There is an escalating crisis in Southeast Asia; a crisis developing from the symbiosis of organised crime, terrorism and the covert domestic and foreign policy ambitions of several Asian nations. One of the main actors in this process has been the increasing co-operation between the Chinese Government, the Chinese Communist Party (‘CCP’), the Peoples Liberation Army (‘PLA’) and the Triads in expanding the criminal activities of organised crime across the world and especially in promoting and expanding Chinese political policies towards Hong Kong, Macau and Taiwan. In many areas, the Triads have played a major role in Chinese economic and political interactions with its neighbours and trading partners, especially in the international trade in dugs, chemical substances and people smuggling.
China has a unique and complicated history; one in which the military forces, the criminal organisations like the Triads and the Communist Party all played important roles. To a high degree the history of China has been one of internal military strife, weak central governments, widespread criminal organisations and a post-war consolidation of political power in the hands of the Communist Party.
The Chinese Military
The influence of the Chinese military in the economic affairs of China has been extensive for the last three thousand years. They have always dominated the agricultural sector, and, after the death of Mao Tse Tung, they have been the dominant force in Chinese industry and politics. There has been a long tradition of warlords in China especially from 1916 to the late-1930s, when the country was divided among military cliques, a division that continued until the fall of the Nationalist government in the mainland China regions of Sichuan, Shanxi, Qinghai, Ningxia, Guangdong, Guangxi, Gansu, Yunnan, and Xinjiang.
In this period a warlord maintained his own troops loyal to him, dominated and controlled the agriculture and mining in his area or region; and acted as the de facto political power in that region. To maintain themselves they often fought with their neighbouring warlords and against any attempt by the Emperor or central government to control them. Some of the most notable warlord wars, post—1928, including the Central Plains War, involved nearly a million soldiers. The central government was weak and relied on the power and support of these fractious warlords. The central government provided a national civil service and a national administrative regime but was uniformly weak.
The military might of the warlords remained strong. Their power lay in the weakness of the central government. The various imperial dynasties were limited in their ability to rule such a vast expanse of territory as China and domestic political groups were slow to form. After centuries of fighting among feudal Emperors (the Qin and the Han Dynasties) imperial rule in China was overtaken by the Mongol invasion. In 1271 the Mongols conquered China and imposed their own, Yuan Dynasty, which lasted until 1368. In 1368 the Ming Dynasty drove out the Mongols and began the modernisation of China. Peasants were involved in the restructuring of the agricultural system and a stronger central government was fortified with a centralised bureaucracy based on competence and exams. This lasted until 1644 when the Manchu Qing Dynasty drove out the Ming.
Initially the rationalisations of the political system were maintained and expanded by the Qing but, by the beginning of the 19th century the imperial hold on China was weakened by the discovery of China’s wealth by the European colonial powers and the Japanese. They soon began making demands on the ruling emperors and were allowed to impose "unequal treaties" that created foreign concessions in China's ports. The weakness of the central government structure allowed the rise of regional warlords whose armies fought with each other for territory and plunder and were funded in this by foreign powers. The Qing tried to respond by instituting a number of reforms, but the foreign powers refused to allow this.
After a period of ever-increasing presence of foreign traders, Christian missionaries, foreign troops and British-supplied opium a violent surge of protest occurred among the Chinese. This included many of the warlords, the landowners and the newly urbanised poor. Their rebellion against foreign rule and in support of the Qing reforms led to their capture of Beijing where they attacked the foreign legations - the "Boxer Rebellion". Initially they were successful, but the foreign imperial powers formed an Eight Nation Alliance (UK, Russia, Japan, France, U.S., Germany, Italy and Austro-Hungary) against the Chinese. They assembled 50,255 foreign troops (expeditionary forces) plus 100,000 Russian troops to occupy Manchuria. In addition, a portion of the Imperial Forces led by Yuan Shikai's Division fought alongside the foreigners against the Imperial troops. The Imperial troops were defeated; Beijing was seized and these eight foreign powers extracted further concessions from the weakened Qing government.
By 1911-12 the Chinese military instigated a series of revolts by reform-minded officers. This led to the Proclamation of Republic of China under Sun Yat-sen and abdication of last Qing emperor. Although the Emperor was removed, this change did not lead to democracy in China as no army was so strong as to effect change in more than its own area. Sun Yat-sen attempted to build national institutions but was unable to stand up to the growth of warlordism and the rise of the Communist Party in China after the Russian Revolution of 1917.
Sun Yat-sen and his troops played an instrumental role in the overthrow of the Qing Dynasty After the success of the Double Ten Revolution he became the first president of the Provisional Republic of China, in 1912 and then founded the Kuomintang (‘KMT’), serving as its first leader. He was succeeded by Chiang Kai-Shek, who led the KMT into a close relationship with the Bolsheviks after their ouster of the Mensheviks. Sun Yat-sen, known as the « Father of the Nation » of Republican China had been a Triad member from an early age. While he was in Honolulu and Chicago he was known as a ‘426 fighter' of the Triads, (the chief enforcer of the Three Harmonies triad Kwok On Wui).and these connections and sympathetic goals helped him launch the revolution which in 1911 officially ended imperial rule in China and restored Han dominance.[i]
By the early 1900s China had developed a growing urban proletariat in its major cities. Workers migrated from the agricultural plantations of Central China and congregated in cities like Shanghai, Canton where they formed trades unions. With the fall of the imperial system the Chinese labour movement began to organise. In this they were assisted by the agents of the Communist International (‘Comintern’) which had formed in Russia after the 1917 revolution. The Communist Party of China drew its strength from the urban working class in such large cities as Shanghai and Canton. In these cities, there was an urban proletariat which had settled permanently and worked in the ports, transport hubs, construction and an increasing number of administrative jobs.
