By removing the military from business, the Chinese leadership wants to make a playing field that is fairer and easier to control.
That is the intention behind the startling announcement by President Jiang Zemin, in a speech to army leaders and carried on the front page of the People's Daily yesterday, that the military must get out of businesses from which it has made a fortune over the past 20 years.
The General Logistics Department of the People's Liberation Army runs an estimated 20,000 firms, involved in hotels, tourism, real estate, arms manufacture and export, telecommunications, health care and many other sectors. They could account for up to 3 per cent of mainland gross domestic product.
Mr Jiang said the PLA and the People's Armed Police must carry out a thorough restructuring of all their business activities and in future must withdraw from them all together. The firms themselves were in a state of shock.
'We have not been informed of this officially,' said an official of the San Jiu (999) pharmaceutical factory in Shenzhen, part of the fast-growing 999 Group. 'We are waiting for an official notice . . . Whatever is the order we will follow.' The Xinxing Group, set up in 1989, employs 200,000 workers in dozens of factories. The plants used to make weapons but most have switched to civilian products such as shoes and clothes.
'It is hard to say what effect the order will have on our group,' one official said.