.

Over the hot and wet summer months the image of the army was transformed. Memories of its bloody role in the 1989 pro-democracy protests faded. Its reputation for smuggling was pushed into the background. Young people in China have even taken to wearing army fatigues to identify with the men on the front. The PLA is once again the heroic people's army.

But the glorification of the PLA may be serving other purposes. Behind the scenes in Chinese politics a power struggle is being waged, with the civilian arm of the government, heavily influenced by reform-minded Prime Minister, Mr Zhu Rongji, trying to rein in the commercial might of the army, or "PLA Inc".

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President Jiang Zemin shocked high-ranking military officers on July 22nd when he announced that the military should get out of commercial activities. It could prove to be the major decision of his presidency. Some analysts believe that the move against PLA Inc is the serious part of a massive anti-smuggling campaign under way since June.

The PLA operates 15,000 to 20,000 companies in China to supplement its budget. It owns 1,500 hotels, three basketball teams, foreign ice-cream franchises, golf courses, luxury liners and night clubs where prostitution occurs. It controls an estimated 4 per cent of the national economy. It is like an independent fiefdom which evades duties and rarely suffers prosecution for corruption. President Jiang's move is essentially to reassert civilian control over revenue-rich sectors of the economy.

The anti-smuggling campaign is also useful in stimulating demand for local produce. The businesses hit are those illegally bringing in cheap imports to a country which loves foreign products, from cars to baby milk. The story of a foreign company which had a £30 million lobster import business with a Chinese partner makes the point.

When the lobsters arrived at Beijing airport in water tanks, they were relabelled as local produce, thus avoiding a high tariff. When the new anti-smuggling police force moved in it simply stopped trading. Lobster buyers now have to turn to Chinese suppliers.

Similarly with China's campaign against gas-oil smuggling which has choked tanker traffic in the South China Sea. Since June many vessels without proper import permits have been left sitting off Chinese ports, including several foreign oil tankers. This helps Chinese refineries which have difficulty selling off their huge inventories because China's crude oil is overpriced on the plummeting international market. The PLA is heavily involved in the gas-oil trade.

The army is unlikely to try hard to undermine the decision announced by President Jiang that the military and police forces be prohibited from running businesses and smuggling. The army may have gone too far and the leadership must protect its legitimacy. The party rank and file are unhappy. In March, one third of the 2,950 deputies in the Chinese parliament staged an anticorruption protest. The message has hit home. Also PLA smuggling activities are influencing foreign policy. They allegedly extend to rifles, ammunition and even missiles, with countries like Pakistan and Iran among regular purchasers.

The floods have benefited both President Jiang and the army generals. The president, often seen on the dykes with megaphone urging the soldiers to greater sacrifice, has shown his ability to mobilise the army and people. The heroics of the recruits have washed away the stigma of repression and corruption. Grateful flood victims have been shown cooking noodles for hungry soldiers. But the noodles may have been bought from an army business in the first place. And Beijing wants the revenue from such enterprises for the civilian coffers.