With the formation of the Comintern, numerous unionists were sent to China to help strengthen the nascent Chinese communist unions and parties. Mikhail Borodin's famous mission was only one of many Comintern missions. Nonetheless, power remained firmly in the hands of the local warlords whose min t'uan (private armies) controlled much of the rural areas. By far the most important development emerged in 1923 when the workers, students and peasants began to form national parties. Among the first was the Kuomintang, or Nationalist Party. The other major party was the Kung Ch'antang, the Communist Party. Interestingly the Kuomintang found a close ally in the communist party of the Soviet Union which sent down instructors and advisers to shape the Kuomintang into a disciplined Bolshevik party. No sooner had the party formed and become organised when the Soviets demanded that the Kung Ch'antang merge itself into the Kuomintang.
In the meantime, the Kuomintang became a model in miniature of the Bolshevik party. The Soviets sent advisers to instil communism in the military forces and set up the Whampoa Military Academy. The Russians shipped in arms and instructors to bolster the Kuomintang forces. The Kung Ch’antang remained a left faction within Kuomintang and worked to strengthen the Kuomintang on Moscow's orders. The Chinese communists were successful in recruiting the urban workers of Canton and Shanghai and were able to set up communist-led peasant organisations in Hunan. They built strong unions among the railroad workers and miners in Hunan and, through their control over the Independent Division of the Fourth Army in Hunan, were able to control the industrialised areas east of Changsha. The leadership of the Kuomintang devolved on the director of the Whampoa Military Academy and the hero of the northern campaign, Chiang Kai-shek.
Having won control of Canton he began a march on Shanghai. In support of the Kuomintang the workers in the communist unions of Shanghai began a series of major strikes. At the height of this demonstration more than half a million workers went out on strike in Shanghai, backed by an armed workers' militia of more than five thousand.
On 26 March 1927 Chiang Kai-shek marched into Shanghai, welcomed by the striking workers as their liberator. Chiang had barely been in the city for a few days when he contacted the leaders of the compradors and the notorious Green Gang Triad organisation to make a deal with them. Allied with these forces, Chiang began a purge of all the communists, especially the unionists. The Green Gang controlled organised crime in Shanghai and, under Du Yuesheng, specialised in opium (which was supported by local warlords), gambling, and prostitution. Shanghai was the vice capital of the world at that time. “The Green Gang was often hired to break up union meetings and labour strikes and was also involved in the Chinese Civil War. Carrying the name of the Society for Common Progress, it was responsible for the White Terror massacre of approximately 5,000 pro-Communist strikers in the City of Shanghai in April 1927, which was ordered by Nationalist leader General Chiang Kai-Shek, who granted Du Yuesheng the rank of General in the Nationalist army as a reward for conducting the massacre.”[ii]
On 12 April 1927, he and the local gangs turned their forces on the communists in the unions. More than five thousand communists lost their lives. When the strikes ended in May, communist control had been wrenched from the unions by the Kuomintang.
A brief attempt at an urban uprising based on the unions in the 1930s was ruthlessly put down by the Kuomintang and the Triads. The Soviets had succeeded in creating a Kuomintang which had devoured the local communist party. It was Trotsky, in fact, who had warned of the dangers involved in making the communists join the Kuomintang. He wrote that £the policy of a shackled Communist Party serving as a recruiting agent to bring the workers into the Kuomintang is preparation for the successful establishment of a Fascist dictatorship in China” He was not wrong. The Kuomintang set about obliterating the communists, driving them from the cities to their stronghold in Hunan. The Chinese communists, led by the son of a wealthy Hunanese peasant, Mao Tse-tung, adopted these lessons to the communist struggle in China. He decreed that the peasantry (not the workers) should form the basis of the revolution. Only after the peasant revolution would there be a need for control of the urban masses.
The defeat of the Kuomintang leadership of the ex-warlord Chiang Kai-shek in the wake of the Second World War and Japanese occupation left the ravaged China in the hands of the Chinese Communist Party led by Mao Tse-Tung. Mao was both the Chairman of the Chinese Communist Party as well as the Chairman of the Central Military Committee. His rule was personal, direct and disastrous. The Great Leap Forward and the Cultural Revolution led to the virtual self-destruction of China. Millions starved to death; many more were exiled or driven away from the cities. One major aspect of China didn’t change much under the rule of the CCP; the official Chinese Government’s structure for the military regions of the PLA remained, generally, the ancient divisions of China in the period of the warlords. This is very important to the understanding of the early development of the Chinese military industrial complex.
The Origins of the Chinese Triads
The Triads have an almost mystical version of their history, mixing nationalism and rebellion in equal parts. They started as “Robin Hood”-like groups fighting against the excesses of the emperors, organising in rural China. They took part in the many rebellions of the Chinese people against their emperors but were somewhat constrained by the military might at the regional level by the warlords. The first reference to a secret society in China was a group known as the “Red Eyebrows” which appears to have been established when the Western Han Dynasty was collapsing in AD 9. The group played an important role in helping Wang Mang, a Han Dynasty official, overthrow the Dynasty and found the Xin (“renewed”) replacement. However, after his rule from AD 9-23 the Han Dynasty was restored.
In AD 184, a group of rebels known as the “Yellow Turbans” turned against the Han Dynasty, and although their efforts failed, they helped hasten the fall of the Han Dynasty in AD 220. In AD 618, the Tang dynasty came into power, marking a pivotal moment for China's secret societies, as Buddhists became targets of purges that forced them underground. Organizations like the “Red Turbans,” led by Zhu Yuanzhang (who eventually became emperor) later fought against the Mongolian rulers and in 1367 managed to overthrow the Yuan Dynasty.
