Rotting From Within

In many fields of international competition, China is less sanguine about its abilities than outsiders. Chinese leaders often remind Westerners that China is a developing country, with hundreds of millions of people living in poverty, an unbalanced economy, and high social tensions. What should most worry Beijing, and provide some comfort to those who fear Chinese military expansionism, is the state of corruption in the People’s Liberation Army (PLA).

True, the world underestimated how quickly a four-fold jump in Chinese military spending in the past decade would deliver an array of new weaponry to prevent the United States from interfering in a regional military conflict. Top American generals have worried publicly about "carrier-killer" ballistic missiles designed to destroy U.S. battle groups as far afield as the Philippines, Japan, and beyond. Last year, China tested a prototype stealth fighter and launched its maiden aircraft carrier, to augment new destroyers and nuclear submarines. What is unknown, however, is whether the Chinese military, an intensely secretive organisation only nominally accountable to civilian leaders, can develop the human software to effectively operate and integrate its new hardware.

Judging from a recent series of scathing speeches by one of the PLA’s top generals, details of which were obtained by Foreign Policy, it can’t: The institution is riddled with corruption and professional decay, compromised by ties of patronage, and asphyxiated by the ever-greater effort required to impose political control. The speeches, one in late December and the other in mid-February, were given by Gen. Liu Yuan, the son of a former president of China and one of the PLA’s rising stars; the speeches and Liu’s actions suggest that the PLA might be the site of the next major struggle for control of the Communist Party, of the type that recently brought down former Chongqing party boss Bo Xilai. Liu is the political commissar and the most powerful official of the PLA’s General Logistics Department, which handles enormous contracts in land, housing, food, finance, and services for China’s 2.3 million-strong military.

"No country can defeat China," Liu told about 600 officers in his department in unscripted comments to an enlarged party meeting on the afternoon of Dec. 29, according to sources who have verified notes of his speech. "Only our own corruption can destroy us and cause our armed forces to be defeated without fighting." This searing indictment of the state of China’s armed forces, coming from an acting full three-star general inside the PLA, has no known modern precedent.

There is no way to independently verify Liu’s withering assessment of the extent of corruption in the PLA, but he is well-positioned to make it. His professional experience includes a decade in the government of the central Chinese province of Henan and a decade in the paramilitary, taking him beyond narrow lines of command and patronage. His logistics department is integrated with all other arms of the Chinese military and his status as the descendant of a high-ranking leader, or princeling, enables privileged informal networks across military ranks and the civilian side of the party-state. Some Chinese and diplomatic PLA watchers believe Liu, the highest born of all the princelings now climbing into power, is on his way to the very top of China’s military as a vice chairman of the Central Military Commission (CMC) after the current leadership retires following this year’s 18th Party Congress, the first large-scale transfer of power in a decade. It helps that he is a close friend of the princeling president-in-waiting, Xi Jinping.

While Chinese leaders regard the United States as a likely future adversary, Liu is more worried about what the PLA, which hasn’t seen significant combat since a militarily disastrous invasion of Vietnam in 1979, is doing to itself in times of peace. In his February speech, he described the army beset by a disease of "malignant individualism" where officers follow only orders that suit them, advance on the strength of their connections, and openly sell their services at "clearly marked prices."

The practice of buying promotions inside the military is now so widespread, Liu noted, that even outgoing President Hu Jintao, who also leads the military from his position atop the CMC, had vented his frustration. "When Chairman Hu severely criticised ‘buying and selling official posts,’ can we sit idle?"

Liu’s revelations are not necessarily good news for China’s would-be foes. Foreign government strategists are starting to worry that corruption and byzantine internal politics may amplify the known difficulties in communicating with the PLA and adroitly managing crisis situations. Despite the risks inherent in China’s growing arsenal, expanding ambitions and spasmodically aggressive rhetoric and actions, military cooperation between the United States and China is almost nonexistent. Diplomats say American officials are given less access to PLA officers than colleagues from other Western embassies, who themselves are kept largely in the dark. Senior Western government officials have told me that U.S. military leaders have less knowledge of command systems, and far fewer avenues of communication, than they had with their Soviet counterparts during the Cold War. Michael Swaine, a China security expert at the Carnegie Endowment for International Peace, writes that the "fragmented and stove-piped structure" of the Chinese system means it has great trouble communicating even with itself, especially in crisis situations. He, like most other analysts, does not study corruption in the PLA because of the difficulty in measuring it.

In some ways, though, it’s hiding in plain sight. Outsiders can glimpse the enormous flow of military bribes and favours in luxury cars with military license plates on Changan Avenue, Beijing’s main east-west thoroughfare, and parked around upmarket night clubs near the Workers’ Stadium. Business people gravitate toward PLA officers because of the access and protection they bring. PLA veterans told me they are organising "rights protection" movements to protest their inadequate pensions, which they contrast with the luxury lifestyles they observe among serving officers. Retired officers have told me that promotions have become so valuable that it has become routine to pay the equivalent of hundreds of thousands of dollars in bribes to even be considered for many senior positions.

