China is increasingly trying to position itself as alternative to Western model of governance - SAB

RIGA - China is increasingly trying to position itself as an economic superpower and an alternative to the Western model of governance, the Latvian Constitution Protection Bureau (SAB) said in its annual report. 

To achieve this, Beijing is trying to improve its image in other countries and gain an economic and political influence or even dominance over them, SAB said.

Latvia, especially as a member of the European Union and NATO, is among the targets of China’s influence. Historical and ideological reasons make it relatively difficult for China to achieve a political influence in this region, so the main emphasis is placed on economic cooperation as a tool of influence. It has to be understood that any potential or existing cooperation with China poses significant risks. Although economic cooperation with China is beneficial, other goals might be hidden within it, endangering not only the parties involved, but also the national security.

SAB said in its report that to weaken competitors and strengthen its own position, Beijing is trying to increase economic domination over other countries and gain a wider and freer access of its companies to the EU market. China is expanding its economic influence abroad by investing in foreign companies and establishing its own companies. 

Investments in existing foreign companies give China a relatively easy access to the EU market, while offering financial benefits for the companies. However, cooperation with China can leave the company vulnerable by contributing to its financial dependence. In strategically important sectors (e.g., renewable energy, telecommunications, pharmaceuticals), this may also pose risks to the national security.

Lately, Beijing tends to establish new companies in the European Union, employing Chinese nationals instead of local residents. This gives China access to the EU market while maintaining a full control over the company’s operations, as Chinese nationals abroad are also subject to Beijing’s control. Lack of operational transparency in Chinese-founded companies creates security risks for the country in which the company operates, by making it difficult to control the company and putting China in an advantageous position.

To prevent an excessive economic dependence on China and its adverse influence in strategic sectors which would pose threats to the national or EU security, Chinese investments are examined both at the respective Member State and EU level. Still, companies themselves should also be critical of Chinese labor or investment, considering not only the expected benefits but also the potential risks. A short-term economic gain can turn into a long-term loss.

Potential threats must be carefully evaluated not only in business but also in academia. China often cooperates with universities, research institutes and think tanks in foreign countries, including Latvia. Both parties seem to benefit: Chinese students and researchers gain experience and knowledge and develop skills, and the knowledge they provide in turn contributes to the Latvian academic environment and research. But there is another side to this cooperation. 

Chinese nationals, even when abroad, are subject to state control, maintaining a regular contact or reporting back on their activities and impressions. Upon returning to China, they may also be forced to hand over the information and knowledge they have acquired, if it is regarded as potentially contributing to the Chinese security and prosperity. The risk is particularly high when cooperating with students who have been awarded a Chinese scholarship for studying abroad, as these students are often subject to various conditions, such as the obligation to work in the public administration for a certain period of time after their studies or maintain a contact with the Chinese Embassy to report on their activities. This is why cooperation and joint projects with Chinese nationals may prove risky, while jointly developed technologies and acquired knowledge – vulnerable. 

Potential partners should be especially cautious in areas related to China’s strategic interests, especially military and technological development. Over the recent years, Beijing has shown an increased interest and invested resources in the fields of biotechnology, artificial intelligence, quantum technology, green energy, etc. 

Competitiveness in these areas allows China to compete with other great powers and increase its economic and military capacity, or even dominate these sectors. The development of emerging and disruptive technologies provides a unique opportunity to gain an absolute advantage in a specific sector, establishing a new market and having control over it. This creates a dominance that is very difficult for other countries to catch up with or surpass. That is why we want to be mindful of working towards Latvia and its allies winning the technology race, instead of other actors, including China.

SAB reported, that people should be especially careful when cooperating with the Chinese while staying in China. State control over the public, including foreign nationals residing in China, is extremely extensive. It is necessary to realize all the ways in which a person may expose themselves to potential threats while staying in China.

There are general risks for any Latvian national or resident who chooses to travel to China. The Chinese authorities keep a close eye on the profile and purpose of travel for each person entering the country to identify people who could be useful for performing actions beneficial to China, e.g., promoting Chinese investments in Latvia and the EU or sharing useful information. These people can be contacted while in China, or the electronic devices brought with them can be used to obtain information. 

SAB said that any person with access to information of interest to China, such as people in influential political or economic positions, scientists and researchers, should be especially aware of this risk. Western entrepreneurs or media representatives are often invited to various seminars in China that are paid for by the hosts.

It is important to realize that these trips may include more than a friendly presentation of opportunities for potential cooperation, concealing targeted attempts to make contact with individuals whose knowledge, influence or access to information is attractive to China, SAB warned.