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.

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