Positioning of Chinese private security companies

    WORLD  02 December 2023 - 05:30

    The American War on the Rocks defense publication provides a comprehensive overview of the evolution and challenges faced by Chinese private security companies as they navigate the global security landscape. Caliber.Az reprints this article.

    "Since the launch of the Belt and Road initiative in 2013, Chinese private military companies envisioned working with US firms like Blackwater. They sought to replicate Blackwater’s role in Iraq, safeguarding China’s Belt and Road initiative against criminal and militant violence. In doing so, they also sought to benefit from the newfound legitimacy of private military companies as opposed to old-fashioned mercenaries.

    But the private military and security business changes quickly. Heightened tensions with the United States have left Chinese state-owned enterprises less willing to collaborate with security contractors from the United States and Europe. For a time, the rise of the Russian Wagner Group offered a new model, blending mercenary work with quasi-private proxy service for authoritarian states. At one point, Russian private military companies tried to insert themselves in the lucrative business of protecting the Belt and Road initiative from Africa to the Middle East, and even at sea against pirates. However, the appeal of this approach also proved short-lived, with Yevgeny Prigozhin’s mutiny making his methods appear distinctly threatening in Beijing.

    Now, Chinese security experts continue to weigh the merits and drawbacks of both Blackwater and Wagner models. The Chinese Communist Party government remains unconvinced by either, steadfastly committed to the Maoist principle that 'the party controls the gun.' But despite Beijing’s reluctance, Chinese private security firms are likely to play an increasingly pivotal role in protecting Chinese interests and enhancing security capabilities in a realm where the line between private and public is seldom clear.

    Legal Origins

    The evolution of Chinese private security companies began in the 1990s with a set of laws that allowed, in a very restricted way, the licensing of private security companies in mainland China. The regulation was part of Premier Deng Xiaoping’s broader policy of China 'opening up' to the West and allowed a limited privatization of the state security function. According to the law, only former military and police personnel could apply to the relevant authorities for a license and register a private security company, and private security officers could not carry weapons. Future amendments to the law expanded the sector’s reach, but the earlier limitations are still shaping the evolution of private security companies with 'Chinese characteristics.'

    In 2009 a new law amended some of the earlier limits. It gave private security companies the option to provide armed escort services while transporting cash and valuable goods, and dropped the stipulation that only former public security officers could be licensed. Nevertheless, most of the several thousand Chinese private security companies based in mainland China are still founded and directed by former security officers, and the core personnel are recruited from the People’s Liberation Army, People’s Armed Police, and the police force. At the same time, the detailed law on private security companies operating within China exists in tension with the lack of precise rules and regulations for the private security companies abroad. The ongoing legal vacuum leaves the entire sector open to competition from semilegal Chinese private security companies that set up shop overseas without the proper licensing at home.

    The Limits of Low Risk

    Building global infrastructure across sometimes unstable or conflict-prone parts of Eurasia is a dangerous business. Beijing has intensified efforts to secure the Belt and Road initiative by conducting comprehensive regional threat assessments and providing security training to its overseas workers, but threats continue to surge at an alarming rate. Despite this, Beijing was not prepared to send the People’s Liberation Army to protect its citizens overseas with boots on the ground. So, ready or not, the evolving Chinese private security sector filled this security gap.

    Except for the Chinese state energy companies, most state-owned enterprises have been trying to avoid trouble by investing in countries that Beijing deems safe or capable of protecting its citizens and infrastructures. This makes work more manageable for the security companies they employ. For example, in Africa, leading Chinese private security companies such as Haiwei, Huaxinzhongan, Kunlun Lion Security, and Frontier Services Group operate in relatively stable regions from Egypt to Kenya and Uganda.

    However, numerous smaller Chinese private security companies are venturing into far more precarious environments without the proper resources to confront militants and criminal threats. The rapid shift in threat environments from Islamabad to Bamako has demonstrated that Beijing’s security evaluation and crisis response must adapt more swiftly than initially anticipated. In South Asia, the $63 billion China-Pakistan Economic Corridor is facing a rise in insurgent violence, as reflected in the Baloch female suicide bomber who killed three Chinese educators from the Confucius Institute and the frequent attacks that claimed the lives of Chinese workers. After US-led coalition troops left Afghanistan, the Islamic State in Khorasan Province began to focus its wrath on China. Similarly, in Africa, criminal violence against Chinese miners, including killing and kidnapping for ransom, is on the rise.

