After martial-law troops backed by tanks shot their way into
student-occupied Tiananmen Square in 1989, central Beijing looked
like an urban battlefield, with burned-out buses and bullet-cratered
buildings left as signposts of the Army's advance.
Yet, as if at the eye of a hurricane, two complexes here survived
unscathed: the Communist Party headquarters opposite Tiananmen
Square, and the nearby five-star Palace Hotel.
The protective force field around the Palace turned out to be the
same power that wrought destruction in Beijing: The hotel is one of
thousands of flourishing businesses owned by the People's Liberation
Army. Yet the ultra- swank hotel, with its marble staircases and
gold-plated Rolls-Royce, is under a cloud now that China's leadership
has ordered the Army to divest itself of a vast business empire.
President Jiang Zemin, the first civilian to head the PLA since
the 1949 Communist revolution, recently launched a campaign to strip
the Army of its multibillion-dollar commercial operations. But
Chinese and American analysts say that Mr. Jiang may be creating a
political minefield by confronting the Army, and that he is likely to
encounter strong pockets of resistance. "The Army is a very strong
political-interest group, and anyone who challenges it faces
tremendous risks," says Hu Angang, a researcher at the Chinese
Academy of Social Sciences.
The president launched an offensive on the PLA Inc., as many
critics call China's entrepreneurial Army, in part to combat a web of
corruption entangling growing swaths of soldiers. China's military
engages in everything from smuggling to operating discos, from making
pirated compact discs to exporting submachine guns to the United
States, says a Western official. Shrouded in secrecy, the PLA is
believed to own up to 30,000 companies that produce an estimated $6
billion in profits yearly. "Public resentment is mounting against
the Army's flexing its power in the business sphere and its being
above the law," says the official, who asked not to be identified.
Yet many Chinese were shocked when Jiang, flanked by the
military's high command, publicly accused unnamed Army officers,
along with members of the judiciary, police, and paramilitary, of
aiding or shielding massive smuggling rings. Jiang, who rose to
power through the bureaucracy rather than on the battlefield, "has
been courting the PLA for years," says the Western official.
"Because Jiang relies on the Army to rule China and has no military
experience, many analysts believed he would pretty much let the PLA
do whatever it wanted. …