Xi’s Watching You: Inside China’s Corporate Spy Network

The arrest a year ago of Sam Pa provided a rare glimpse into China’s commercial intelligence operations.

Through his long-nurtured network across Africa, Sam Pa – one of many pseudonyms adopted by the entrepreneur – collaborated with elites and Chinese businesses to plunder the resources of countries from Guinea to Zimbabwe. One deal supplied Robert Mugabe with vehicles for his secret police and $100 million in cash in exchange for diamonds from the Marange field, notorious for human rights abuses.

Last October, Sam Pa was arrested in connection with a corruption case centered around the Chinese state oil company Sinopec – another victim of President Xi’s anti-corruption drive. Yet Beijing’s shady dealings continue. Chinese intelligence services are frequently fingered in cyber-attacks, along with old-fashioned bribery or burglary to capture information from US and other firms.

The Ministry for State Security is instrumental to such operations along with the Ministry of Commerce. A core role for MOFCOM is tracking valuable business and technology secrets. Thanks to so many Chinese companies being state owned, commercial networks offer a reliable source of information for intelligence agencies to tap into.

While the intelligence services have traditionally focused on internal matters – controlling restless communities hankering for autonomy or democracy – China has also always been interested in what other nations are up to. Beijing’s operatives in Africa date to the mid-1960s when China sought to encourage revolutionary movements in newly independent countries, playing a hand in conflicts like the long-running Angolan civil war.

But it’s South Africa that’s at the epicenter of modern-day intelligence gathering on the continent. The country is a hotbed of Chinese along with Israeli and Russian intelligence networks gleaning information from Sub-Saharan Africa’s economic hub, according to the Al-Jazeera Spycable papers. The leaks shed light on a break-in at South Africa’s Pelindaba nuclear research facility, which was absurdly blamed on common burglars and then more plausibly on terrorists. The secret cables eventually pointed to Chinese intelligence interests in the plant’s cutting-edge research into pebble bed modular technology. Pretoria, mindful of its increasing economic dependence on China, downplayed the incident.

Listening ear

Such activity raises anxieties about Chinese firms embedded in Africa, like Huawei and ZTE. The two companies are behind the construction of a great swath of global telecoms infrastructure. Their ingenuity in difficult terrains and conflict zones has won them many admirers. But the companies’ reach also gives Beijing, potentially at least, a listening ear across the continent. By inserting “backdoors” into the fiber optic networks, China is able to listen in to communications.

In reality, evidence of such activity is scant and difficult to prove. But America’s government isn’t giving Huawei the benefit of the doubt. It banned the firm from developing telecoms infrastructure in the US.

While Sam Pa was cut down to size because of his maverick nature and for drawing too much attention to himself, there’s little doubt that a year after his detention, the network he created is as strong and all-pervading as ever.

Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.