On May 22, the Procurement Network of the People’s Liberation Army (PLA) issued a notice that China Aerospace System Engineering Co., Ltd. has been banned from participating in all military material procurement activities for a year due to irregularities in a military procurement activity in 2017, including bid rigging and collusion. Insiders revealed that this penalty is a result of the investigation into the misconduct during the tenure of Zhang Youxia, causing the internal procurement system of the military to face past issues.
Upon the announcement of the penalty, mainland public opinion has linked this incident to past issues in PLA procurement, the crackdown on the Rocket Force, and the interests chain within the military-industrial complex. A source close to the military, who goes by the pseudonym Xiao Zhenyi, told Epoch Times, “Corruption within the military can be seen as the leader in CCP corruption.” He further disclosed examples of corrupt practices within the military involving smuggling cars during the early days of China’s reform and opening up, misusing military vehicles to transport contraband goods, and receiving kickbacks from procurement activities, including dual-use items sold to Iran last year.
In a statement published on May 22 by the PLA Procurement Network titled “Announcement on the Dishonesty Treatment of China Aerospace System Engineering Co., Ltd.,” it was revealed that the company engaged in bid rigging and collusion during the procurement activity coded as 2017-HJJBJ-1005. In accordance with military supplier management regulations, the company is prohibited from participating in military material procurement activities for one year starting from May 22, 2026. During this ban period, any other companies held or managed by its legal representative, Xie Quansheng, are also restricted from participating in relevant military procurement activities.
The penalty for the company involved in this incident was imposed in May 2026, approximately nine years after the event took place. Xiao Zhenyi highlighted that following the investigation into Zhang Youxia, significant changes were made within the Rocket Force system, including replacements of officials and thorough screenings of individuals promoted during Zhang’s tenure. He stressed that this issue cannot be viewed solely as one company being penalized, as undisclosed military-industrial companies are also involved in bid-rigging practices, more serious than the case of China Aerospace System Engineering. The former is handled by the Rocket Force procurement management department, while the military enterprise is under investigation by the Military Discipline Inspection Commission.
Reports by the Lu Qi Evening News on May 25 mentioned China Aerospace System Engineering being listed on the military procurement dishonesty list, with the Rocket Force procurement department overseeing the case. However, the report did not delve into the broader issue of corruption within the PLA.
Retired military personnel familiar with military procurement, using the pseudonym Xu Chi, stated in an interview that the military procurement system has long been a significant source of revenue for interest groups. He emphasized that military procurement is a lucrative sector, with intricate connections to higher-ups like the General Armament Department. He noted that investigations into individuals may lead to uncovering procurement cases, as scrutiny in this area is generally lacking compared to other sectors.
Public records and online sources reveal that China Aerospace System Engineering Co., Ltd. was established in April 1993, with a registered capital of 740 million yuan, and is a subsidiary of China Aerospace Science and Industry Corporation. The Corporation is a central state-owned enterprise within the CCP military-industrial complex, involved in aerospace, defense, manufacturing of military and civilian products, information technology, and system integration.
Upon being singled out in the military procurement dishonesty announcement, legal expert Mr. Li expressed that bid rigging and collusion are not mere errors in filling out information but are premeditated agreements among multiple companies on bidding outcomes, pricing, and corruption practices involving a chain of individuals.
Comments in the comment section of the Toutiao platform reflect the public’s reaction to the news, with one user suggesting a connection between this incident and recent sentencing of high-ranking military officials, while another user points out that these are distinct issues. The discussion highlights how this procurement penalty announcement has been intertwined with discussions on military anti-corruption efforts and the cleanup in the Rocket Force on mainland Chinese social media platforms.