The February address, the second and most detailed of Liu’s corruption speeches, suggests the problems run much deeper than anecdotal evidence suggests. "Certain individuals exchange public money, public goods, public office and public affairs for personal gain, flouting the law and party codes of conduct, even resorting to verbal abuse and threats, clandestine plots and set ups," he said. "They physically attack loyal and upstanding officials, kidnap and blackmail party leaders, and drag in their superiors to act as human shields. They deploy all of the tricks of the mafia trade within the army itself." The way Liu describes it, the web of military cliques, factions, and internal knots of organized crime sounds more like the workings of warlord armies before the communist revolution than the rapidly modernizing force that is currently rattling China’s neighbors.

Chairman Mao spoke of "curing the disease to save the patient" in the times of discipline and austerity before the revolution. Perhaps because Liu was talking about the PLA — where putrefaction appears more advanced than elsewhere in China’s sclerotic bureaucracy — he took the metaphor beyond its usual graphic limits. In his February speech, Liu recalled a childhood tale about a surgeon in Siberia who saved himself from acute appendicitis by using a mirror to guide a knife into his lower abdomen.

"How many people on this earth are really able to operate on themselves?" he said, according to sources who verified the speech. "No matter if it is an individual or an organisation, to fix a problem when it arises requires this type of guts and nerve."

Liu’s legendary pedigree gives him license to do and say things that others cannot. He is the sole surviving son of former President Liu Shaoqi, who had been Mao’s anointed successor for 20 years until Mao turned on him at the start of the Cultural Revolution. Arrested and publically beaten, the elder Liu died in 1969 in a cold concrete prison cell — naked, emaciated, and caked in vomit and diarrhea. One of his brothers died when his head was forced onto a railway track; the other lost his sanity in jail and died shortly after his release. In 1979, Liu’s mother was released after a decade in jail; his father was posthumously rehabilitated the next year in the lead up to a great show trial for the family’s old assailants, including Mao’s wife Jiang Qing. Liu Yuan and his friend Xi Jinping, who also suffered during the Cultural Revolution, resolved to be grassroots officials in the countryside and began ascending through government ranks.

When he talks of a "life-and-death" struggle to save the PLA and the Communist Party system his father helped create, few would doubt that Liu means it. What is less clear, however, is whether the PLA can simply remove its own rotten parts as if they were an infected appendix, and whether the divided and compromised civilian and military leadership, reeling over Bo Xilai’s downfall, can provide so much as a scalpel to enable Liu do the surgical work.

Liu’s Dec. 29 "life-and-death" speech heralded what could become the biggest expose of PLA corruption since former president Jiang Zemin opened an investigation into the Yuanhua Group in 1999. In that scandal, widely covered in official media, Yuanhua used military connections to evade a staggering $6.3 billion in taxes by smuggling everything from cigarettes and luxury cars to fully laden oil tankers. The case brought down hundreds of provincial and military officials, including the head of a major PLA intelligence division. It also enabled Jiang to consolidate his grip on the military.

The outside world caught another limited glimpse of military corruption in December 2005, when the deputy commander of the navy, Adm. Wang Shouye, was detained for unspecified "economic crimes." Official reports said he was brought down by a mistress, while Hong Kong’s Asia Weekly said he kept five mistresses and stole almost 20 million dollars. At the time, the PLA Daily, the military’s official newspaper of the PLA, said the PLA’s two historic tasks were fighting wars and eradicating corruption, but no one took visible action on corruption for a further six years. The subject was pushed back out of sight and all that seems to have changed is that the sums have grown much bigger.

In late January, Liu followed up his tough talk by ripping out one allegedly cancerous node, the deputy director of his Logistics Department, Gu Junshan, after a protracted internal struggle. Gu was the first military official of such a high rank to be toppled since Admiral Wang in 2005. A source with direct knowledge of the case described General Gu extorting county officials with threats of violence and buying his way up through the PLA hierarchy. The source, whose allegations could not be independently confirmed, said that Gu, together with friends, relatives, and patrons in and beyond the military, profited immensely from a property development in Shanghai, distributed hundreds of PLA-built villas in Beijing as gifts to his friends and allies, and generally ran his construction and infrastructure division like a mafia fiefdom. He lists a bewildering array of personal assets, beginning with Gu’s own villa, which stands outside the usual military compounds behind a high wall next to Beijing’s East Fourth Ring Road, called the General’s Mansion.

"Gu’s problem is extraordinary big," said the source. He said Gu had arranged chartered flights for his domestic and international flights even when he had been a one-star major general, which is unheard of for someone of that rank. Gu could not be reached for comment.

