China in Africa

All data are collected in the Fiscal Year of 2008-2009.

6. The Role of Chinese Institutions in the Acquisition of Business Intelligence

A discussion on China’s business entry into the African continent is incomplete withouttaking into account the covert role played by that country’s intelligence organs in servingthe economic interests of the state. Unlike Western corporations which predominantlypursue strategic business decisions, independently of state intelligence structures, majorChinese companies enjoy a close interlock with the intelligence community throughappropriate channels of authority and individuals sitting in strategic management positions.

Part of the state’s national economic planning needs require a clear understanding of thestrategies, business and production plans, marketing strategies and pricing formulas ofglobal competitors. Given that Chinese companies work in tandem with the state’seconomic and developmental strategic plans, such information is a necessary requirementto ensure proper alignment of companies with the state’s economic objectives.

Consequently, linked to China’s growing energy and resource acquisition arrangementswith African countries and regional organisations has been its ever growing intelligenceoperations coinciding with an increasing presence of Chinese intelligence personnel on thecontinent. Leading the charge has been the Ministry of State Security or Guoanbu, thePLA’s Department of Military Intelligence (DMI) and the all-powerful Ministry of Commerce(MOFCOM - the defacto head of China’s economic and business intelligence gatheringand evaluation structure in the country. Whole sub-departments fall under these agenciesdealing with economic intelligence.

All negotiations with foreign governments and business entities are the subject of ongoingassessments by a number of PRC intelligence structures. The systemized collection ofeconomic information and the institutional memory of the Chinese state is thereforesteered, defended and maintained by the intelligence service apparatus directly andthrough its mandatory presence in all strategic organs of state. This includes mostsignificantly the oil, coal and steel sectors.

6.1. The Ministry of State Security

The National Security Ministry better known as the Ministry of State Security (MSS), is thecountry’s single most important strategic intelligence service, enjoying both an internal andexternal function. It works heavily in the industrial intelligence field as spy/counterspy/analyst/researcher/operative, through its Second Bureau, Eighth Bureau EconomicOffice, 10th Bureau of Science and Technology, and the infamous Technical Department(Jishubu), which spends a considerable resources on spying and monitoring foreignbusinessmen.

Guoanbu’s Director, Security Minister and master spy Geng Huishang, is an expert ineconomic/business/trade intelligence, protection and penetration of business secrets,patents, and also of American and European politico-military affairs.

The new PRC intelligence chief - General Huichang (on left).

The Guoanbu also specializes in determining the strategicenvironment in selected countries which may be the target ofChina’s commercial interests or the source of contractors workingon Chinese contracts, by scrutinizing decision-makers, statistics,media, and by the deployment of strong human intelligence(HUMINT) and signals intelligence (SIGINT) assets, whenever needed.

6.2. The Intelligence Role of Mofcom

The Ministry of Commerce (Mofcom) also plays a critical role and boasts some of theworld's top economic intelligence gathering units. While it is predominant with regards tothe government’s formal interface with foreign commercial interest groups, it also has subintelligenceunits dealing with economic information gathering. According to the Frenchpublication, Intelligence Online , MOFCOM works closely with the MSS, with key agentsfrom the latter assigned to ministry positions as special staff.

Their mission is to accompany China’s massive economic change on the world economicstage by such actions as gaining headway within the World Trade Organization (WTO),negotiating intellectual property agreements, hammering out trade strategy, acquiring newtechnologies and forming joint ventures with key overseas actors. [See Annexure III.]

Importantly, unlike other countries, the dividing line between state and private enterprise isdeliberately blurred, with individuals wearing many hats. A Chinese business leader mayhead a Chinese company with state share-holding. He may also report to MOFCOM andbe a member of the MSS or some other high ranking CCP official working in one of themultitude of research organisations or think-tanks.

To make things more complicated, the MSS also has “allocated” places in this unit, as asuitable cover for travelling abroad on economic missions, attending internationalconferences and complicated trade negotiations. Chinese “business delegations” areinvariably filled with MSS/MOFCOM operatives to provide background intelligence andsum up opposition negotiating positions and provide relevant advice to business officials.This was certainly the case when Chinese oil executives were looking into investing in SaoTome’s offshore oil sector back in 2003/2004 in conjunction with Nigerian oil interests.