Following the collapse of the Yuan Dynasty the Ming Dynasty was the ruling government for almost 300 years, but in 1644 another outside force overthrew the Empire of the Great Ming, and the precursors of what today are called the Triads established themselves. The Ming dynasty in Beijing fell into the hands of rebel Li Zicheng. Some 20 years later the White Lotus Society (the Buddhist sect which the Red Turbans had previously formed around) morphed with the Heaven and Earth society, or Tiandihui , as they were known, and became the Triad society.[iii]
This is also the period where there were early worker associations formed; more like guilds than unions, but active in social movements within their regions or cities; separate and distinct from the nascent Triads. When another rebellion began against the newly installed Qing, the Emperor requested assistance from his subjects to help fight against the Ming attackers. Among those heeding this request were the Shaolin monks at the Siu Lam monastery. Despite being pro-Ming, they decided to help the Emperor because they didn't want the empire taken over by barbarians. They were also skilled warriors and wanted to show their warlike skills in the hopes they might impress people to join them when the time came to revolt. Finally, they hoped that by pretending eagerness to fight for the Emperor, it might get them greater autonomy.
Once victorious, Emperor Shunzhi was not only impressed with their skills, but he also began to see them as a potential liability. Just to be on the safe side, he ordered them to be executed and their monastery burned. After the assault, eighteen survivors escaped, although thirteen of them died from their wounds and malnutrition. The remaining five Shaolin monks (Tsoi Tak Chung, Fong Tai Hung, Ma Chiu Hing,, Wu Tak et Lee Shik Hoi) became the five ancestors of the new Triad society. They found shelter and eventually began recruiting for their rebellion, vowing loyalty to their code of “overthrowing the Qing and restoring the Ming. They gathered new forces and attacked the Emperor. They lost and disbursed to safe havens abroad or in the Chinese main urban centres where they turned from patriotism to crime.[iv] They found a ready ally in the foreign imperial forces taking over their concessions in China and peddling their opium to the masses.
These Chinese criminals weren’t always private sector entrepreneurs seeking to earn a quick, if dishonest, buck. They felt they were part of the rebel movements seeking justice under the emperors. When their efforts were defeated, they turned to a more profitable profession, crime. The Triads developed a set of rituals and practices top preserve their anonymity and to bind each member to the society; a lot like the Freemasons. They set up a triangle of power which reflected the Heavens, the Earth and Man. Things were explained as variations on the triangular theme. However, power was vertical as in a pyramid; “the Shan Chu (Mountain Master) was the overall leader responsible for making the final decision on all matters. The Fu Shan Chu (Deputy Mountain Master), when appointed, was the deputy leader and directly assisted the leader. The Heung Chu (Incense Master) was responsible for all ceremonies of initiation and promotion. The Sin Fung (Vanguard) was responsible for recruitment and organising and assisting in ceremonies. The Hung Kwan (Red Pole) was the ‘fighter’ rank of the society. The Pak Tsz Sin (White Paper Fan) was responsible for the general administration of the society. The Cho Hai (Straw Sandal) was the liaison officer for the society. The ‘49 Chai’ was the ordinary member usually recruited to follow a particular office-bearer.”[i]
Triads also use numeric codes to distinguish between ranks and positions within the gang. For example, "426" refers to "fighter" while "49" denotes a rank-and-file member. "489" refers to the "mountain master" while 438 is used for the "deputy mountain master", 415 for "white paper fan" and 432 for the "straw sandal". "25" refers to an undercover law enforcement agent or spy from another triad, and has become popularly used in Hong Kong as a slang for "traitor".[ii]
When a triad member is sworn in he must take thirty-six oaths of loyalty to his brothers that include secrecy and obedience, and should he violate them he will most likely suffer what is known as a slashing or more charmingly, “the death of a thousand cuts.” It is an orchestrated attack where the victim is cut multiple times by a meat cleaver and left for dead. The multi-faceted ritual oaths taken by Triad recruits repeatedly refer to the death penalty for violation of any aspect of the Triad code.[v]
When the KMT was driven south by the communists, many fled to Taiwan. Others were trapped in South China. Among them was the 997th Brigade of the KMT which settled in northern Burma. There they promoted the production of opium and began its export to the rest of the world, including the use of US aircraft sent in to deliver supplies to the 997th and with nothing to take back. This became a thriving business (Air America). Throughout the 1960s, 1970s and into the 1980s, notable warlords with fuzzy motivations arose in the Shan State. It was often unclear whether they were ethno-nationalists or communists, drug lords, cronies of Rangoon, or a combination of these.
The most predominant such leaders were: General Li of the KMT (commanding groups in Burma from Thailand), Li Hsing Ho of the Rangoon-supported “home guard,” also known as the Ka Kwe Ye (KKY), Kyi Myint (Zhang Zhiming) of the CBP, and the infamous Khun Sa of the Shan United Army (SUA).[iv] The refining of this morphine base was undertaken by the Union Corse (the Corsican Mafia) operating in French Indo-China as ‘anti-communist’ allies of the French Colonial Government up until Dien Bien Phu.
When the French and the Corsicans were driven out of Indo-China the drug business reverted to the triads and gangs who had stayed loyal to the KMT and who had taken up residence in Taiwan, along with local nationalist Burmese and Vietnamese. For a long time, the drug business was dominated by the Taiwanese gangs (United Bamboo, Four Seas, Hung Mun , Hip Shing, Hop Shing, On Leong, Three Mountains, Tsung Tsin, Ying Ong, Suey Sing) because of the close ties with the KMT government in Taipei.. However, by 1954 power had passed from Taiwan to the relocated Triads on Hong Kong (including the KMT drug trade). This was largely because the KMT Government in Taipei was becoming increasingly concerned with the rise of Communist China and its attempts to impose a “One China” policy, especially in the UN.