In February, official military websites and news agencies confirmed Gu’s removal, but only in passive terms: "Gu Junshan no longer holds the position of deputy director of the General Logistics Department." The leadership, it seemed, was still battling over the fate of Gu and those who have protected him.

The Department of Defense, which represents the PLA when dealing with foreign bodies, did not respond to faxed interview questions. But all Chinese observers interviewed for this article agreed that the PLA’s corruption and discipline problems are growing worse. Military corruption is a more "imminent" threat to the PLA than the U.S. armed forces, said Zhu Feng, a professor international relations at Peking University. Others say the problems have multiplied in the decades after the Tiananmen Square massacre of 1989, as the formal PLA budget has climbed to $106 billion a year while civilian leaders are struggling to assert control.

Chen Xiaolu, a princeling and former PLA colonel who has many powerful princeling friends including General Liu, declined to repeat the "terrible stories" about PLA corruption he hears from recently retired generals (except to confirm the broad thrust of stories about Gu Junshan, whom Liu deposed). Chen, the son of one of China’s 10 great marshals and son-in-law of a legendary commander, Gen. Su Yu, runs a successful infrastructure investment firm, Standard International. He opted out of the government and military system after the Tiananmen massacres. He told me the 1989 bloodshed left a vacuum of purpose and integrity within the PLA, which money has rushed to fill. "The problem has really got out of hand in the last 20 years," he said. "After the June 4 movement, when ‘opposing corruption’ was the protestors’ slogan, some of the officers no longer cared about anything. They just made money and broke all the rules."

A second princeling who has recently retired from a ministerial-level position told me discipline and unity in the PLA has deteriorated in the past decade. He said an unprecedented leadership vacuum has opened up at the top of the military because President Hu never consolidated his grip, even after more than nine years at the helm of the Communist Party and seven years chairing the Central Military Commission. Unlike under Mao, Deng Xiaoping, and the latter years under Jiang Zemin, China no longer has a paramount leader who can hammer down authority at crucial junctures. "Gangs" of patronage and bribery are congealing together, he said, adding that "Corruption is the glue that keeps the whole system together, after the age of idealism."

A third princeling, whose father once ran China’s security apparatus, blames Jiang for sabotaging the last leadership transition in 2002 by refusing to relinquish control of the military. He said Jiang promoted dozens of generals who are, as he put it, either "henchmen" or "morons." The result is that nobody is really in control, he said.

On the civilian side of the Communist Party, Bo’s spectacular demise has punctured the conventional wisdom that China’s power transitions are "institutionalised" and will flow smoothly. The Bo episode showed, once again, that there are no enforceable rules, nor independent arbiters to decide who governs the world’s most populous nation and how they do it. Bo is now officially being investigated for "serious discipline violations" and his wife for murder.

Liu’s battle against PLA corruption has opened a new field of elite political struggle, adding uncertainty at a time when old patronage bonds are breaking down, a new generation of princelings led by Xi Jinping are taking power, and the princelings themselves are not united. Gu Junshan’s case "reveals serious struggle between those already in power and the new forces in the PLA," said Chen Ziming, an independent political analyst in Beijing. "Princelings like Liu Yuan represent the new force but who are those in power now?"

The official with direct knowledge of the Gu Junshan case told me that Liu succeeded in taking Gu down only after Liu had appealed personally to President Hu, who had three times issued instructions to handle it. The source said the first two orders had been blocked by Gu’s key patron high in the hierarchy, whom the source did not name. "It was as if President Hu was making a show of his impotence," said the official.

Several sources with indirect knowledge of the case said that Gu was removed late in January only after Hu took the highly irregular route of asking the party’s civilian apparatus to do the job. "With Hu’s direct instructions, they bypassed the PLA discipline inspection commission and asked the central discipline inspection commission," said Chen Ziming, the political analyst. "This means the case faced major resistance inside the PLA."

Gu’s networks and patrons in the Central Military Commission and beyond remain in place. The source with direct knowledge of the Gu case said that three of the top four members of the Central Military Commission expressed strong support for Liu Yuan’s move against Gu; Xu Caihou, the fourth member of the CMC, and others, did not. Liu may have been alluding to this resistance in his speeches, when he spoke darkly of those who acted as "shields" and "umbrellas" for corrupt officers. He also spoke mysteriously of "hostile forces" who tried to use last year’s uprisings in the Middle East "as a spear to attack our army" and sow "discord between the party and the army," suggesting another dimension of struggle.

Other signs of PLA power struggles are bubbling to the surface. Three weeks ago, a Chinese defence attaché informed a foreign military academy that that another of the PLA’s rising stars, Gen. Zhang Qinsheng, would not attend a conference because he had been "replaced" in his position as first deputy chief of the General Staff Department, the PLA’s operational headquarters, according to a source at the academy. The information appeared to confirm swirling rumours at the time. Chinese defense officials then scrambled to tell foreign diplomats that there had been "a misunderstanding" and General Zhang’s position was, in fact, secure. The false information of Zhang’s demise was followed by false rumors of a military coup, which a surprising number of citizens thought to be credible.

