Transparency best way to battle corruption
Military procurement is an essential part of any functioning army. In the case of the People's Liberation Army, it has also been a lucrative source of personal enrichment for many senior officers and their cliques. A decade-long effort to root out corruption within the mainland military has achieved a degree of success. But entrenched interests within the different regional commands continue to make it difficult to monitor weapon purchases and other logistics costs, even for Beijing and the central command.
A decisive step is being taken to introduce a new logistics and equipment procurement system to save costs and make deals more transparent. It is expected to be followed by a similar centralised purchasing system for weapons. This is a step in the right direction, but its effectiveness is still untested.
Compared with civilian purchases, those made by military organisations the world over are more prone to inefficiencies and corruption. The reason is that defence spending is not dictated by market forces but national security. Those in charge, therefore, have a greater say in such decisions than civilian officials who may be obliged to call for open bids each time significant purchases are made.
In a democracy, bids are usually required for costly weapon systems. Even so, there are still opportunities for collusion and corrupt deals because there are usually only a few defence companies available and they control the technology and pricing. In a closed and secretive military such as the PLA, shady deals are even more difficult to monitor. Even its top brass have now acknowledged the old system for weapons and logistics procurement is plagued by problems such as monopolies and arbitrary pricing because regional and local units have been able to make purchases on their own.
China's defence budget has been growing steadily at least since the mid-1990s and has accelerated in recent years. It takes up about 2.4 per cent of gross domestic product - which is within the norm of most countries. But the country's phenomenal economic growth means its military budget expands in absolute terms at a relatively fast rate. Weapons procurement is estimated to cost about a third of the budget, thereby creating ample opportunities for corruption.
President Hu Jintao began cracking down on corruption within the PLA when he took over as chairman of the Central Military Commission in 2004. But reform has been slow. Among the more visible clean-up efforts has been an audit of more than 4,000 military officials. Deputy navy commander Wang Shouyue , for example, was handed a suspended death sentence in April for embezzling 160 million yuan (HK$181 million). Since last year, logistical purchases involving non-essential materials have to be made on the open market and outside companies must be invited to bid for PLA-related infrastructure projects. A similar system is being planned for weapons procurement.
The opaque nature of China's military spending mirrors the largely controlled nature of the mainland economy. Both are constant sources of irritation and alarm for foreign businesses and governments.
As China modernises its army, it must adopt new managerial and administrative systems to cut costs, reduce wastage, enhance efficiency and transparency. Mainland soldiers have long been barred from conducting private business. Now, it's time to regulate the military's internal business dealings.