During part of the 1980s and 1990s, the Central Military Commission (CMC) of the Chinese Communist Party (CCP) allowed the People's Liberation Army (PLA) and the People's Armed Police (PAP) to legally engage in business and trade. This policy was officially promulgated on 2 April 1985. Later, the CMC believed that its drawbacks of this policy were too great, so it gradually rolled back the decision. On 15 December 1998, the PLA and PAP completed the decoupling of most of their operating enterprises. In July 2019, the CMC announced the cessation of all paid services by the military. Currently, only the Xinjiang Production and Construction Corps (XPCC) still operates its own businesses.

Promulgation and implementation In 1985, at the enlarged meeting of the Central Military Commission (CMC) of the Chinese Communist Party (CCP), Deng Xiaoping, Chairman of the Central Military Commission, advocated saving military expenditure for the sake of reform and opening up. As a result, tight military expenditure gradually became a prominent problem faced by the central government and governments at all levels at that time. Under this background, the military was allowed to engage in business. On 2 April 1985, the General Staff Department, the General Political Department and the General Logistics Department of the People's Liberation Army (PLA) formulated the Interim Provisions on the Military Engagement in Production, Operation and Foreign Trade, which was forwarded and implemented by the State Council and the CMC on 4 May 1985. The "Interim Provisions" made clear provisions on the production, operation and foreign trade activities of the troops. The main contents include:

When the military engages in production and business activities, it must strictly abide by the relevant policies, laws and disciplines of the Party, the State and the military, and ensure the completion of various tasks such as combat readiness, training and construction, and the security of military secrets. Smuggling, speculation, tax evasion, short selling and profiteering are strictly prohibited; it is not allowed to purchase or resell the state's scarce materials or sell materials allocated within the plan. Units that implement enterprise management must apply for approval in accordance with national regulations, operate in accordance with the law, and pay taxes in accordance with regulations. Strictly implement the principle of separation of responsibilities between the military and enterprises, and separation of officials and businessmen, implement autonomous operation, independent accounting, self-financing, do not occupy military establishment, do not consume national defense funds, and are not allowed to use the troops' equipment and camp property, raw materials, fuel, etc. Units below the army level should mainly develop planting, animal husbandry, breeding, forestry and agricultural and sideline product processing. The proportion of troops engaged in agricultural and sideline production and operation activities should be controlled within 5%. In order to solve the problem of insufficient technical force, local professional and technical personnel can be hired through local personnel and labor departments, and contract workers and temporary workers can be hired. After completing the subsidy adjustment and supply and upward adjustment tasks stipulated by the superiors, the surplus products produced by the troops can be sold through military service agencies, or entrusted to local commercial and supply and marketing departments for sales. With the approval of the local government, certain industrial and agricultural production projects can be jointly operated with local enterprises and institutions. The troops are allowed to independently or through military-civilian cooperation undertake national and local construction projects, transportation tasks, and the state's barren mountains, wastelands, and wastelands for development and afforestation. The required machinery, vehicles, and other equipment are purchased with production funds, and the troops used are reported and approved in accordance with regulations. Military hotels and guesthouses are managed in an enterprise-like manner and can accommodate non-military personnel. The charging standards are differentiated between non-military and non-military personnel. However, guesthouses in military restricted areas are not allowed to be open to the public. Military airports and large docks, with the approval of the State Council and the Central Military Commission, can provide services for civilian use and charge fees in accordance with regulations. All types of hospitals are allowed to treat local wounded. The establishment of wards for the treatment of foreign guests, overseas Chinese, and patients from Hong Kong, Macao, and Taiwan must be reviewed and approved by the military region and the military service. Colleges, scientific research, cultural, design, and other public institutions are allowed to carry out intellectual, technological development, technology transfer, and consulting activities. All foreign economic and trade affairs of the entire military, except for the General Staff Department's Poly Company, the General Political Department's Kelly Company, and the National Defense Science and Technology Commission's Xiaofeng Company, are managed and handled by China Emerging Corporation. Other units are not allowed to establish foreign trade companies, let alone directly conduct trade with foreign countries. The "Interim Regulations" clearly stated that the General Logistics Department is the competent department for implementing these regulations.