The triads found a welcoming home in Hong Kong and Macau. Besides the usual trifecta of illegal gambling, drug trafficking and sex work, modern triads also exerted their influence through extortion of businesses from small newsstands to huge construction companies. They regularly shook down wealthy businessmen and were always busy in the kidnaping for profit business. The Triads have traditionally made their money through drug trafficking, loan sharking, prostitution, smuggling, gunrunning, and extortion and protection rackets. In recent years they have been moving more into credit card fraud, minibus concessions, call-girl rings, trade in illicit substances, people smuggling, and computer software and CD pirating. Working outside the law they were able to accrue large sums of unvouchered cash which they used to fund many building projects in the expanding Hong Kong building boom and provided working capital (at a price) to many new businesses.
Just as in the integration of the Indian gangs with the growth of “Bollywood” the triads have helped create a film industry in Hong Kong (and later China) which they controlled. Their first successes were the scores of films about the triads; action films which glorified their role. “Young and Dangerous – including multiple sequels, spin-offs and a prequel – was an instant hit with young and old alike. The appeal relied on the protagonist’s careful balance of sinister, saintly and cool. Despite their crime affiliation, the gangsters were often depicted as loyal and just individuals navigating a corrupt society. Chan Ho Nam, the protagonist originally featured in the comic book series Teddy Boy, remains fiercely faithful to his girlfriend, best friends and boss , even in his struggle to be recognized as boss himself.”[vi]
The Triads control an empire worth many billions of dollars. The largest and most powerful Triad, Sun Yee On, (composed mostly of Chiu Chow from Eastern Guandong) has more than 45,000 members; many in Hong Kong. The Sun Yee On is well connected with the Hong Kong tycoons and Communist party elite and is well-integrated with the Hong Kog police. Among the most popular ventures shared by Chinese officials and Hong Kong triads are the businesses that triads know best--nightclubs, karaoke bars and brothels. In Shanghai, the People's Liberation Army owns a string of nightclubs with the Sun Yee On, and where the Public Security Bureau (police) operates several high-class houses of prostitution (including one called the Protected Secret Club). The second and third largest Triads respectively are Wo Sing Wo and 14K (14 stands for the road number of a former headquarters and K stands for Kowloon). See Appendix 1 for a list.
There is also a particularly brutal Triad group which developed in Hong Kong which was formed initially as a gang trying to stop Triad extortions in the city but whose violence and cutthroat behaviour soon won them a place in the hearts of the Triad societies who used them for some of their most brutal offences. This is the Big Circle Gang formed by ex-Red Guards after their purge and rustication by the PLA. During 1968 and 1969, a large number of these Red Guards were purged by the PLA and exiled to Guangzhou for re-education. Many escaped and travelled to Hong Kong after the death of Mao Tse-tung in 1975. Since the mid-1970s, the term 'Big Circle Boys’ has been used explicitly to refer to criminal groups based in mainland China by the Triads and the police in Hong Kong. Their criminal enterprises extend around the globe, with a high level of activity in Africa, in the trade in illicit chemicals. abalone. gold, diamonds and ivory.[vii]
The Triads were equally as strong in Macau as they were in Hong Kong, especially in the casino business where the largest and most notorious triad was the 14K. Their boss or “dragon head” was the infamous Wan Kuok-koi, known as Broken Tooth Koi. After a brutal conflict between 14K and Shui Fong, the 14k eased out most of their rivals. The Chinese made a film about “Broken Tooth Koi which gained a worldwide audience.[viii] While criminal enterprises are not unique to China the development of the Triads has a special degree of intensity because they have become linked with the emergence of a military-industrial complex of corporations controlled by the Chinese military and then, as the result of the economic reforms of Deng Xiaoping, a close working relationship with the Chinese Communist Party inside China and abroad.
The Chinese Military-Industrial Complex
Mao Tse-Tung left China in a weak position. He was succeeded by Hua Guofeng who attempted to keep a tight control over the power structures of China, including the Central Military Committee. However, his power waned, and control was transferred to the reformer Deng Xiaoping, who revolutionised the economy of China. Deng never held office as the head of state or the head of government, but served as the de facto leader of the People's Republic of China from 1978 to the early 1990s as the leader of the Communist Party of China (CCP).
Deng represented the next generation Chinese leadership and was instrumental in introducing Chinese economic reform, also known as the socialist market economy and partially opened China to the global market. He is generally credited with pushing China into becoming one of the fastest growing economies in the world and by raising the standard of living. Deng Xiaoping's ouster of Hua Guofeng was the moment when the market policies of economic reform began. This reform was carried on primarily by the military companies created in the various regions by the armies which controlled them.
With this opening into market reforms and a relaxation of control by the CCP the military groups began to form companies on their own in their own regions. It is not difficult to see why. The People’s Liberation Army (‘PLA’) controlled the security situation in its region. That meant it issued permits to enter or leave the region; it controlled the communications network in the region; it had the trucks and other transport under its control; and it was charged with maintaining order. It was, in fact, in charge. This was not controlled by one central PLA group but was under the control of the individual army for each military region; some, like the 28th Army and the 39th Army were in economic hotspots and were able to thrive quickly. The Northern Army was quick to exploit its opportunities.
These burgeoning military corporations were aided in their efforts by the presence of the Triads, especially in the urban areas. While the military had the physical control of the region and the industries the Triads had the seed capital and the local administrative, middle-management, people. The local civil administration had become enmeshed in the activities of the Triads and were able to operate their corrupt enterprises without a reliance on the Chinese Communist cadres who were notionally in charge of the regions. Usually, they too became part of the corrupt enterprise. Until the end of Hua Guofeng’s rule the CCP was opposed to the activities of the Triads. As a general rule, Communist parties don’t like the criminal fraternity as they want no competition from the private sector in stealing from the people. However, with the accession to power of Deng Xiaoping, the situation changed.
