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Chines Army's Investment Interests

Business ventures of the Chinese People's Liberation Army (PLA) have grown over decades into a multibillion-dollar wordlwide empire including hotel chains, pig farms, brothels, restaurants, toy production, textile and pharmaceutical manufacturing. John Howard reports.

Following worldwide concerns that the PLA was heavily involved in international arms trading, drugs and espionage, the US Congress directed the Clinton administration to draft a report on how many front companies may be working for the Chinese military on US soil. Eight months past the deadline, the list remains uncompleted.

Nevertheless, US senate and congressional leaders now say that as many as 3,000 businesses in the US are PLA controlled.

Even China's own political leaders began raising a sceptical eye at PLA Inc., when they realised that mixing military and business for decades has led to widespread corruption and smuggling.

Last year, around the same time that Congress began eyeing PLA businesses as main sponsors of arms trading, drugs and espionage, the PLA was finally ordered by Chinese President Jiang Zemin to get out of business and to privatise its estimated 20,000 worldwide ventures.

But the transition in China is slow going and most of the ventures continue. This is causing great alarm in diplomatic circles because it is unknown just how many ventures the PLA still has and in what countries they remain operating. In most cases the PLA is able to operate worldwide without scrutiny because of lax laws.

Lax investment laws in New Zealand, for example, would allow the PLA to operate with impunity. The profits from PLA ventures are returned to finance the PLA machine and, it is alleged by top US officials, to fill the pockets of Chinese generals and top military people.

An important issue internationally is whether businesses operated by the PLA continue to serve the Chinese military war-machine despite paper shuffling of ownership, says James Lilley, who once served as US Ambassador to China.

"There is no question that the PLA placed people with worldwide companies or invested in or created companies to collect technical information, that's what they have done and continue to do. They are still in business worldwide, even if its through a front man, " Mr Lilley said.

A report by a US House of Representatives investigative committee chaired by Rep. Christopher Cox released recently ignited a storm of criticism with findings of Chinese espionage at US nuclear laboratories and the theft of highly classified secrets regarding the US nuclear arsenal.

The Chinese Army began sponsoring commercial operations 50 years ago. Those ventures originally provided clothing, food and arms to the revolutionary army but, over the years, they have grown into a worldwide network which, according to US officials, makes the Mafia look like Sesame-street.


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