Chinese Navy airplanes were used in a massive profiteering scheme to illegally transport imported consumer goods from Hainan Island to Sichuan Province for resale, according to China's official military newspaper.
The People's Liberation Army Daily said that from January to March of this year, a certain unidentified Air Force unit under the Chinese Navy used military aircraft on six occasions to transport from Hainan Island to Sichuan Province imported consumer products that were not supposed to be brought out of Hainan.
The information was in an Aug. 17 issue of the military newspaper obtained here today. The newspaper is not easily obtained by foreigners, who are not permitted to subscribe to it.
The newspaper said the products, which were to be sold at a markup, included more than 6,000 video cassettes, 1,038 video cassette recorders, 386 television sets and one Japanese-made minibus. The total value of the products was more than $2.07 million, the military newspaper said.
The People's Liberation Army Daily thus confirmed earlier suspicions of military involvement in China's recently disclosed Hainan Island affair. It is viewed by some observers as the biggest profiteering scandal since the nation began its open-door policy toward trade and investment more than six years ago.
Earlier unconfirmed reports indicated that the Chinese Navy had played a role in illegally transporting by sea thousands of imported motor vehicles from China's southern island of Hainan to the Chinese mainland.
It was not clear whether the military newspaper had addressed the question of sea transport in other editions, since the publications are so difficult to obtain.
The reported involvement of naval aircraft in the Hainan affair would have constituted only one small part of the scandal, since hundreds of millions of dollars in illicit loans were involved, according to reports carried by the official New China News Agency earlier this month. But the full story has yet to be revealed. The news agency said earlier that 143 cases of criminal practice are still under investigation.
Foreign observers here said it is logical to assume that some Navy units used not only airplanes but also seagoing vessels to carry some of the imported consumer goods to the mainland, given the Navy's heavy involvement in strategic Hainan and the difficulty of moving thousands of vehicles in a relatively short period of time by means other than military sea transport.
When the Hainan scandal was disclosed three weeks ago, the Chinese press cited investigative reports showing that 89,000 motor vehicles were moved from Hainan to the mainland for resale, along with other imported consumer goods, which were then resold at double or triple their original price.
In its Aug. 17 report, the People's Liberation Army Daily said that the Navy division had been involved not only in illegally transporting goods but also in selling them for total revenue amounting to more than $827,586.
It said the division's illegal activities occurred after central-government authorities had stipulated formally that government organizations could not engage in business activities. Even after a disciplinary inspection team was sent to Hainan in early March to investigate the case, leaders of the Navy division were reported to have ignored the investigation and continued to transport imported products off the island for resale elsewhere.
A Communist Party Central Committee military commission accused leading cadres of the Navy division of forgetting Communist Party ideals and discipline. A party warning was delivered to the commander and political commissar of the division, and serious demerits were recorded in their records, the People's Liberation Army Daily said. The division's chief of staff also got a warning and a demerit.
Corruption in the Chinese military is a sensitive issue, given the traditional image of the armed forces as a highly disciplined force.
But the official press has from time to time touched on the subject in recent years. In December 1983, for example, the English-language China Daily reported that two Navy officers at the Canton Naval Base, who sold airplane fuel to a trafficker in exchange for several million dollars' worth of gifts, were sent to jail for two years.
In another development, a shake-up appeared to be under way in the special economic zone of Shenzhen, adjacent to Hong Kong. Once considered a model of economic development, Shenzhen has been the subject of central government criticism recently. It has absorbed large amounts of foreign exchange while failing to generate sizable exports or attract foreign investment and technology to the degree that had been expected.
According to a Hong Kong newspaper with close ties to the Peking leadership, Shenzhen Mayor Liang Xiang is to be replaced by Li Hao, deputy secretary general of the State Council in Peking.