Well, I was exagerrating for effect, but essentially the government years ago (Mao era) told the People’s Liberation Army that they were going to be at least partly self-supporting. So the Army starts their own farms, factories, etc. which operate independant of the party apparatus. Instead of sitting around or training for war, soldiers operate these businesses, which become very big indeed. You probably own things in your house made by the PLA under some front or another.
More recently, the CCP started getting nervous about this threat to the Party’s monopoly on power and wanted to re-nationalize the means of production, or even privatize, but the Army says no. Most of the businesses make a profit, and that profit is passed up the chain of command with everyone taking their slice.
So a typical situation might be a tank unit that also runs a factory making plastic whatnots. The officer in charge may also have farms from which his unit eats. In theory he’s only trying to make enough money / food to subsidize training and readiness … but since he gets some of the profit, you can guess how that works. Moreover, if the Colonel kicks in some money to the general, maybe he gets to expand the factory…
I won’t go further, since I’m not an expert, but you get the idea.
Oh, hell, maybe I should just ask some experts:
"It is generally agreed that official figures for business turnover as well as profits certainly under-represent what military enterprises actually earn from their commercial operations. Under reporting of profits is acute, especially among lower level military units, … Military enterprises are allowed to keep a substantial portion of their earnings. They retain between 20 to 40 per cent of their profits for reinvestment and other uses. The remainder is divided between the GLD which keeps between 40 to 60 per cent, regional and provincial military authorities who keep between 10 to 20 per cent and the local PLA unit gets 10 to 20 percent. The average profits received by the GLD is between 2.5 to 4 billion per year (since 1993 onward).
Parent military units get the money from the enterprises which are used for training and improvement in the living standards of troops. One group army is reported to have allocated 85 per cent of its total profits to barrack construction and repair, food subsidies, medical coverage for troops, and miscellaneous facilities. At the same time, a substantial amount of money is also spent on luxury items and services for senior officers and executives of the military conglomerates."
http://www.ciaonet.org/olj/sa/sa_jun00mod01.html
"The vast majority of the PLA’s commercial activity – probably more than 80% – are small- and medium-scale enterprises owned by military regions and districts. Even senior PLA officials are unsure of the true numbers and types of all PLA companies under their nominal control. **In 1993, the head of Xinxing, the large conglomerate owned by the General Logistics Department, was quoted in the Hong Kong press as saying that his company had difficulty calculating how many subsidiaries it had, since “so many were opening or closing without informing us.” **
http://hongkong.usconsulate.gov/uscn/state/1997/1106a.htm
Bolding mine.
Feudalism in waiting.