In 1978, Deng Xiaoping initiated a series of economic reforms that led to the opening of China. The reforms devolved economic decisions to the local level, letting states and townships take responsibility for their economic activities. The result was an economy less regulated by the central government, but still very connected to politics on the local level. This opened the door to the development of corporations and the integration of the Triads into the system of administration. Deng was famous for his saying “It doesn’t matter if a cat is black or white; as long as it catches mice, it’s a good cat.” In essence, the “black cat” and “white cat” stood for “planned economy” and “market economy,” and Deng was saying that whichever one gets the job done will be adopted.
This greatly improved the power of the Triads and created a dependency by the local Party and civil administration to the military and the Triads for their sustenance. These included gifts or donations as a tool for organized criminals to purchase the cooperation of the police. At the highest level of political corruption was the practice known as "maiguan maiguan," or the selling of government posts to criminals or action by government officials to protect criminals and heijin, the penetration of mobsters into the legitimate business sector and the political arena
An interesting aspect of the role of the Triads came during the civil disturbances of the Tiananmen Square uprising, when the Chinese Communist Party, under Li Peng, cracked down on China's democracy movement, ordering in the troops to battle the students. The PLA was ambivalent about this and seven retired senior military officers openly criticized the martial law order imposed by the Beijing government and called for the ouster of Premier Li Peng. The populace was outraged, and the authority of the Communist Party waned. The PLA realised it was free from the controlling hand of the Party and became agents of change; primarily corporate change, encouraged by Deng Xiaoping (retired but active). During the march for democracy the Triads were used to rescue some of the leading protestors.
They embarked on Operation Yellowbird, a plan to rescue activists from Beijing to a safe haven in Hong Kong and then abroad. After the Chinese government quashed the Tiananmen Square protests of 1989, Beijing issued a wanted list of ringleaders of the protests. In response, activists in Hong Kong, including the Hong Kong Alliance in Support of Patriotic Democratic Movements in China, set up Operation Yellowbird in mid-June 1989 to help wanted activists escape from China. They raised large sums of money from the Hong Kong democrats and engaged the Triads to sneak the dissidents beyond the CCP control. Closely following the aftermath of the protests, seven of the twenty-one most wanted students escaped China through the operation’s assistance; although some had no knowledge of its existence at the time. Yellowbird successfully helped more than four hundred dissidents, who were smuggled through Hong Kong, and then onwards to Western countries.
Chan Tat-Ching, or Brother Six, was the mastermind of the escape as the Triads had the speedboats and other smuggling equipment which could get the protestors out. The U.S. and British intelligence agencies offered their assistance and the French consulate prepared the diplomatic papers and passports to get them out of Hong Kong. This was achieved with the co-operation of two of the PLA armies.[ix]
The build-up of PLA corporations began in earnest. They already had numerous companies under PLA control manufacturing goods for the defence sector. During Mao Tse-tung’s rule and the era of Sino-Soviet tensions, the military moved many of its factories inland in case of a possible attack on China. Manufacturing purely military products, such as arms, ammunition, as well as electronics, plastics and metals for military applications, these so-called "third-line" factories were built in remote mountain regions, far away from transportation routes and power sources. The factories bought supplies at subsidized costs from other factories, manufactured the weaponry and related products -- generally low-tech and low-quality -- and then sold them to the military at subsidized prices.
After Mao's death in 1976, the new leadership encouraged the military plants to begin exploring civilian uses for their products and to engage in the broader liberalizing economy. The nimblest managers were free to exploit new markets for their goods. During the early 1980s, the PLA's share of the national budget declined, spurring it to look to other sources for cash, especially hard currency. The higher organizational levels of the PLA created trading companies like China Xinxing, China Poly and China Songhai to take advantage of the opening of China's economy to the international market.
They formed banks, holding companies and international trading companies like Everbright to market these goods worldwide. The PLA ran farms, factories, mines, hotels, brothels, paging and telephone companies and airlines, as well as major trading companies.
The number of military-run business exploded during the boom of the late 1980s. The "third line" factories opened branches in the coastal areas, earning increasingly high profits from the manufacture of civilian goods. Even the lowest levels of the PLA set up production units. In fact, the PLA had a largely captive audience of Chinese who had never really had the chance to acquire personal goods produced in China before. In addition to their international arms sales, their production of consumer goods for the domestic market soared.
The government first attempted to regulate PLA business activities in 1989 with a series of decrees, among them a prohibition on active military personnel concurrently holding positions at commercial enterprises. The reforms were intended to keep management of PLA enterprises under the control of senior military leaders and prevent lower-ranking officers from becoming involved in the daily functioning of the military companies. In the wake of the rejection of the Party in 1989 these government strictures fell away. The government tried again the early 1990s, when the central leadership of the military took steps to coordinate the production of the vast number of military factories by tying the plants together under "group companies." The groups, acting like conglomerates, have been successful in centralizing management and production, running the trading companies and expanding the groups' business operations. The PLA now acted as a state within a state, with its power growing substantially along with the wave of Chinese economic expansion. Many of the companies have listed themselves on capital markets in Hong Kong and elsewhere, opened representative offices in overseas markets, solicited foreign companies for joint ventures and partnerships in China and emphasized exports.”
The so-called red chips, companies listed on the Hong Kong Exchange, but which are in fact mainland Chinese firms, were the hottest stocks on the market. Hong Kong is the PLA's favoured stock exchange because of its loose disclosure guidelines. China Poly Group has two listed companies: Continental Mariner Company Ltd. and Poly Investments Holdings Ltd. Both Continental Mariner and Poly Investments have a large number of subsidiary companies in mainland China, Hong Kong and tax havens like Liberia, the British Virgin Islands and Panama. China Carrie's listed company in Hong Kong is Hongkong Macau Holdings Ltd. China Carrie also owns HMH China Investments Ltd. on the Toronto Stock Exchange and HMH Gold Mining on the Australian Stock Exchange. 999 Enterprise Group, another company controlled by the PLA General Logistics Department, operates Sanjiu Pharmaceuticals Group, the largest pharmaceuticals manufacturer in China. 999 has listed on the Hong Kong exchange.
