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1 1 (Updated January 17, 2001)

handle is hein.crs/crsaaph0001 and id is 1 raw text is: Order Code 98-197 F Updated January 17, 2001 China's Military-Owned Businesses Shirley A. Kan Specialist in National Security Policy Foreign Affairs, Defense, and Trade Division Summary Defense companies of the People's Republic of China (PRC) fall under two hierarchies: those belonging to the military, or the People's Liberation Army (PLA), and those in the defense industries under the State Council. This CRS Report focuses on PLA-owned businesses. Some advocate limiting economic ties with PLA companies. Others say targeting the PLA would unnecessarily hurt strategic goals with China and would be formidable to enforce. Complicating the issue is the ban on the PLA doing business that China's president ordered on July 22, 1998. The FY1999 National Defense Authorization Act (NDAA) required a published list of PLA companies operating in the United States, but some Members of Congress say the Administration did not comply. The FY2001 NDAA again required a report (may be classified) on such companies. This CRS report may be updated as warranted. Princelings, Arms Sales, and Civilian Business The PLA's diversification into increasingly civilian profit-making business originated with late paramount leader Deng Xiaoping's military and economic reforms. In January 1982, Deng articulated the 16-character Military-Civilian Combination Policy, (military-civilian unity, peacetime-wartime unity, priority for military production, use civilian production to support the military.) In addition, the Commission of Science, Technology, Industry for National Defense (COSTIND) was created in 1982 under the Central Military Commission (CMC) and the State Council to integrate the civilian and military sectors of research and development, and production.1 In 1985, military reforms cut back the PLA's budget and began to demobilize 25% (one million) of the soldiers. There were surplus people and less money. The PLA began seeking profits in arms sales, including the sale of missiles to the Middle East. The PLA' s profits were also tied to the personal fortunes of princelings, the children (and their spouses) of top military and 1 CRS Report 96-889, China: Commission of Science, Technology, and Industry for National Defense (COSTIND) and Defense Industries, updated Dec. 3, 1997, by Shirley A. Kan. In March 1998, COSTIND was reorganized solely under the State Council. Congressional Research Service The Library of Congress CRS Report for Congress Received through the CRS Web