MISSION ACCOMPLISHED?

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SIX MONTHS AFTER the commander-in-chief, President Jiang Zemin, ordered China's armed forces to get rid of their sprawling business empire, the generals reported: mission accomplished. "The People's Liberation Army and the armed police have handed over their enterprises to a special office under the State Economic and Trade Commission and relevant local offices," reported the official media in mid-December.

In fact, only two named PLA businesses have been transferred as far as anyone who follows official reports knows. In November, Yunfeng Industries Co., belonging to the army's Shanghai garrison, was turned over to the Green Land Group Co., a local joint venture. And Sanjiu Enterprises, a military-run pharmaceutical company in Guangdong province, was handed to the local government.

In November the State Economic and Trade Commission, reporting directly to Premier Zhu Rongji, was set up as the main receiving agent in this massive transfer of public assets. The commission is to analyze, appraise and then dispose of them. Those operating in the red, producing products with no market value, or under poor management would be shut down, merged or allowed to go bankrupt.

It was not very likely that the colonels and generals would automatically snap to attention as soon as Jiang issued an order. After all, the government has as yet offered no real payment for assets worth billions of dollars. In theory, the units are to be "compensated" through hefty, though unspecified, increases in the $10- billion defense budget.

In many ways, trying to dismantle the PLA's business empire is as difficult as rationalizing the thousands of state-owned enterprises - with the added disadvantage that the owners possess guns. Western experts estimate the PLA alone operates between 10,000 and 15,000 enterprises. Some of the abuses connected with state-enterprise reform have been reported with army asset sales. For example, businesses have been transferred to civilian cronies or family members, yet remain under effective control of the officers.

This is not to say that the army is out to sabotage the program. Many army officers, probably a majority, themselves deplore the corrosive effect of the military's deep involvement in commercial activities. An officer who spends too much time running his karaoke bar isn't going to give his unit the necessary training. "Military chiefs have worried about corruption, falling standards and growing inequalities," says one expert.

The Chinese military is no longer the people's army of Mao's day. Like other aspects of society since Deng's market reforms began 20 years ago, the generals want to bring the army into the modern world by slowly buying more sophisticated weapons. These can be obtained through larger defense budgets. "The military is behind this," claims the PLA expert. But like other aspects of reform, there will be backsliding and nothing will be accomplished overnight.