Murphy's Law: August 3, 2005

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China has had a corruption problem in its military for a long time. Think thousands of years. One reason the communists won the civil war against the Nationalists in the 1940s was because the Nationalists were much more corrupt. For about a generation, the communists kept corruption under control. But for the last three decades, corruption has been a growing problem. This despite several major efforts to stop it. So now, the Chinese are really getting serious. They are installing cost control systems, with regular audits, to their military spending. In the past, budgeting was pretty primitive, mainly because cost accounting is expensive to implement. In the past, detailed spending data was collected after the fact, if at all. This made it easier for corrupt officers to steal.  Noting how effectively Western (and Japanese and Taiwanese) companies deal with corruption (detailed budgets and frequent audits), China is installing similar systems throughout its armed forces. This is causing some morale problems among some senior officers, but this is not believed to be serious. Meanwhile, the program has cut costs an average of ten percent in units where it has been installed. 

 


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