Commentary on Political Economy

Wednesday 21 February 2024

Mao-era company militias are back in business

Mobilisation drive attributed to Beijing’s focus on social control while economy slows

EDWARD WHITE · Feb 22, 2024

China’s state-owned enterprises have begun setting up in-house reserve military units, a throwback to the Mao Zedong era, in a sign of authorities’ increasing concern about social and political instability during the economic slowdown, according to analysts.

A Financial Times analysis of company announcements and state media reports over 2023 shows that dozens of Chinese SOEs have set up so-called People’s Armed Forces departments.

The departments were historically affiliated with the People’s Liberation Army’s recruitment efforts at county and village level under Mao. Today, they typically conduct civil defence activities and contribute to military recruitment, promotion and training.

Experts warned against viewing the rise of corporate PAFD units as a sign of preparations for a mobilisation against a foreign adversary. Instead, they said, it probably reflected adherence to President Xi Jinping’s strengthened focus on security and concerns about the risk of social instability as the economy grows at its slowest pace in decades.

“The activation of these PAFD units is a symptom of the leadership’s concern about the domestic social stability situation,” said Timothy Heath, senior international defence researcher at the Rand Corporation think-tank. “Because it’s happening in so many places all at once, this is almost certainly being directed from the top down.”

Heath added that PAFDs could play an important role in maintaining domestic security, acting in a liaison role between companies, society and security forces, while promoting patriotism and monitoring compliance with Chinese Communist party directives.

The economy has failed to return to robust growth since the lifting of pandemic curbs in early 2023 as it has faced a protracted slowdown in the property sector, weaker consumer spending and falling export revenue. It has struggled to find new drivers after years of a debtfuelled property investment boom.

Beijing also faces greater geopolitical challenges in fraying ties with the US that stem from Xi’s support for Vladimir Putin a n d Ru s s i a’s invasion of Ukraine, and China’s increasingly military assertiveness around Taiwan and in the wider South China Sea.

Yili Group, a private dairy producer, established a PAFD late last year at its headquarters in Inner Mongolia, the first such unit at a non-SOE. In January, state-backed media said Yili, which owns several milk companies in New Zealand, was building up a defence force that “serves in peacetime, responds in emergencies and fights in wartime”.

James Char of the S Rajaratnam School of International Studies in Singapore attributed the resurgence of interest in PAFDs to the “[Chinese Communist party] stressing security over development”, which he dated at least to Xi’s second term from 2017.

The Yili announcement, he said, could be seen as following that trend.

Shanghai Municipal Investment Group, a local government enterprise, also established a PAFD in September, while Mengniu Dairy, Yili’s main statebacked rival in Inner Mongolia, set up a department last May.

A military official in the Horinger county government in Inner Mongolia noted that Mengniu’s PAFD must adhere to the party’s leadership over the armed forces, enhance emergency response capabilities, improve the economic and social benefits of enterprises and “hone the ability to win battles”.

Among other groups that announced PAFDs in local government and state media last year were Wuhan Urban Construction Investment & Development Group, PowerChina Equipment Group and Wuhan Metro, as well as Huizhou Water and Huizhou Transport Investment Group in Guangdong province and Haian Urban Construction Development Investment Group in China’s eastern Jiangsu province.

The setting up of PAFDs in statebacked businesses coincides with a new phase of domestic-focused defence reforms. Since the end of 2022, defence mobilisation offices have gradually replaced civil defence units nationwide, signalling a goal of strengthening security capabilities.

One PAFD member in eastern Zhejiang province said his unit was focused on training and recruitment, occasionally presenting military-themed educational sessions to schools.

According to Xinhua, China’s state news agency, Wu Qian, a defence ministry spokesperson, said in October that setting up the PAFDs in state-owned enterprises was required to “fulfil national defence obligations and strengthen national defence construction”.

Heath said the rise of the PAFDs was “surprising” given the CCP leadership’s understanding that most people had little interest in Maoist doctrines and communism of China’s pre-reform era.

“This is an entity that was mainly associated with the mobilisation activity of the Mao years when the party was much more active in directing popular political activity,” he added. “Since Deng Xiaoping led the party more in the direction of pragmatic, market-friendly reforms, this type of activity has faded quite a bit.”

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