Preparing for war, civil unrest or a new pandemic? Chinese companies are building armies like the 1970s

(CNN) — Chinese companies have been doing something rarely seen since the 1970s: creating their own volunteer armies. At least 16 major Chinese companies, including a privately owned dairy company, have set up combat forces in the past year, according to a CNN analysis of state media reports.

These units, known as divisions of the People’s Armed Forces, are made up of civilians who retain their regular jobs. They serve as a reserve and support force for China’s military – the world’s largest – and are available for missions ranging from responding to natural disasters and helping to “maintain social order” to providing wartime support.

The forces, which are not currently operating outside of China, are more likely to use the U.S. than their military movements. More similar to the National Guard, which refers to private paramilitary organizations that typically have a right-wing political focus.

Analysts say the establishment of the corporate brigade highlights Beijing’s growing concerns about potential conflicts abroad, as well as social unrest at home as the economy slows.

It is also seen as part of the response to the pandemic and Chinese leader Xi Jinping’s efforts to tighten the Communist Party’s control over society, including the business sector.

Political expert Neil Thomas said, “The return of corporate militias reflects Xi’s growing focus on the need to better integrate economic growth with national security as the country faces a difficult future of slowing growth and increasing geopolitical competition.” Center for China Asia Society Policy Institute from China Analysis.

“Corporate militias under military leadership can help the Communist Party more effectively quell incidents of social unrest such as consumer protests and employee strikes,” he said.

China’s economy grew by 5.2% in 2023, slightly better than the official target set by Beijing. But the country is facing a number of challenges, including a record housing crisis, rising youth unemployment, deflationary pressures, rising corporate defaults and increasing fiscal strain on local governments.

Protests seem to spread as frustration grows. The number of labor strikes and demonstrations rose to 1,794 in 2023, more than double from 2022, when 830 cases were reported, according to data from the China Labor Bulletin, a Hong Kong-based non-profit organization that monitors labor protests.

Just over a year ago, protesters clashed with police at the world’s largest iPhone factory in Zhengzhou as anger flared at Foxconn over promises to raise wages and benefits to lure workers back after the pandemic.

Outside the commercial sector, military units are organized by local governments and universities, according to regulations on military work. These units still exist in most of these places today, just on a much smaller scale than in previous decades.

Depositors at the Henan branch of the Chinese banking regulator protest after their funds were frozen in 2022. (From Lane Nuo Nuo in February)

Variation of signatures

Most of the companies that have so far announced military formation are state-owned enterprises (SOEs), directly owned by the central or regional governments.

But in December, Yili Group, the world’s fifth largest dairy producer, became the first major privately controlled Chinese company in recent history to establish a unit of the People’s Armed Forces Department.

Yili is not majority-controlled by the state, but the local government of Hohhot city, where it is based, owns 8.5%, according to its most recent stock filing.

The company did not provide any details about the capabilities of the force or the demographics of the employees joining. According to China’s Military Service Law, male members of the military must be between 18 and 35 years of age. There should be some flexibility for people with special abilities. Women can also join, although the law does not specify age requirements.

The Yili unit will be under the direct leadership of the People’s Liberation Army (PLA) garrison in Inner Mongolia, the area where the company is located, and the Communist Party Committee of the regional government.

Huang Zhiqiang, executive vice president of the Inner Mongolia Autonomous Region, said the unit was created to build a Yili-based national defense force that can “serve in peacetime, deal with crises and respond in wartime.” Capital of Hohhot. A senior military officer of the region and the party secretary of the city were also present.

It was the latest in a series of militias set up by major Chinese companies last year.

Yili production line in Hohhot, Inner Mongolia on May 29, 2023. Yili Group is China’s largest dairy producer. (Kilai Shen/Bloomberg/Getty Images)

In September, Shanghai Municipal Investment Group, a state-owned construction and real estate developer, formed a unit of the People’s Armed Forces Department. It will be monitored by the PLA garrison in Shanghai, according to Jifang Daily, the city’s official Communist Party newspaper.

Liu Ji, commander of the garrison, said the army would help with tasks such as employing disbanded veterans or recruiting soldiers for the army.

At least 14 other state-owned companies did the same last year, according to a CNN analysis of state media reports.