This constitutes a major challenge to foreign companies when dealing with Chinesebusinessmen generally, namely which “hat” is being worn. Is it a business, party official,ministry or security/intelligence label? Similarly discussions with MOFCOMrepresentatives are fundamentally problematic in that they invariably have intelligenceconnections to China’s state security services.

MOFCOM draws its information from in-house commerce ministry services such as theDepartment of International Trade and Economic Affairs overseen by Assistant CommerceMinister Yi Xiaozhun and headed by the director Sun Yuanjiang, as well as from a host ofthink tanks and institutes, which have sprung up over the past decade. Among them arethe Foreign Trade Research Institute, the National Economic Research Institute of Beijingand the Shanghai Economic Research Institute.

MOFCOM’s intelligence experts also work hand in glove with the counter-intelligence unitof the MSS (Guoanbu) ministry, and in particular with its Department 17 run by TianGengren, as well as with the "Enterprises" office founded in 2000 by Chen Quansheiig.

Some of MOFCOM’s economic, business and financial information is processed by theChinese Communist Party's United Front Work Department (UFWD). The UFWD's 5thBureau was set up by Hu Deping, son of former leader Hu Yaobang, who is also directorof the Chinese Private Economy Research Society.

In the African environment, MOFCOM is increasingly supplying Chinese companies withinformation relating to trade and investment opportunities in Africa. The economic andcommercial sections of Chinese embassies in Africa are also now more active in collectinginformation to be passed on to Chinese companies. Known as Economic and CommercialCounselor’s Offices (ECCO), they normally have well-maintained Web sites reporting localprojects with Chinese involvement, and are in close contact with events on the ground.

Additionally, Chinese intelligence agencies and related advanced technology commercialorganisations are often linked together through "guanxi" (pronounced "gwan-shee") socialrelationships and connections (i.e. insider knowledge needed for bureaucratic approvals,finding the right person for the job, tips on new opportunities, etc.). Such guanxi networksare a fundamental component of modern Chinese intelligence operations and are alsorelated to the "united front" approach.

A related concept is hui guan, or a place association for those who originated in a commoncounty or village. As the old Chinese saying goes, "one’s body might be in a foreign land,but his heart is back in the motherland" (shen zai caoying xin zai han). This has farreaching implications when understanding the role played by Chinese expatriates abroadwhich act as a reservoir for intelligence gathering, local networking and influencingoperations. [See below.]

Importantly, the united front approach is reinforced by business, personal, family andfactional linkages that often transcend the formal chain-of-command. These unofficialrelations reinforce the integrated nature of China’s decision-making institutions. Unliketheir Western counterparts, Chinese institutions are informally more integrated.

6.3. The MSS in Africa

Countries that have undergone an expansion in Chinese security personnel includeAngola (to assist China’s entry into the country’s energy sector and open back-channels toSao Tome Principe); Guinea Bissau (to monitor Taiwan’s relations with Gambia); Senegal(to monitor Taiwanese activities in Dakar before Senegal switched sides in October 2005),Niger (to monitor Taiwan’s relations with Burkino Faso and the movement of Islamicmilitants possibly linked to the Uighurs from Xinjiang Province); Nigeria (to satisfy China’sexpanding strategic interest in energy resources and new markets); Sudan (which until therecent peace accords, was used to monitor and provide tactical information of rebelmovements across the country, as well as developments in Darfur); Egypt and Algeria (tomonitor the movement of Chinese Islamists [Turkestani Uighurs] across North Africa);South Africa (given its strategic locality and importance in the developing world); andMozambique (given its strategic location on the Indian Ocean and its proximity to Taiwansupported Swaziland).

Higher concentrations of MSS personnel have been a recurring pattern wherever Chineseoil companies make new investment forays into unchartered territory. Some of thehighest concentrations of MSS personnel in Africa are found in Egypt, Sudan, NigeriaAngola and South Africa. Of the five, only South Africa and to a lesser extent Egypt is notrelated directly to oil investments. The increase in MSS’s presence in Luanda and Nigeriawas geared not just at assisting with Beijing’s growing involvement with the local oilindustry but also due to their proximity to Taiwan’s African allies i.e. Liberia (beforeswitching diplomatic relations in October 2003), Gambia, Burkina Faso and STP. Sudanbecame the primary launch pad for Beijing’s foray into Chad when the latter enjoyeddiplomatic relations with Taiwan prior to 2006.

