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THE PLA AND THE CHANLLENGE OF CHINESE EXPORT CONTROLS by TIAN ZHAO Under the Direction of Gary Bertsch ABSTRACT While China has made significant progress in export control legislation and policy, most of the scholars in the area of nonproliferation and export controls agree that Chinese government lacks the capability to effectively implement those laws and policies. There are various factors that undermine the efficacy of Chinese export control implementation. This paper examines the impact of one of the most important factors, the People’s Liberation Army (PLA). This paper analyzes the PLA’s involvement in the command chains of Chinese export control system and in Chinese defense-industrial and military enterprises decision-making. The conclusion is that the PLA, by caring for and protecting its own interests, has become a hindrance to the effective implementation of Chinese export controls. INDEX WORDS: Defense-industrial enterprise, Export Control, PLA, Military enterprise THE PLA AND THE CHANLLENGE OF CHINESE EXPORT CONTROLS by TIAN ZHAO B.A., Peking University, P.R. China, 2001 A Thesis Submitted to the Graduate Faculty of The University of Georgia in Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS ATHENS, GEORGIA 2003 © 2003 Tian Zhao All Rights Reserved THE PLA AND THE CHANLLENGE OF CHINESE EXPORT CONTROLS by TIAN ZHAO Major Professor: Gary K. Bertsch Committee: Jeffrey D. Berijikian William O. Chittick Electronic Version Approved: Maureen Grasso Dean of the Graduate School The University of Georgia May 2003 iv TABLE OF CONTENTS Page LIST OF TABLES...............................................................................................................................v LIST OT FIGURES ............................................................................................................................. vi SECTION 1 INTRODUCTION ........................................................................................................................ 1 2 DEFINITIONS.............................................................................................................................. 4 3 AN OVERVIEW OF CHINESE ARMS EXPORTS AND EXPORT CONTROLS................... 5 4 CHINA’S PROLIFERATION AFTER THE 1998 REFORM..................................................... 9 5 THE PLA’S AUTHORITY AND ITS IMPACT ON EXPORT CONTROL REFORM ........... 12 6 PLA-OWNED ENTERPRISES AND THEIR INCENTIVE FOR ARMS EXPORTS ............. 20 7 THE PLA’S CAPABILITIES AND NETWORKS TO EXPORT ARMS................................. 27 8 THE PLA’S RELATIONSHIP WITH DEFENSE-INDUSTRIAL ENTERPRISES................. 33 9 CONCLUSION........................................................................................................................... 40 APPENDIX I EVOLUTION OF CHINA’S EXPORT CONTROL SYSTEM.................................................. 42 II CHINA’S PROLIFERATION RECORD TIMELINE .............................................................. 45 III CHINESE DEFENSE-INDUSTRIAL ENTERPRISES........................................................... 50 REFERENCES .................................................................................................................................. 56 v LIST OF TABLES Page Table 1 CITS assessment of the elements of the PRC system of nonproliferation export controls Fall 1996 and Fall 1998 .......................................................................................7 Table 2 Numbers of military enterprises controlled by various branches of PLA .......................32 vi LIST OF FIGURES Page Figure 1 The percentage of PLA officers in Central Committee and Political Bureau..................13 Figure 2 Structure of the Chinese arms control system before the 1998 reform............................18 Figure 3 Structure of the new Chinese arms control system following the 1998 reform...............18 Figure 4 The PLA’s main conglomerates.......................................................................................22 Figure 5 Commercial earnings of the PLA 1989-1998 ..................................................................23 Figure 6 The estimated process of defense-industrial exports through the channel of PLA..........39 1 INTRODUCTION Export control and nonproliferation is a very important issue in US-Chinese relations and is referred to as one of the four pillars in these states’ bi-lateral relations.1 The study of Chinese export controls is of increasing importance to scholars. This paper is based on the general argument that, rather than resulting from a grand geo-strategic design, Chinese weapons proliferation results from fragmented autonomous, and uncooperative decision-making institutions and power groups within the defense