These include Mengniu Dairy, China’s second largest dairy producer; Haiyan Urban Construction Investment and Development in Nantong City, Jiangsu Province; Three property construction, transportation and water services companies in Huizhou City, Guangdong Province, as well as nine companies in Wuhan, the capital of Hubei Province.

At a press conference in October, a spokesman for the Ministry of Defense said that the initiative to establish the military in state-owned enterprises was aimed at “strengthening the development of national defense”.

Long story

Chinese militias date back to the founding of the People’s Republic in 1949. In fact, they originated in the 1920s and supported the Communist Party in many of its battles. After 1949, when the Party took control of mainland China, units were eventually integrated into governments, schools, and businesses.

The force remained influential during the Maoist era from 1949 to 1976 and reached its peak in the late 1950s — with 220 million members — when military tensions with the United States over Taiwan were high, according to government documents.

The militia is the core of the Chinese military, composed of two full-time professional forces: the People’s Liberation Army (PLA) and the People’s Armed Police, in charge of internal security. According to the country’s defense law, the army plays a supporting role for the EPL.

China’s revolutionary leader Mao Zedong said that by recruiting large numbers of civilians into the brigade, he was improving the country’s defenses against the threat of “imperialist forces” such as the United States. But historians say Mao used those forces to promote his personal agenda and consolidate his power.

He incorporated the brigades into the People’s Communes, formally enormous conglomerates in 1958 that controlled almost all economic and political activity in rural China. The communes were a central part of Mao’s “Great Leap Forward” campaign, a disastrous attempt to galvanize agriculture and increase steel production through collectivization that resulted in millions of deaths.

While developing a cult of personality inside and outside the party, Mao expanded the military system to suppress and intimidate those who opposed his radical policies.

On July 24, 2023, armed police and soldiers train in seawater in Fengchengang City, Guangxi Autonomous Region, China. (CoastPhoto/NoorPhoto/Getty Images)

After Mao’s death in 1976, the country began to focus on economic development rather than political struggle. As the economy took off, the number of militia members fell to 8 million in 2011, according to the most recent data available from the Ministry of National Defense.

Although some state-owned companies maintained their military, they were nonexistent among large private companies until recently, as the private sector began to reestablish itself only after 1978, when China implemented free-market reforms.

Because right now?

The resurgence of corporate militias has been fueled by the Covid-19 pandemic and the recent crisis in the real estate sector, according to Timothy Heath, senior researcher on international defense at the RAND Corporation.

“The Covid-19 pandemic can play a role in motivating leaders to find more effective institutions and forces in society that can help manage and coordinate responses to major national emergencies like the pandemic,” he said.

A multi-year housing market crash has led to a widespread mortgage crisis. Since 2022, angry homebuyers in many Chinese cities have refused to pay their mortgages on unfinished apartments after cash-strapped developers delayed or abandoned construction.

The fallout from the housing crisis has spilled over into the financial sector, causing some major banks to default on their investment products, prompting protests by those who lost money.

The reestablishment of People’s Armed Forces divisions is also related to broader efforts to reform the Chinese military, Heath added. The Chinese leader has made no secret of his goal to “modernize” the PLA and transform it into a “world-class” fighting force.

“The main objective of the changes is to improve the military’s ability to carry out the mobilization of defense assets. This, in the long run, could save resources for the PLA by handing over some tasks to the military to deal with them,” Heath said.

Willie Lamm, a senior fellow at the Jamestown Foundation, notes one sense Deja vu. “We are witnessing a resurgence of Mao’s key slogans: ‘People’s War’ and ‘Organic Coexistence of Civilian and Military Sectors,'” he said.

It may reflect Beijing’s desire to tighten control over society and put the country on a war footing, as Mao did in the 1950s and 1960s.

In this Oct. 20, 2020, image, anti-landing spikes are placed off the coast of Taiwan’s Kinmen Islands, just two miles off the coast of China (in the background).

In the long term, Xi could prepare to invade Taiwan, while “much of China becomes militarized,” Lam said, adding that major cities could become “militarized zones” or “ports.”

Xi has promised that the island’s eventual “reunification” with the mainland is “a historical inevitability”. China’s ruling Communist Party considers Taiwan part of its territory, though it has never controlled it.

“If more and more citizens become members of his militia, his nationalist fervor will increase,” Lam said.