    Competing Models

    While the Chinese private security sector was actively transforming to cope with growing overseas challenges, Beijing has imposed restrictions on the private security companies’ access to weaponry, compelling them to rely on armed personnel from local or international organizations. As a result, Chinese private security companies are still tasked with a passive role including asset protection from riots, theft, kidnapping for ransom, terrorism, or even maritime piracy. This is the core reason why, during the last decade, numerous Chinese military experts have advocated for the professionalization and restructuring of the sector, possibly emulating Western private military models or even adopting elements from the Russian approach.

    After the launch of the Belt and Road initiative, the Chinese private security sector first experimented briefly with the Blackwater model. This was exemplified by the establishment of Frontier Services Group, a joint venture in Hong Kong co-founded by Erik Prince in collaboration with the Chinese state conglomerate China CITIC Bank. However, as tensions between China and the United States intensified, the prominence of the Blackwater-inspired model within Frontier Services Group and the broader Chinese private security sector started to decline. In April 2021, Prince stepped down from his position as the executive director and deputy chairman of the company. As of now, Frontier Services Group is under the leadership of Li Xiaopeng, former director of one of the prominent Chinese private security companies, Dewei International Security Limited, which was recently acquired by Frontier Services Group.

    Before Prigozhin’s untimely death, Chinese security companies had begun to consider partnerships with Russian private military companies. They were drawn to three key advantages offered by providers like Moran: experienced contractors with proven track record in battle, no apparent Western connections that could compromise the confidentiality of state-owned enterprises, and competitive pricing.

    Yet there were always bound to be complications. Fundamentally, the Belt and Road initiative demands stability while the Wagner Group thrives in chaos. This poses a paradoxical challenge for Beijing and Moscow’s 'no-limits friendship.’ The actions of unregulated and heavily armed Russian mercenaries in areas experiencing growing Chinese investments have become a murky aspect of the competition. In March 2023, the unresolved murder of nine Chinese miners in the Central African Republic raised suspicions about Russian mercenaries associated with the Wagner Group potentially staking their claim in the profitable gold mines. Despite having new leadership, the Wagner Group remains under the same client, the Kremlin, and continues to expand its influence into the Middle East and North Africa region, which overlaps with Chinese interests in natural resource exploitation. In this context, Russian propaganda touts the Wagner Group as offering the attractive prospect of 'armed stability' from Mali to Niger, but it remains to be seen whether the group’s claims about their efficiency in counter-terrorist operations are accurate.

    All this is taking place at a time when the power dynamic has shifted in favor of Beijing. Moscow cannot match China’s economic expansion, but the deployment of mercenaries and private military companies as geopolitical placeholders in uncertain times helps Russia gain the confidence of military leaders in regions susceptible to military coups.

    Meanwhile, the pandemic accelerated the Chinese security sector’s consolidation, reducing the mid-size Chinese private security companies’ avenues for profit and forcing mergers, hostile acquisitions, or even bankruptcy among hundreds of companies. At the same time, COVID-19 not only created a huge business disruption overseas but also added additional services that the private security companies had to perform at home. Lastly, the automation of security functions using facial recognition and AI for crowd control has significantly reduced the need for a large number of security personnel. This has both limited the demand for local security guards and opened up opportunities for Chinese private security companies operating abroad to export advanced surveillance technologies.

    During the pandemic, the limitations on international travel constrained new deals and reduced the scale of ongoing Belt and Road initiative projects. Therefore, proper security solutions were the first to be hacked down by the Chinese state-owned enterprises’ cost-reduction programs. Also, the pandemic severely limited in-person meetings and the under-the-table corruption that surrounds the expansion of small semi-legal Chinese private security companies abroad. A manager working for a prominent Chinese private security company mentioned that several small Chinese private security companies that used to maintain their international client portfolio by bribing their way out of problems were in dire need of face-to-face meetings: 'Giving red envelopes [cash] to smooth new deals and acquire local licenses and permits is not going to be easy on Zoom.'

