Chinese army out to capture profits

December 23, 1990|By Robert Benjamin | Robert Benjamin,Beijing Bureau of The Sun

BEIJING -- Some of the profits from that Chinese-made stuffed toy you are giving your child for Christmas may be going directly toward the care and feeding of a People's Liberation Army soldier.

The same can be said for an array of thousands of other everyday products now exported by China to 53 countries and regions, an array that includes baby carriages and clothes, hand tools and door locks, camping and sports gear, canned food and kitchen equipment.

All of these items -- not to mention high-tech industrial products -- are produced by China's defense industries, including 244 factories directly run by the army that was called upon to crush pro-democracy protests here last year.

Receiving a declining share of China's state budget in the 1980s aswell as orders to cut its forces, the Chinese military has increasingly converted excess production capacity at its defense industries from military to civilian ends in an effort to support itself.

As a result, 40 percent of China's military factories now turn out 10,000 different civilian products.

Such products, which a decade ago accounted for only about 7 percent of China's defense industries' output, now make up about 70 percent of their total production, according to the China Association for Peaceful Use of Military Industry Technology.

Between $100 million and $200 million worth of Chinese-made civilian products are now exported every year, and perhaps half of these items are produced by factories directly owned and run by the PLA's logistics wing, according to official Chinese sources.

Harlan Jencks, a University of California at Berkeley expert on Chinese military affairs, said the rapidly increasing role of China's military in civilian production stems from the military's need to put to work its defense plants' grossly underutilized production capacity, to apply its research talent toward China's modernization and to generate income at a time of tight defense budgets and dramatically declining arms exports to a newly competitive world market.

Adjusted for inflation, China's military budget -- which increased by an average of more than 5 percent annually from 1951 to 1978 -- averaged decreases of about 3 percent a year in the 1980s. Though China's defense budget soared by about 15 percent in 1990 over 1989, it remains just two-thirds that of 10 years ago as a share of the total state budget.

And so the financial future of China's military is clear, Mr. Jencks said: "They have been increasingly told to pay their own way."

Mr. Jencks said that, because the military's official budget does not include its industries' earnings, it is difficult for foreign intelligence experts to pinpoint exactly how much of these profits China's armed forces actually retain for their own use.

However, Jin Zhude, a spokesman for a group of military-related organizations that exhibited an array of military-made civilian goods in Beijing last week, said that the profits from the PLA's 244 factories go directly toward the daily upkeep of Chinese troops -- upkeep that runs less than 50 cents a day per man.

Though military-made items represent only a small share of China's $16.5 billion in total exports to the United States, the diversity of products under a variety of brand names on display at last week's exhibition confirmed that it likely would be impossible for the American consumer to determine which Chinese products come from a defense plant.

Amid mock-ups of rockets and banks of TV sets showing films of bTC helicopter attacks, China's defense industries at the exhibition offered almost everything for export -- from medical equipment to luggage, machine tools to tape decks, computer components to baby shoes.

Chinese aerospace plants make television parts. Chemical factories produce fireworks. Weapons-makers turn out clothes, eyeglasses and toys. One huge PLA conglomerate even has been involved in a joint venture with an American company to export blood products to the United States.

Though the shift toward producing civilian products has served to maintain and modernize China's military industries, Mr. Jencks theorized that foreign consumers concerned about aiding that effort with their purchases might take consolation in an unintended side effect.

As he put it: "You could say that the better job that they do of making baby carriages, the harder it is going to be for them to convert back to making weapons."

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