The creation of the DHZ was a plot concocted by its leader, Chairman Jie Bo Lao as the first step in his plans of world domination.
In 2112, following Chairman Bai's death, Vice-Chairman Ming Huang Jiu was to be sworn in as the new leader, but his assistant, Jie Bo Lao, secretly ordered the Rapid Reaction Force to shoot down his plane during a routine flight; his only son, Kwang Ming, was the sole survivor of the assassination attempt. As soon as he became Chairman, Jie Bo Lao promoted the country's policies and changed its name as well. In a change from free market policies, all industries were nationalized to create a "National Corporation".
Chairman Jie would silence anyone that stood in his way. Thus the people suffered greatly under the brutal oppression of his government. This led to the rise of an internal resistance faction called the Hua Lian Rebels, which is armed and financed by the USN. Although under-equipped and outnumbered by the Changli Army, the Hua Lian Rebels seek to put an end to Jie Bo Lao's dictatorship at any cost.
However, the government still reigns supreme by the end of Front Mission 3's two scenarios after the destruction of the Hua Lian and defeat of its renegade Lost Number forces.