    Policy Dilemmas

    Now, amidst rising violence overseas and industry disruptions at home, it will be harder for the Chinese private security sector to continue keeping a low profile. This, in turn, is forcing the Chinese government to confront a fundamental question: How can it safeguard its global interests without outsourcing the use of force security to entities resembling Wagner or fully privatizing security firms along the Blackwater model? In my upcoming book Money for Mayhem I explore how the Chinese academic community views private security companies as a proper solution for minimizing political tensions with host governments, particularly in nations scarred by colonial history and armed conflicts.

    Over the recent decades, Beijing’s ability to project its image as a developing country rather than a former colonial power while still benefitting from the US security umbrella has shielded Chinese workers and investments. However, the present starkly contrasts this facade as Beijing finds itself entangled in the complex web of security challenges.

    While noninterference is a constant feature of China’s foreign policy, it is increasingly up for debate as China aspires to a greater role in the international order. So far, Beijing is opting for a pragmatic approach: slowly departing from noninterference when a specific opportunity arises. In the 'New Era of International Relations Not Defined by the US,' the increasingly complex and fluid environment benefits Beijing’s privatization of the monopoly of security services abroad. However, the rising violence and uncertainty are not providing the necessary time for the Chinese private security sector to prepare for new threats.

    From a legal perspective, some Chinese scholars emphatically assert that government-mandated military operations should not be delegated to external parties. Within this context, Chinese scholars pinpoint a crucial contradiction originating from the practices of the United States and the United Kingdom, which have outsourced numerous military functions since the Iraq and Afghanistan wars. This outsourcing, they contend, carries a substantial risk of triggering widespread human rights violations. Consequently, the majority of the scholars strongly recommend that the development of Chinese private security sector policies should adhere to the guidelines of the Chinese central government, in alignment with the U.N. mandate on the obligations of contracting parties and the responsibility to abstain from delegating 'inherent' governmental functions.

    The critiques put forth by Chinese researchers on the state of the national private security sector can be summarized in four points. First, within the realm of domestic law, regulations have been steadily evolving since the enactment of the primary legislation on private security companies. However, the legal framework for the establishment and qualifications of security companies operating abroad remains uncertain. While regulations for enterprises engaging in overseas business have improved in areas such as financial requirements, human resources management, and state support, the security sector has lagged behind in this regard.

    The second critique pertains to the Belt and Road initiative, highlighting the absence of a streamlined process, often referred to as a 'one-stop shop,' for acquiring essential operational information. Various ministries and government departments, from the Ministry of Foreign Affairs to public security, have overlapping administrative regulations concerning the expansion of private security companies in overseas markets. While there is a clear recognition of the need to protect China’s overseas interests in the face of escalating security challenges, the establishment of a cohesive regulatory framework remains uncertain.

    The third critique addresses the expertise gap between Chinese private security companies and their international counterparts. Chinese personnel, particularly retired military personnel, often lack the experience to handle unforeseen crises in foreign territories and may struggle with communication in English or local languages. Additionally, they are deficient in risk prevention and risk management capabilities. To address these deficiencies, Chinese private security companies need to cultivate talent capable of effectively communicating and collaborating with foreign law enforcement agencies, participating in overseas security operations, and managing outsourced resources.

    As for the fourth point, researchers concur that Chinese private security companies operating abroad must rigorously adhere to the laws of the host country and relevant international legal norms. They are urged to present the Belt and Road initiative in a positive light, promote China’s image, and leave a favorable impression in the host country to earn the trust and recognition of the local population. Furthermore, the industry should actively develop overseas security products that leverage China’s rapid technological development and production capabilities.

    What’s Next

    Three developments during Xi presidency are likely to lead to more Chinese private security companies venturing overseas: the ongoing preference for state-owned enterprises, the acceleration of civil-military integration, and an increase of violent attacks against Chinese individuals and infrastructure abroad. Safeguarding Chinese ports and vital sea communication routes, collecting critical local intelligence, and deploying personnel for non-combatant evacuation operations are just a few of the strategic offerings within the future arsenal of Chinese private security companies. Given China’s growing global economic and diplomatic engagement, the Chinese government will increasingly rely on private security companies, whatever its reservations. Beijing clearly does not want to replicate the Russian experience, but it remains to be seen how effectively it can keep control over this growing industry".

    Caliber.Az

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