China allows private investment in army equipment?

Supervision of China's military enterprises is increasing, as is evident from recent investigations of several senior managers on suspicion of corruption, analysts said.

The most recent such case involves AVIC Heavy Machinery Co, an industry leader listed on the Shanghai Stock Exchange, which announced on Tuesday that its deputy general manager, Wu Hao, was under investigation on suspicion of corruption.

The company said production and business were continuing as usual.

No further details were released.

Wu, 49, assumed his position in October 2010. The company's annual report shows that his salary last year was 630,000 yuan ($100,800) before taxes.

AVIC Heavy Machinery, a subsidiary of Aviation Industry Corp of China, engages mainly in aerospace-focused businesses including casting and forging, hydraulics and new energy. It has about 12,000 workers and eight subordinate companies.

The Beijing company is striving to develop high-end equipment manufacturing industries for both civil and military use, its official website says.

The company's net profit last year was 153.3 million yuan, down 28.18 percent from the previous year due to shrinking profits amid a mixed global economic picture and a slowdown of the Chinese economy, according to its annual report released in early April.

Several senior managers with military-related companies also have been investigated recently.

On May 29, Huang Xiaohu, former board chairman of State-owned Anhui Military Industry Group Holding Co Ltd, was tried on multiple allegations, including embezzlement and bribery.

Huang, 51, was accused of embezzling more than 15 million yuan of public funds and accepting bribes totaling 2.05 million yuan. The prosecutors also alleged that he had offered 14.5 million yuan in bribes to Liu Ya, at the time the vice-mayor of Bengbu in Anhui province. The court has not issued a verdict.

Huang's predecessor Zhang Youren, the company's former board chairman, was detained by police last year on corruption allegations.

In October, Chen Shengtian, Huang's former colleague and the company's office director, was sentenced to nine years in prison for embezzlement, the Legal Daily reported.

Anti-graft authorities have tightened regulations regarding State-owned enterprises, including military companies, amid the clean-governance measures, said Zhou Shuzhen, a professor of public administration at Renmin University of China.

More effective measures, such as sending inspection teams, should be taken to supervise companies in the military industry, she said.

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