Smaller military enterprises, like the Songliao Automobile Company owned by the PLA Shenyang Military Region, have also listed in the domestic Chinese markets. China Poly Group is a commercial arm of the Chinese People's Liberation Army (PLA) General Staff Department. The PLA General Logistics Department operates China Xinxing. The PLA General Political Department owns and operates China Carrie. And the PLA Navy runs China Songhai.
These are not small operations. As early as 1994, with $382 million worth of import-export trade, China Poly Group was the fifty-ninth largest import-export company in China, according to China State Statistical Bureau. China Xinxing ranked 170th with $159 million, China Carrie ranked 203rd with $137 million, and China Songhai ranked 395th with $71 million.
Foreign companies looking for a foothold in China like partnering with the PLA because of the stability it can offer to any long-term project. Companies with military partners get the added security of knowing that the top "management" of many of the PLA companies are from the ranks of the "princelings," the children and relatives of senior Chinese Communist Party officials. These influential princelings assure that the business operations of the PLA will have the government connections that are so important in China's corrupt system. In the case of China Poly, chair Wang Jun and president He Ping act as brokers between the government and the military. Wang Jun is the eldest son of the late Vice-President Wang Zhen. He Ping is the son-in-law of the late Deng Xiaoping. Wang Jun's brother, Wang Bing, is the chair of the PLA Navy Helicopter Company. China Carrie's president is Ye Xuanning, the second son of late PLA Marshal Ye Jianying. [x]
These military companies established joint ventures with many of the largest international firms; making full use of their intellectual property. This dominant role of the PLA corporations grew after Tiananmen Square as the Communist Party was in some disarray. By 1998 the Party tried to reassert itself in control. There was an effort by the Chinese Government to try and rein in some of these companies but to no avail. More than a year after the Chinese military was ordered to disband its octopus-like business empire (1999) and return to the barracks, its influence over the nation's economy continued. During 1999, some PLA high-profile investments, such as Beijing's five-star Palace Hotel, were handed over to central government shareholders with great public fanfare. And at least 150 large, profitable enterprises were grabbed up by the central government. Most, however, stayed with the PLA.
By the mid-1990s, the so-called PLA Inc. included over twenty thousand companies in everything from agribusiness to electronics to tourism to arms exports. The 1989-1990 reforms had only a marginal effect. The Party had diminished control of these companies.
The Rise To Power of Xi Jinping
With the rise to power of Xi Jinping in 2012 the party began to reassert control of the military and its companies. In addition to his role as Chairman of the Communist Party Xi Jinping took over the leadership of the Central Military Council (‘CMC’) the Party’s control organisation in charge of the military. He used his position to dramatically reduce the number of soldiers and reorganised the military structures. Most importantly, Xi embarked upon a strict anti-corruption campaign.
President Xi Jinping concentrated on the "rule of law" within China. An important part of the "rule of law “was the eradication or, at least suppression of corruption. Since the start of his anti-corruption drive in November 2012, more than forty high-level officials have been investigated and shamed. These officials include current and former municipal and provincial party secretaries and vice governors, senior government officials, and executives at state-owned enterprises
This anti-corruption campaign was not embarked upon solely to punish Party and Army leaders who had stolen from the State. It was also a means of removing from the leadership of the Party many of Xi’s enemies; both on the Left (Bo Xilai and the “New Left” in China); and the Right Jiang Zeminists (Zuo Yongkang, Xu Caihou and Guo Boxiong). Xi and Wang Qishan, Politburo Standing Committee member and head of the powerful Central Commission for Discipline Inspection, have made it clear that the ‘new’ PLA will not tolerate a senior military leadership that has its loyalties anywhere but the CMC. Many of the leaders of the PLA military corporations had to choose between the companies and their ranks in the Army. This effectively returned many of the companies to Communist Party discipline.
At the same time, after 2014 and the collapse of the real estate market the large, and mostly unregulated “Shadow Banks” in China were brought back under the control of the large state banks. By far the most important development was the gradual expansion of the State-Owned Enterprises (‘SOE’ yangqi) under State-Party control. There are about 120 large SOEs in China, managed by the State-owned Assets Supervision and Administration Commission (SASAC) as well as several large banks and insurance companies not supervised by the SASAC. In recent years, the Communist Party leadership has concentrated its financial might in supporting these SOEs with cheap credit and a policy of growth. This has a dramatic effect in spurring their growth and they have spread overseas as well. However, the direction of cheap credit to these SMEs and the promotion of major infrastructural projects has stifled the growth of small and medium-sized corporations through a shortage of capital and led to a lack of spurs for domestic savings. China has had to redirect these funds to reach the new middle-sized firms and allow the growth of a domestic savings pool;
President Xi Jinping was seen as an unlikely leader of the Party or as a reformer of the economy at the time of his accession to power as he had no apparent political base supporting him. He was never viewed as part of either the conservative or reformist factions of the Party but wavered around a broadly centrist stance. Perhaps this is due to his background and his experience. Unlike his predecessors in the office Xi has had a prolonged military experience and is a “princeling” of the military establishment. After graduating from Tsinghua University in 1979, Xi’s father was able to get him a job as a secretary to the Central Military Committee, the nerve-centre of the Peoples’ Liberation Army (‘PLA’). His father was Xi Zhongxun, a former vice-premier and a crony of then defence minister General Geng Biao. Xi's wife, Peng Liyuan, a popular singer with the PLA Song and Dance Troupe, has the rank of major-general. Xi is known to be on good terms with the disproportionately large number of princelings who have since the early 2000s risen to the post of major-general or above. These "military princelings, who were recently made full generals with high military ranks included Political Commissar of the Academy of Military Sciences Liu Yuan, Political Commissar of the Second Artillery Corps, Zhang Haiyang, and the Vice-Chief of the General Staff Ma Xiaotian
Xi understands the difficulties confronting a reformer in China. His father was a revolutionary leader of the first generation of Great March Chinese Communists and was deputy premier to Chou En Lai in the late 1950s. In 1962, he was purged from any leadership posts by being associated with an ‘anti- party’ clique. Xi Zhongxun was forced to undergo public self-criticism and in 1965 was demoted to the position of a deputy manager of a tractor factory in Luoyang. Things were worse for him during the Cultural Revolution and he spent time in and out of prison. After the Cultural Revolution, he was rehabilitated and put in charge of Guangdong Military Region. There he pioneered special economic zones with their own economic and trade opportunities, like Shenzhen. In 1982, he was back in the Politburo until his retirement in 1988. He continued to support economic reform and supported the 38th Army Commander Xu Qianxian when he refused to follow orders to lead his troops into Beijing on the eve of the June Fourth Tiananmen Square Massacre.
