The PLA Gets Back Into Business0128 GMT 000216The People's Liberation Army (PLA) continues to play an important role in Chinese business despite President Jiang Zemin's 18-month old ban on doing so. According to a Feb. 15 report by Reuters, the PLA has not only kept its stake in China Great Wall Communications, but has formed a new telecommunications company: Hebei Century Mobile Communications. By expanding into so-called CDMA, Code-Division Mulitiple Access cellular service like that used in the United States, the military is moving into a high profile, lucrative market. By doing so, the PLA can continue to fund itself independently of the central government in Beijing. In political terms, the militarys newly revealed enterprise strongly suggests that Jiang is not firmly in control of the situation. Abroad, this development is a warning to foreign investors who are watching Chinas bid to join the World Trade Organization (WTO). Largely untapped by foreign investors, Chinas cellular telephone market has tremendous growth possibilities. There are 40 million users, and the dominant company state-run China Telecom reports that its customer base has grown 44 percent per year. But the telecommunications industry is also an important political flashpoint, particularly as the country prepares to join the WTO. Conservatives in the Information Industry Ministry, led by Wu Jichuan, have worked to protect the monopoly of Chinese firms. They fear that opening the market to foreigners would siphon money away from the Communist Party and cost the party its power over an important instrument of control. On the other side of the spectrum, reformists such as Prime Minister Zhu Rongji have argued that opening this industry is essential to enhancing productivity and competitiveness. The PLA, for its part, wants to protect its ability to do business. The PLAs bid to provide American-style cellular service suggests two things. First, Jiang is unable to enforce his most important command to the military; the PLA continues to seek its own sources of funding and ultimately some degree of independence from Beijing. Second, Jiang may be unable to deliver the lucrative Chinese telecommunications market to foreigners, even though membership in the WTO requires it. In domestic political terms, it appears that neither Jiang nor the reformers are fully in control of the situation. And Jiangs fence-straddling strategy trying to split the difference between economic reformers and hard-liners may be failing. The Hong Kong magazine Kai Fang reported that party members in the Communist Party Central Committee want Jiang to step down as secretary after the 16th National Party Congress. Its even possible that Jiang himself winked at the PLAs new enterprise in an attempt to appease the military. ) 2000 WNI, Inc. All rights reserved. |
-- Possible Impact (posim@hotmail.com), February 16, 2000