establishment.2 Complex family-connected networks operate across military organizations, government ministries, and nominal civilian corporations. These networks can be unresponsive to admonitions from the Ministry of Foreign Affairs, who must deal with the protests of foreign governments.3 The goal of this paper is to address one of the powerful groups in Chinese arms export system, namely, the People’s Liberation Army (PLA). The PLA is a very important, but often ignored factor in China’s export control system. The PLA plays a very significant role in both Chinese politics and economics. In regards to the study of Chinese arms exports and export controls, the PLA has penetrated every aspect of the export control system. Firstly, the PLA assumes partial authority to implement export control regulations and policies and oversees Chinese weapons and other defense-related exports. Secondly, the PLA itself possesses hundreds of enterprises, 1 The other three pillars are US-Sino trade, human right issues and Taiwan issue. 2 For a good discussion, see Lewis, John W., and Hua, Di, and Xue, Litai, 1991. "Beijing's Defense Establishment: Solving the Arms-Export Enigma," International Security, 15 (4): 87-109; also see Blasko, Dennis J., 1994. "An Introduction to the Chinese Defense Industry," Defense Intelligence Reference Series, VP-1920-271-90; Donovan, Kevin F., 1996. The Economics of Proliferation in the People's Republic of China. Research Report at Air War College, Air University, AU/AWC/RWP075/96-04. 3 See Hyer, Eric, 1992. "China's Arms Merchants: Profits in Command," China Quarterly, 0 (132): 1101-1118; also see Medeiros, Evan S., and Gill, Bates, 2000. Chinese Arms Exports: Policy, Players, and Process. Strategic Studies Institute. 2 which produce all kinds of weapons and other sensitive products. Some of those enterprises are among the most active and aggressive weapon exporters in China. Thirdly, the Chinese army has possessed and maintained a well-developed connection with influential individuals in the Chinese political system, which largely facilitates the PLA’s exports. Therefore, any analysis of the Chinese export control system will be incomplete without addressing the PLA. Surprisingly, existing writings on the PLA’s impact on Chinese export controls are very limited. One reason for the limited literature is that the Chinese government has not released much information regarding how the PLA is involved in policy making and implementation. In China, the PLA stays in power mainly due to historical reasons and traditions.4 Hence, the inner workings and mechanisms of the PLA can hardly be traced to any laws, policy statements or any other sources. Another possible reason is that PLA has penetrated, to a large extent, various aspects of the Chinese economy, defense and civilian sectors alike. Therefore, a significant number of companies can hardly be thought of as being connected with the military establishment.5 As a result, literature on Chinese export controls fails to see how PLA decisions impact industry decision-makings as well as their corresponding export activities. This paper is trying to overcome the difficulties noted above and takes a close look at how the PLA impacts the Chinese export control system. This paper will show that the PLA’s involvement in export control development has hampered the progress of 4 For a good discussion, see Falkenheim, Victor C. ed., 1987. Citizens and Groups in Contemporary China. Center for Chinese Studies, the University of Michigan. 5 Medeiros, Evan S., and Gill, Bates, 2000. Chinese Arms Exports: Policy, Players, and Process. Strategic Studies Institute; also see Blasko, Dennis J., 1994. "An Introduction to the Chinese Defense Industry," Defense Intelligence Reference Series, VP-1920-271-90. 3 Chinese export control reform and undermined the effectiveness of the export control system. The paper will be divided into several sections. The first section is the clarification of a couple of confusing definitions, the understanding of which is important to the arguments of this paper. The second section is an overview of the development of Chinese export controls. The third section is a brief description of recent Chinese proliferation behaviors. It shows the gap between relatively developed export control laws and policies and the less effective implementation. It will imply that despite the progress of export control regulations and policies, some intervening variables, among which is the PLA, have not been changed or changed little, and that this is the major loophole within the Chinese export control system. The fourth section will closely look at the PLA’s power and authority within the Chinese political system. It will show that the PLA’s traditional
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