As Xi’s father was purged from his offices and imprisoned Xi himself was rusticated and moved out of Beijing to Yanchuan County, Shaanxi until his father was reinstated and rehabilitated in the party. When Xi Zhongxun fell afoul of Mao Tse Tung in 1962, his family was consigned to manual labour in Languishes village, a ramshackle town in northern Shaanxi province. Xi Jinping spent seven years in Liangjiahe under the same conditions as his neighbours — he lived in a cave home, subsisted on rice gruel, and hauled buckets of water from a nearby well.
Roughly speaking there are two major factions in the Chinese Communist Party – the military princelings (sometimes call the ‘Elitists’) and the Tuanpai (the ‘Reformers). The Tuanpai originate in the China Youth League, in the 1980s, as a party cadre who developed and trained within the party structure as administrators and officials, originally as supporters of Huo Yaobang. They were followed by a new generation of Tuanpai in the 2000s allied to the party general secretary Huo Jintao his group of populist associates and other political allies.
The first Tuanpai The Youth League faction was greatly weakened when Hu Yaobang was side-lined in an internal power struggle instigated by the conservative faction. Some members continued to serve under Zhao Ziyang, Hu's replacement as party leader and also a reformist, while others were moved into less important positions. When Zhao was also deposed in 1989, many remaining members of the Youth League faction were purged from the Party leadership, and the faction ceased to exist as such.
The second, and current Tuapai, rose to power through the patronage of Deng Xiaoping. Key figures include Hu Jintao, former CCP General Secretary, former PRC President; Li Keqiang, Premier, Politburo Standing Committee member; Liu Yandong, Second Vice-Premier, Politburo member; Li Yuanchao, Vice President, Politburo member; Zhang Baoshun, former Anhui party secretary; Wang Yang, Third Vice-Premier, Politburo member; Zhou Qiang, President of the Supreme People's Court; Yuan Chunqing, former Shanxi party; Hu Chunhua, Guangdong party secretary, Politburo member; and Lu Hao, Governor of Heilongjiang.
Keeping these two factions together has been role of Xi Jinping, as a princeling himself, but with irreproachable reformist instincts. Perhaps his greatest success has been the relentless purging of the PLA of corrupt leaders. Starting in 2012 Xi Jinping shook up the structure of the PLA and the CMC. He eventually netted two of the biggest fish in that pond. In January 2015 Xu Caihou, 71, a former vice-chairman of the Central Military Commission and a member of the powerful Politburo, confessed to taking "massive" bribes in exchange for assisting in promotions. He was found guilty and expelled from the party. His death from bladder cancer interrupted his trial on criminal charges. However, in April 2016, Xi Jinping arrested and expelled from the party China’s top general Guo Boxiong for massive corruption (along with members of his family). The man who ran the world’s largest army was charged with accepting $12.3 million in bribes. Guo was also charged with taking advantage of his position to aid the promotion and relocation of other people. Guo “confessed” to his wrongdoings, Guo had been the military chief of the People’s Liberation Army and a former CMC vice-chairman. In his ten years at the top Guo had promoted many of the PLA leading figures and they were warned by Guo’s arrest.
The result of this attack on corruption changed the balance between the military and the party leadership. The PLA was presented with the option of allowing many of the major military-industrial companies to morph into state-owned enterprises in return for a proper funding and reorganisation of China’s military. The PLA chose to return to its more military pursuits and leave much of the business to the State and Party leadership. In return, the PLA got new equipment, a reorganised structure and a more focussed program.
The withdrawal of the PLA from many of its business ventures and its reorganisation into a more solidly military configuration has increased its efficiency and made the military-Triad relationship much less important. However, the Triads have continued to prosper throughout China as they still retain a lot of the cash circulating through the economy. While the CCP may use ‘reform’ and ‘anti-corruption’ to weed out its enemies in the political structure it still needs the Triads to help manage the commerce across the vast areas of China. Most importantly, the CCPF and the PLA have been using their symbiotic relationship with the Triads to engage in policies in which it cannot or will not be seen to be engaged.
Using the Triads As Adjuncts to Chinese Foreign Policy Goals
There are three key areas in which the Triads act to promote the foreign policy of the Chinese state; the suppression of dissent and labour activism in Hong Kong and Macau; the preparations for the Chinese military takeover of the island of Taiwan; and the expansion of the new Belt and Road initiative of the Chinese state.
As the Chinese government cracks down on dissent in supressing the discontent of workers across China in strikes and demonstrations, the local administration frequently calls on the local Triads to suppress the dissent. However, this took on a more important role in the use of the Triads in suppressing the dissent in Hong Kong’s Umbrella Revolution from 26 September to 15 December 2014 when the CCP in Beijing demanded that they pre-screen all candidates for the election of new leaders for Hong Kong. The students and other activists took to the streets and blocked traffic and commerce to protest the violation of the “separate system” agreed with the British when they vacated the colony. When London and Beijing signed their agreement returning Hong Kong to Chinese control on July 1, 1997, the fear was that the colony's criminal syndicates would relocate to Europe or the United States. Instead, the syndicates moved into southern China.