Over the past three to four years, the most successful MSS operations have been inSenegal and Chad, where it played a crucial role pre-positioning Chinese oil companies inthe latter, and opening channels to the ruling parties that paved the way for the switch indiplomatic relations from Taipei to Beijing.

Importantly meetings between MSS/Chinese diplomatic officials and their Chadiancounterparts often took place outside the target countries to evade detection by Taiwan’ssecurity services. The Chinese diplomatic Corp at the United nations (UN) played apivotal role in this respect.

6.3.1. The Role of Local Embassies

Most PRC embassies in Africa have MSS sections embedded in them, and in someinstances ambassadors or charges’ are themselves reported to be senior MSS officers (forexample Guinea Bissau and Liberia).

The PRC embassy in Pretoria, for example, is very active in collecting information on theSouth African economy, while another key processing conduit of economic intelligence inthe region is the Chinese embassy in Maputo. They also make numerous requests forspecific information on economic opportunities in South Africa and for meetings with SouthAfrican business leaders.

In Harare, members of the MSS detachment were activated in late 2005 to draw up anassessment of growing anti-Chinese sentiment building up in the region over cheapChinese imports. The MSS suggested in its memo a number of possible solutions togrowing opposition to Chinese exports:

  • Pledging funds for local development, taken from profits generated by the sale of Chinese products in African countries.
  • The continued or renewed support for trade union, farmer and shopkeeper associations in Africa, including invitations for job training programmes, seminars, etc.
  • Holding specific seminars for business/economic journalists to promote the Chinese case.
  • Promising funds to develop African sectors feeling most threatened by the "Chinese invasion".

West Africa has also become a particularly active region for Chinese intelligence activities.The PRC embassy in Nigeria has been reinforced with additional MSS intelligencepersonnel, on several occasions in the past few years. The mission serves now as C3I forintelligence activity towards STP, US interests in the area, as well as the movement ofTaiwanese operatives and businessmen in Nigeria and Gabon.

Other PRC missions that have been reinforced by additional personnel are the embassiesin Bissau and Guinea Conakry, to monitor developments in Senegal and Gambia. Theformer Chinese ambassador to Guinea Bissau and current Ambassador to Mozambique,Tian Guangfen, has been identified by French intelligence (DGSE) as a senior MSSoperative.

According to sources in the region, the PRC at one stage had as many as 30 specialistMSS agents inside Liberia alone, in the lead up to the presidential elections in October2005 to detect any possible financial assistance Taiwan might have been rendering toLiberian presidential candidates.

China has also been closely monitoring the situation in Cote d’Ivoire as well as theactivities of the Burkina Faso government that is seen to be destabilizing Chinese allies inthe region such as Abidjan and Mali.

Intelligence assets, though usually attached to Chinese embassies, are also found inChinese companies, especially media organisations; so-called fraternal Chineseassociations and China’s ever-growing number of peace-keeping forces on the continent.Here media outlets such as the New China (Xinhua) news agency plays an important rolein this regard with journalists acting as information conduits back to Beijing on a multitudeof issues of interest to Chinese leaders. Assets in the Chinese expatriate communitiesalso play a vital role and liaise closely with embassy personnel. .

6.3.2. The Acquisition of Business Intelligence

Business intelligence plays a vital role in guiding China’s energy resource acquisitionprogramme. Not surprisingly, Chinese intelligence services are closely linked to majorChinese companies. These include Baosteel, CITIC, CNPC, the PLA aligned ChinaOverseas Shipping Corporation (COSCO), involved in the shipment of raw materials toChina; Huawei, ZTE, Merry Glory, Semi-tech, ZMC, etc; and use these companies tocollect precious intelligence. This is also relayed via the State Body for Science andTechnology (SSTC). Chinese companies are also used as cover for the infiltration ofChinese intelligence assets into targets countries masquerading as employees of thesecompanies. It also provides them with a cover to understand the local environment andinterface with local decision-makers to strengthen Chinese political institutions in theirdiplomatic offensives in such countries. In this respect Chad was a classic example ofhow Chinese oil companies were in fact the vanguard or the conduits of China’s unofficialeconomic and political engagements with the opposite political numbers in Chad,notwithstanding the latter’s political relations with Taiwan pre-2006.

