At the same time, advocates of maintaining a cordial relationship with China view the PLA business empire as a barrier to Beijing’s complete integration with the international economy. Negotiation over China’s entry into the World Trade Organization, for instance, has been hung up in part over the continuing role of non‐market enterprises like the PLA firms.
Now Chinese President Jiang Zemin has ordered the PLA to divest its commercial operations. This has brought a collective sigh of relief across the political spectrum. Human rights activists and free market advocates alike cheered his order.
But the applause is premature. True, the Chinese military’s business role creates cause for concern. Analysts estimate the PLA makes $3 billion to $5 billion (it publicly admits to $1 billion) annually in profits.
The extensive network of PLA firms inhibits China’s move to a true market economy. Moreover, the military is thought to be involved in slave labor. For these reasons, the disappearance of PLA companies would be a benefit. But there is a more important point. China, with the world’s largest population, is likely eventually to develop the globe’s biggest economy, almost inevitably becoming a major military power.