On the sixth day of the democracy protests in Hong Kong, in both the Central District and Mong Kok on Kowloon, a new and violent force engaged in the clash between the authorities and the student demonstrators. Despite the peaceful nature of the protest, even when the police used tear gas against the students, there seemed to be reluctance on both sides to enter into pitched and violent battles. But, on the sixth day of the protests, a violent group of anti-Occupy protestors joined the conflict and engaged in trashing student tents and hurling obscenities and projectiles against the students. On that Friday in Mong Kok they beat the students and destroyed their banners and posters and chanted “go home”. Water bottles and other missiles were thrown. Abandoned buses that had stood at the site since activists occupied it were boarded and driven off to loud cheers. For a long period, the police were unable, or unwilling, to separate the two sides. Female activists were sexually abused, and foreign journalists attacked. This was repeated in Causeway Bay. This was the result of the CCP engaging the Triads in the suppression of dissent; in fact, the Big Circle Gang of ex Red Guards who had practice in breaking up crowds as well as the Sun Yee Ong. Since 2014 the CCP and local CCP officials in Hong Kong have mobilised the Triads, especially the Big Circle Gang, in suppressing any dissent; labour, student or democrat.
The main current thrust of CCP and Triad co-operation is the determination by China that the island of Taiwan must be returned to the control of the Chinese state. There have been many abortive efforts by the PLA to prepare for an invasion of Taiwan, but they were never actually conducted. As part of the bargain made by Xi Jinping with the PLA was an agreement that the PLA would be allowed to ’liberate’ Taiwan. One the keys to preparing for the invasion of Taiwan has been the activation of the Triad organisations in Taiwan as an adjunct to CCP power. One of the main vehicles for this has been the China Unification Promotion Party (CUPP), a pro-mainland group created by Chang An-le, the onetime head of the Bamboo Union, one of the most powerful triads. In April 2014, about 500 of his followers attempted to physically remove anti-Beijing protestors from the Taiwanese parliament. The CUPP regularly contributes manpower to violent protests organized by other groups.
There is also evidence of growing collaboration and coordination between pro-Beijing triads in Hong Kong and the CUPP in Taiwan. In early 2017, a group of Hong Kong pro-democracy activists, Joshua Wong among them, were assaulted at the airport in Hong Kong before boarding a flight to Taiwan. Pro-Beijing gangsters were waiting for them at Taiwan Taoyuan International Airport and attempted to attack them. Chang’s son, Chang Wei, was arrested for his role in the altercations and was detained again in September the same year for physical assault during a protest at National Taiwan University over a pro-Beijing musical concert.[xi]
Tensions continue to grow between China and Taiwan. China is trying to limit Taiwan’s international space and undermine support for the island’s incumbent ruling party. The U.S. actively supports Taiwan, as part of the American president’s policy towards China. This year, one may expect an increase in Chinese pressure on Taiwan because of upcoming parliamentary and presidential elections scheduled for early 2020 on the island.
China’s says its goal is “peaceful reunification”. It exerts pressure on the island to recognise the “1992 consensus” as a condition for dialogue. It assumes there is “one China” with different interpretations. Generally, both political and economic pressure has been used by China for a long time. “During the KMT government, relations were based on closer economic ties. However, this approach led to Kuomintang’s defeat in 2016. Among the reasons was dissatisfaction among young Taiwanese (who comprised the Sunflower Movement protests) due to the rapid pace of changes in relations with the PRC and neglect by the government of public opinion on its policy towards the mainland”.[xii] The pressure on Taiwan is likely to continue as the 2020 elections approach.
The Chinese triads are one of the world’s largest organisations involved in international criminal activity. Their ‘snake heads’ smuggle men and women all over the world. They supply or carry much of the world’s trade in amphetamines, ephedrine, heroin, opium, mandrax and similar drugs. They have a large stake in the success of the new Chinese Belt and Road initiative which will engage international trade using Chinese transport facilities.
This engagement with Chinese vessels, trains, ports and handling facilities is breathing new life into Chinese organised crim and offers a bonanza in business to the Triads; especially with the support of the Chinese Government. During the Cultural Revolution in China the theme song of the movement was “The East is Red”. The Cultural Revolution may have passed into history but, indeed, the East is still red. The Belt and Road initiative will spread the power and control of the CCP across the globe and, with it, the power of the Triads.
[i] Booth, Martin. The Triads: The Growing Threat from the Chinese Criminal Societies. Grafton, 1990
[ii] Brian G. Martin, The Shanghai Green Gang: Politics and Organized Crime, 1919-1937
[iii] Prof. Zha Daojiong, From Temples to Chinatowns: The evolution of Chinese Organized Crime,, Peking University, January 2015
[v] Basham, Richard. "The Roots of Asian Organized Crime." IPA Review 48.4 (1996)
[vii] Wang, P.. "Vicious Circles: Gang Legacy of the Cultural Revolution. Jane's Intelligence Review, 2011
[ix] Lam, Jeffie,. "'Operation Yellowbird': How Tiananmen activists fled to freedom through Hong Kong". South China Morning Post, 26 May 2014
[x] David Welker, "The Chinee Military-Industrial Complex Goes Global", Monopoly Makers, June 1997
[xi] J. Michael Cole, “Nice Democracy You’ve Got There. Be a Shame If Something Happened to It”., Foreign Policy, 18 June 2018
[xii] Justyna Szczudlik, “Rising Tensions in China-Taiwan Relations”, PISM, 19 February 2019