That China is targeting foreign competitors in the energy and natural resources sectorshas been lent credence by reports received that Chinese intelligence officials had beengathering information on De Beers Diamonds during the course of 2005 doing explorationwork in the Central African Republic (CAR), on behalf of another foreign company in thearea.

The line of investigation included enquiries made by the Chinese embassy in Bangui forCVs and background information on in country geologists and managers working DeBeers. Sources in the country state that this line of enquiry was known to the Chineseambassador to Bangui, He Siji. The same Chinese official also tried to obtain certainagreements signed between the CAR government and the prospective mining company.

This once again highlights the symbiotic relationship that exists between Chinese companies, MOFCOM and China’s state intelligence apparatus.

The private enquiries that were being conducted by MSS elements in the embassy were reporting directly to a "working group" under one of the company’s managers.

6.4. The Role of the Chinese Expatriate Community

The Chinese expatriate community in Africa plays a crucial support role in China’sengagement with the continent. Chinese intelligence utilizes the services of Chineseimmigrants in foreign countries to gather intelligence. A broad range of professionals,experts, students, businessmen, and others with well-established local contacts in aforeign country can be utilized as information conduits by Chinese intelligence agencies.

Just how many Chinese are in Africa is unknown. Figures range from 500 000 to onemillion. In 2004, South Africa’s Department of Foreign Affairs (DFA) estimated that theremay be as many as 250 000 illegal Chinese immigrants in South Africa alone. Largenumbers of Chinese businessmen have come to South Africa legally over the last fewyears and established businesses. The concentration of Chinese businesses in the BrumaLake area of Johannesburg, for example, is run by a number of Chinese businessmen whoare in South Africa legally. However, many Chinese businesses in the rural areas are nowrun and staffed by illegal Chinese immigrants.

The DFA has become increasingly frustrated by this problem and by the PRC embassy’srefusal to take responsibility for illegal Chinese immigrants in South Africa. The PRCEmbassy continually maintains that these individuals entered South Africa on their ownaccord to conduct legal business and are not the responsibility of the Chinese government.The PRC Embassy also argues that Chinese immigrants in South Africa should beconsidered a positive factor, as they set up new businesses and “create jobs.” However,DFA argues that any new jobs created are only for the Chinese businessmen themselves,their family members or other Chinese persons in South Africa.

The Chinese are prevalent in a number of other countries in Africa. In Angola, theChinese population in Luanda alone is estimated in the region of 80 000 to 100 000. TheChinese embassy in Mauritius estimates that there are 30 000 Chinese expatriates on thistiny island. Government officials in the Ministry of Foreign Trade in Sudan estimate thatthere are over 16 000 Chinese residents in Khartoum alone with another largeconcentration in Port Sudan. Nigeria has a large Chinese expatriate community which isactive in local economic associations.

Given the nature of the Chinese Communist Party (CCP) and the social dynamics whichlink Chinese communities together – they offer significant platforms of influence in theirrespective countries of abode. This is due to:

  • There reluctance to assimilate with locals
  • Their loyalty and dependency on China
  • Family members who are left behind
  • The political connections of the communist party whose influence extends far into the reaches of Chinese civil society
  • The debt of gratitude they owe the Chinese government for letting them pursue their business interests overseas
  • There vulnerability to threats of blackmail, extortion and intimidation against their family members left behind in China should they not be willing to serve the state.

Thus they become a source of information on local business conditions that is fed back tothe Chinese government. As one US intelligence official explained: “Wherever there is aChinese community, the CCP is going to try and infiltrate, if they haven't done so already”.

Local Chinese expatriates are also active in local Chinese business associations and socalledfriendship associations to a) leverage Chinese influence in such countries, b)undermine Taiwan’s economic influence in Africa and c) provide a source of information onlocal economic and business developments. These friendship associations promoteconstant contacts with the PRC, through trips, seminars or "good will" visits of African andChinese dignitaries.