The PLA’s top brass has responded to the rumours of a coup and the ongoing political struggle — including in relation to the ongoing purge of Bo Xilai, who has military supporters — by demanding unity and further isolating its officers from the outside world. "Whenever the party and country faces major issues, and reform and development reach a crucial juncture, struggle in the ideological arena becomes even more intense and complex," warned an editorial in the PLA Daily. Alluding to the recent chatter, the editorial also told soldiers to ignore rumours on the Internet. "We must pay close attention to the impact of the Internet, mobile phones and other new media on the thinking of officers and troops."

The PLA has made huge efforts to politically indoctrinate its officers in order to ensure their loyalty, according to Chen, at the expense of parallel efforts to "professionalize." He does not believe the political campaigns are working. "Maybe one day they will not be willing to obey their higher authorities because they are corrupt," he said. "Maybe the young generation of officers don’t want to serve anybody and just want to take their own advice."

Meanwhile, Liu is generating enemies as he drives his corruption campaign deeper into entrenched networks of factions and patronage, and reveals his ideological views and political ambitions more openly. "Liu Yuan has gone mad," said the princeling who has recently retired from a ministerial position, and who is close to the Jiang family. Liu spent less than a decade in the PLA, and some officers resent being led by a man who lacks a professional military background, according to a source close to a rival princeling general. Others are suspicious of his personal ambition and believe his political comments have overstepped the boundaries of military discipline: Liu, like Bo, has suggested China should return to Mao-era ideals. Many see Liu’s challenge to their financial and political interests as an existential threat.

Already, Internet rumors have spread that Liu is battling cancer, which sources close to him deny (he has annual checkups after an earlier scare). Other rumors speak of business links between Liu’s wife, a glamorous nurse named Wei Zhen, and Bo Xilai’s wife, who is under investigation. Sources close to Liu says his wife does not engage in business.

Liu knows what he’s up against. "Those who work against corruption are out-competed by those who are corrupt," he said in his February speech. "Justice is under pressure and people fear retaliation while the scum congratulate each other on their great career prospects, get promoted and become rich."

And many are relieved that someone is at least trying to arrest the rot. "He says the Communist Party is in crisis and has to change," Chen said of Liu. "Some people question his intentions. I say I don’t care about intentions; I say if he’s against corruption then I support him."

There are signs Liu may be making progress. Although General Gu was not detained after his sacking, in recent weeks a formal investigation was finally approved, according to the official source close to the case. Last week the military director of Liu’s department, who had supported his efforts to unseat Gu, was empowered to convene a new PLA-wide corruption-fighting audit committee. "Thoughts and actions must be united to the decisions and instructions made by Chairman Hu and the Central Military Commission," the military director, General Liao Xilong, said in official military media, adding to the chorus of calls for unity after recent upheavals.

Liu’s surgical work could alter the delicate balance of factional power involving President Hu, his predecessor Jiang, and his anointed successor Xi. If Liu succeeds, he could vault into the vice chair position of the CMC, officially reporting to his friend Xi Jinping when Xi becomes CMC chairman. Some observers believe Liu is enabling Hu to make his move to assert authority, as Jiang had done with the Yuanhua corruption investigation, also late in his own term. "The formation of the audit committee in the military finally signifies a decisive move by the current civilian leadership to assert more control over the military," said Victor Shih, a political scientist at Northwest University. "For a variety of reasons, it has taken Hu Jintao almost his entire administration to prepare for such a move."

Few analysts believe the PLA can seriously tackle its own corruption problems without decisive intervention from the civilian leadership. Whether Hu or his likely successor Xi will have the political capital to spend remains an open question. And if the PLA is the malignant morass of theft, bribery, extortion and mistrust that Liu and other well-placed princelings say it is, then China’s military offensive capabilities must be lower than many overseas strategists fear. "The impact of corruption on the PLA’s war-fighting capabilities is likely to be serious," said Tai Ming Cheung, a China security expert at the University of California Institute on Global Conflict and Cooperation, San Diego.

Behind the PLA’s shiny exterior is a world where information is not trusted, major decisions require cumbersome bureaucratic consensus, and leaders fear their subordinates will evade responsibility or ignore directions. This entails a different array of risks than the ones that have troubled China’s neighbors and the United States. And Liu, like several other active princelings, is not sure whether the PLA is capable of self-surgery in the age beyond ideals and strong leaders. "We are falling like a landslide!" Liu said in one of his speeches. "If there really was a war," he asked his subordinates, "who would listen to your commands or risk their life for you?"