The November 23 attack on the Chinese consulate in Karachi, Pakistan, is the latest sign that anti-Chinese sentiment may be taking root in countries that have received massive inflows of investment from China’s Belt and Road Initiative. USIP’s new Special Report provides an overview of the different security arrangements China is using to protect its overseas investments and workers, and examines how the Belt and Road Initiative is spurring the rapid growth of China’s domestic private security industry.

Summary

  • China’s Belt and Road Initiative—a large-scale connectivity project encompassing infrastructure, energy, and trade—has extended China’s economic presence throughout Eurasia and around the world. It has also posed new security challenges for Chinese companies operating abroad.
  • China employs three strategies in safeguarding its economic interests abroad. First, Chinese companies rely on a host country’s government for security needs. Second, Chinese companies hire local security firms. Third, Chinese companies employ a combination of Western and Chinese security firms.
  • The number of Chinese security companies is growing steadily. Still, only a handful of these companies operate abroad.
  • Although China’s security industry is privately operated, the Chinese government is heavily involved as both a corporate stakeholder and regulator.
  • Chinese private security firms are most active in high-risk Middle Eastern countries such as Iraq. However, these companies have not expanded their reach significantly in Southeast Asia, particularly in Laos and Indonesia, despite significant Chinese investment in projects in the region.
  • The Chinese government’s cautious approach to the development of the country’s private security industry stems from its wariness of paramilitary entities. Abroad, actions of rogue security contractors could jeopardize China’s overall investment plans and diplomatic standing. At home, unemployed security personnel, who are highly trained and organized, could pose a threat to social stability.
  • As China’s global economic influence expands, China’s private security industry can expect continued cautious encouragement from the government. However, if the Belt and Road Initiative falters, Beijing could put the brakes on the growth of the country’s private security industry to minimize potential challenges to the government.

About the Report

As more projects associated with China’s Belt and Road Initiative are launched in conflict-prone states, the need for security to protect Chinese workers and investments is increasing. This report focuses how Chinese private security firms are supplementing—and in some cases supplanting—local and Western security forces in protecting China’s economic interests abroad. Supported by the Asia Center at the United States Institute of Peace, the report is based on an extensive review of Chinese-language sources as well as interviews conducted in 2017 and 2018 with security company representatives, government officials, academic researchers, and knowledgeable members of the public in China and Eurasia.

About the Author

Zi Yang is a senior analyst in the China Program at the S. Rajaratnam School of International Studies at Nanyang Technological University, Singapore. His research interests include Chinese defense industry reforms, military mental health, and the information warfare capabilities of the People’s Liberation Army. His work has appeared in the Georgetown Security Studies Review, Norwich Review of International and Transnational Crime, Asia Times, and National Interest, among other publications.

Related Publications

China’s Role in North Korea Nuclear and Peace Negotiations

China’s Role in North Korea Nuclear and Peace Negotiations

Monday, May 6, 2019

By: USIP China-North Korea Senior Study Group

This is the second in the Senior Study Group (SSG) series of USIP reports examining China’s influence on conflicts around the world. A group of fifteen experts met from September to December 2018 to assess China’s interests and influence in bringing about a durable settlement of the North Korean nuclear crisis. This report provides recommendations for the United States to assume a more effective role in shaping the future of North Korea in light of China’s role and interests. Unless otherwise sourced, all observations and conclusions are those of SSG members.

Conflict Analysis & Prevention; Mediation, Negotiation & Dialogue

Where Does China’s Belt and Road Initiative Stand Six Years Later?

Where Does China’s Belt and Road Initiative Stand Six Years Later?

Thursday, April 25, 2019

By: Jennifer Staats

Few projects illustrate the risks of China’s Belt and Road Initiative (BRI) better than the Hambantota port in Sri Lanka. In 2017, unsustainable debt loads drove Colombo to give China a 99-year lease and controlling equity stake in the Hambantota port, while local communities protested the loss of sovereignty and international observers worried about China’s strategic intentions. The Hambantota case may be an outlier, but it has become a “canary in the coalmine,” and a warning sign to other BRI participants about what their future may hold. Increasingly, countries around the world are taking steps to reassert their influence over BRI projects—and Beijing has taken note.

Economics & Environment; Global Policy

China’s Engagement with Smaller South Asian Countries

China’s Engagement with Smaller South Asian Countries

Wednesday, April 10, 2019

By: Nilanthi Samaranayake

When the government of Sri Lanka struggled to repay loans used to build the Hambantota port, it agreed to lease the port back to China for 99 years. Some commentators have suggested that Sri Lanka, as well as other South Asian nations that have funded major infrastructure projects through China’s Belt and Road Initiative, are victims of “China’s debt-trap diplomacy.” This report finds that the reality is...

Economics & Environment

India-Pakistan Tensions Test China’s Relationships, Crisis Management Role

India-Pakistan Tensions Test China’s Relationships, Crisis Management Role

Thursday, March 7, 2019

By: Jacob Stokes; Jennifer Staats

The latest India-Pakistan crisis has put China in a difficult position, as it tries to balance its relationships with both countries, while helping to stave off a conflict and demonstrate its ability to manage and resolve crises. Chinese Foreign Minister Wang Yi spoke to leaders in both Pakistan and India last week, urging them to practice restraint and find a way to deescalate the situation. Despite Pakistan’s request for China to play a more active role, competing priorities constrained the degree to which Beijing could lead—highlighting a chronic challenge for Chinese diplomacy in South Asia. China’s decision to keep a low profile is likely deliberate and in keeping with longstanding practice, but it is inconsistent with Beijing’s aspirations to lead in Asian crisis diplomacy.

Conflict Analysis & Prevention; Mediation, Negotiation & Dialogue

View All Publications