When China's second-highest military officer falls from grace amid allegations of espionage and corruption, CEOs should pay attention. The ouster of General Zhang Youxia—accused of leaking nuclear weapons program information to the United States and accepting bribes for military promotions—represents what one analyst called "the total annihilation of the high command." This isn't merely a Beijing palace intrigue story. It's a signal flare for every Fortune 1,000 company with exposure to China.
Since March 2023, approximately 20 Chinese generals have been purged. Six came from the Rocket Force, which controls China's arsenal of ballistic, hypersonic, and cruise missiles. More than 50 senior military officers and defense industry executives have been removed or placed under investigation over the past two and a half years. The purge has touched every branch: army, air force, navy, strategic missile force, paramilitary police, and major theater commands—including the one focused on Taiwan.
This represents the most aggressive dismantling of Chinese military leadership since the Mao Zedong era. Christopher Johnson of China Strategies Group assessed it as "unprecedented in the history of the Chinese military." That assessment matters because it reveals a fundamental aspect of China's internal dynamics—and, by extension, the stability of the geopolitical environment in which global businesses operate.
The control question
Remember the Chinese spy balloon that drifted across North America in 2023? The incident raised uncomfortable questions about who actually controls China's military. Did Xi Jinping approve that mission, or did the People's Liberation Army (PLA) act independently? The question wasn't academic then, and it isn't now.
The parallel to 2011 is instructive. When Defense Secretary Robert Gates visited Beijing to mend relations, the PLA unveiled a new stealth fighter hours before he met with President Hu Jintao—apparently without Hu's knowledge. The pattern suggests a recurring challenge: civilian control over military operations in China remains, at best, inconsistent.
Unlike America's National Security Act, which was implemented after World War II, China lacks comparable institutional safeguards. In the United States, the President serves as civilian Commander-in-Chief, with the Department of Defense managing military operations and Congress providing budgetary oversight. China's Central Military Commission concentrates power differently. Comprised almost entirely of high-ranking uniformed officers, it places ultimate authority in the Chairman—currently Xi Jinping—who often serves as the sole civilian member.
More fundamentally, the People's Liberation Army answers to the Chinese Communist Party, not the state itself. Its primary mission is ensuring the Party's survival. This "Party-Army" model creates a dual mandate: national defense and domestic political enforcement. In many ways, the PLA remains the Wild West in Beijing.
Business implications: Beyond the headlines
For corporate leaders, Xi's military purge carries implications that extend far beyond defense policy. It signals intensifying internal political pressures at a moment when global business already faces unprecedented complexity. Companies must now navigate not just US-China tensions, but uncertainty about China's internal stability and decision-making coherence.
The timing matters. With 18 months until the next Communist Party Congress in late 2027—which will select a new Central Commission and appoint a new Central Military Commission—Xi appears to be consolidating control and eliminating potential rivals. This consolidation occurs as American intelligence agencies unanimously assess that while Russia creates mayhem in Europe, only China possesses the capacity to mount a genuine global challenge to US interests.
Yet the PLA remains unprepared for conflict with the United States. China aims to "modernize" its armed forces by 2035 and make them world-class by 2049. The question for business leaders: Does Xi's military surge indicate preparation for global confrontation, or does it reveal that loyalty now trumps competence in Beijing's power structure?
Preparing for the new reality
Innovative companies recognize that this environment demands fundamental strategic recalibration. The era of endless tit-for-tat tariffs has arrived. Supply chain diversification is no longer optional. Interest rate volatility will persist as geopolitical risk premiums get priced into capital markets. Companies must engage governments and stakeholders across multiple jurisdictions with unprecedented sophistication.
This isn't your father's globalization. The old playbook—minimize political risk, optimize for efficiency, assume stable rules—no longer applies. Today's environment requires active navigation of geopolitical crosscurrents, real-time intelligence about shifting power dynamics, and communications strategies that account for multiple audiences across competing national interests.
Fortune 1,000 companies need to stress-test China strategies against scenarios ranging from continued integration to accelerated decoupling. They must evaluate exposure not only in manufacturing and sales but also in technology transfer, intellectual property, talent flows, and financial dependencies. The question isn't whether to maintain China operations, but how to build resilience against multiple potential futures.
Navigating complexity
Senior executives responsible for geopolitics, corporate affairs, and stakeholder engagement increasingly recognize they're operating in an environment where traditional risk management frameworks fall short. The interconnected nature of today's geopolitical business landscape demands specialized expertise at the intersection of global commerce and political dynamics.
This is precisely the domain where Caracal Global operates. As a geopolitical business communications firm, Caracal specializes in helping companies navigate the intersection of globalization, disruption, and politics. Led by a Michigan-born, DC-based advocate with deep experience in US and UK national political campaigns, US-China commercial relations, NATO, and strategic media engagement, the firm provides intelligence, strategy, and communications services designed explicitly for this moment.
Caracal Global's clients—senior executives at leading corporations—rely on the firm to transform geopolitical complexity into actionable strategy. Whether stress-testing supply chain alternatives, developing stakeholder engagement frameworks for multiple governments, or crafting communications that resonate across different political environments, Caracal brings expertise in both globalization and American politics to bear on the most challenging questions facing multinational enterprises today.
The bottom line
Xi Jinping's most significant domestic challenge is keeping the People's Liberation Army happy and in check. For CEOs, the challenge is understanding how that internal dynamic affects their business—and preparing accordingly. The old assumption that China's domestic politics stayed separate from international commerce no longer holds. Every purge, every power consolidation, every question about who controls what in Beijing ripples through global supply chains, market access decisions, and risk calculations.
The companies that thrive in this environment will be those that treat geopolitical intelligence as a core competency, not an afterthought. They'll build strategies that account for multiple scenarios. They'll engage stakeholders proactively across different jurisdictions. And they'll recognize that in a world of persistent uncertainty, the ability to navigate complexity becomes a competitive advantage.
When Beijing's generals fall, smart CEOs don't just watch. They recalibrate.
-Marc
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Marc A. Ross is a geopolitical strategist and communications advisor. He is the founder of Caracal Global and is writing a book entitled Globalization and American Politics: How International Economics Redefined American Foreign Policy and Domestic Politics.