Under the leadership of the three headquarters of the CMC, each branch of the military established a joint airline and an ocean shipping company. Subsequently, the major military regions followed closely and established their own economic and trade groups, among which the most representative were Southern Industry and Trade and Northern Industry; driven by their superiors, the various group armies also entered the business world. The income from military operations did improve their training grounds and camp conditions. Subsequently, provincial military regions and military sub-districts also gradually started. The deepening of military business has led to a more complex property structure of military-run enterprises, with joint ventures between different military units, joint ventures between military units and non-military units, and even joint ventures between military units and foreign capital. The military gradually used its military power to exert pressure on the industrial and commercial, tax, customs, forestry and other departments.

Revocation

Opposition The military's business activities were strongly opposed by senior generals, led by Zhang Aiping, then Minister of National Defense. At the Standing Committee of the Central Military Commissio, he strongly pointed out the disadvantages of the military's business activities:

Zhang added: "If we, the people working in the Central Military Commission, cannot even stop this, and if things continue like this, who will be killed in a war in the future? We will be killed first. If we are killed, we will be cursed, disgraced, and infamous! Even our corpses will be tainted for eternity!... When the time comes, you can't blame others for wanting to overthrow you!" However, the voices in support of the military engaging in business outweighed the opposition, and the policy of the military engaging in business was eventually implemented.

After 1987, Zhang Aiping retired and Chi Haotian joined the CMC. Zhang invited Chi to his home, during which he cited a line from Yue Fei's poem Man Jiang Hong that reads "The shame of Jingkang has not yet been avenged" and said, "In order to make up for the shortage of military funds, the emperors of the Song dynasty promoted the strategy of letting the army engage in business. As a result, the military was neglected and military discipline was lax. Facing a small country like Xixia, they were defeated again and again. When the Jin army invaded, the central government lost control and the two emperors Huizong and Qinzong were captured. This is the 'Jingkang Shame' in history." Zhang's talk about "drinking poison to quench thirst" shocked Chi. After Zhang's death, Chi wrote an article "Standing Up to Heaven, and Chasing the Wind and Clouds with Heroic Spirit" to recall this incident.

Cessation According to the situation reflected over the years, doing business is very harmful to the army. According to the documents investigated at that time, the first problem is that doing business distracts the attention of leading cadres and organs at all levels. A considerable number of cadres and troops are engaged in business and do not do their jobs properly, which to a certain extent weakens the army's ability to perform its functions and combat effectiveness. Second, using the gun to engage in business to compete with local governments and the people for profits, the unfairness affects the relationship between the military and the government, and disrupts the national economic order. Third, doing business is prone to corruption, corrupting cadres, and undermining the morale of the troops. The military's commercial interests have expanded rapidly and have developed into a huge network. It involves thousands of loosely connected companies, from hotels, nightclubs, golf courses to airlines, pharmaceutical companies, stock brokers, etc. In addition, some units embezzle normal funds in business, which is actually a diversion of national defense funds. After deducting the embezzled funds, the actual income is very little, and some are even negative.

After Jiang Zemin became the CMC Chairman, he began to adopt a method of gradual contraction and phased rectification under the advice of Vice Premier Zhu Rongji and Vice Chairmen Zhang Wannian and Chi Haotian. In 1991, the CMC stipulated that combat units at the division level and below were not allowed to run businesses. On 19 December 1993, the CMC decided that combat units below the army level were not allowed to engage in business and issued the "Decision on the Rectification and Reform of Production and Operation", requiring that "based on the overall interests of the Party and the country and the long-term development of the army, we must resolutely rectify and reform production and operation, straighten out relations, promote benefits and eliminate disadvantages, and ensure the healthy development of production and operation in the army".

By January 1995, enterprises of combat units below the army level, enterprises run by departments, political affairs, logistics and other organs of major military region and deputy major military region level units, and enterprises run by the second-level departments of the three headquarters were all put under centralized management in accordance with regulations. All soldiers and equipment sent out by various units for labor services have been withdrawn. Various types of mechanical construction teams and transport teams have been reorganized and reduced, and are under the unified management of major units. The army originally had 15,327 enterprises and more than 860,000 employees. Through rectification, the number of enterprises has been reduced by 6,238, accounting for 40.7% of the total; the number of employees has been reduced by more than 60,000.