Some of these organizations include the following:

  • Association for Peaceful Reunification of China (Wang Kebin)
  • China Council for Peaceful Reunification (Wang Chengyu)
  • Taiwan Straits Peaceful Reunification Association (Liang Su Yung)
  • All China Overseas Chinese Federation (Li Zupei)
  • The African-Asian Society (Patron Essop Pahad – former Minister in the South African President’s Office)

One of the main driving forces behind this “active measures” effort has been the All AfricaCouncil for the Promotion of Peaceful Reunification of China (AACPPRC) initially based inSouth Africa and headed by Donald Wong from Gauteng, the ex-head of the TransvaalChinese Association, who is said to have been close to former Chinese vice premier QianQichen.

The “peaceful reunification of China” strategy first emerged at the AACPPRC’s 7thplenary session that took place in Johannesburg on 19 January 2004. The Johannesburgsession was presided over by two veteran Chinese heavyweights: Vice-President of thestate run Association of Chinese Friendship, Li Zupei (ex-ambassador to Ghana), andpolitical party veteran Liang Su-Yung, head of TSPRA and ex-parliamentary speaker.

Donald Wong, the head of the Transvaal Chinese Association (and previous head of theGauteng Chinese Association), took charge of the preparations and logistics, and statedthat even when Chinese people no longer speak their languages, they know where theycame from, and where “their heart belongs”.

Then PRC ambassador to South Africa, Liu Guijin (now Special Chinese Envoy forSudan), was also present at this meeting, as were Wang Kebin, head of the AfricanAssociation of Peaceful Re-Unification, reportedly a senior MSS officer; Zhang Manxin,head of the European section; and Tang Shubei, who supposedly heads a group thatdeals directly on the question of Taiwanese “sympathisers”.

Other institutions present were the Office of Overseas Chinese Affairs (under the StateCouncil), the Chinese People’s Association for Friendship with Foreign Countries, the“Youth Federation”, the Taiwan Democratic Self-Government League, and members fromthe Taiwan Affairs Office of the CCP (long time headed by Chen Yunlin, Li Bingcai andTang Shubei).

6.4.1 The Nigerian Connection

Then come the regional groupings. One of the most influential ones is the West AfricaCouncil for the Promotion of Peaceful Reunification of China (WACPPRC), founded inLagos on 8 July 2004 and headed by Hong Kong based businessmen Cha Jimin. Itsupposedly gathers national councils involving all the West African countries. The Lagosmeeting on 8 July involved some 200 delegates and invited guests.

Addressing the meeting, Cha Jimin said that the establishment of the WACPPRC "is abridge linking the Chinese people in west Africa and other parts of the world to strengthenfriendship between them and further expand exchanges in the fields of economy, trade,sciences and technology and culture."

In his address to the meeting, Wang Changyu, deputy secretary general of the ChinaCouncil for the Promotion of Peaceful National Reunification, said the establishment of theWACPPRC "will surely play an important role in enhancing unity and great union amongthe Chinese people and carry forward the global movement to oppose the 'independenceof Taiwan' and promote the peaceful reunification of China."

Local managers of Chinese multi-national firms were appointed as "chapter heads" of suchregional entities. This is the case of electronics enterprises like Xeon (important inNigeria), ZTE or Huawei, banks or general trade firms.

Finally, there are the national and local councils and chapters of this greatersuperstructure, corresponding to countries and provinces. The most active on thecontinent is the Nigerian China Friendship Association (NICAF) headed by VN Chibundu.Such friendship societies serve multiple roles:

  • Targeted influencing of local politicians and businessman
  • Political and economic intelligence gathering
  • Chinese cultural indoctrination programmes.

Importantly, most of these groupings are directly linked to PRC intelligence officers(specifically MSS), in order to detect Taipei’s diplomatic and economic movements on thecontinent and to promote intelligence gathering – within wider circles many times byinvoluntary sources - among larger crowds of residents, nationals or expatriates. Therehave also been reports that Chinese nationals have been encouraged to organise themselves into informal intelligence organisations to serve Chinese interests.

To date about 170 similar chapter organizations have been established in more than 80countries and regions to promote peaceful reunification of the Chinese mainland andTaiwan.