June 21, 2024 MEMRI Daily Brief No. 610

What To Do Against The Economic Security Threats Posed By China

June 21, 2024 | By Andrew J. Masigan*
China | MEMRI Daily Brief No. 610

China has made no secret of its ambition to displace the United States as the world's predominant superpower and change the world order to one that reflects the values of the Chinese Communist Party. But unlike responsible nations who pursue their ambitions in peace, China has done so at the expense of others through its toolkit of bad behavior. Among its many rogue tactics is that of making economic security threats against nations with whom it is in competition and whom it wishes to undermine and/or nations it can use to gain a strategic advantage.

(Source: FBI)

Economic security threats are designed to undermine the stability, growth, and well-being of a targeted economy. It impairs its ability to manufacture, trade, and compete on a level playing field. These are the ways in which Chinese economic security threats are manifested:

Advanced technology theft. The joint intelligence bureaus of the United States, Canada, the United Kingdom, Australia, and New Zealand, collectively known as the Five Eyes, have made public China's advanced technology theft operations. These include technologies relating to artificial intelligence, aerospace, energy, and defense. One of the ways in which China steals technological secrets is through its army of spies strategically installed in private and public enterprises. The operations are widespread, spanning America, Asia, and Europe. A known case is that of a Chinese Ministry of State Security officer named Xu Yanjun, who was caught using "a range of techniques to attempt to steal technology and proprietary information" from the U.S. aerospace companies, including GE, Boeing, and Honeywell.[1]

Telecommunication sabotage and surveillance. Huawei accounts for over 30 percent of the global telecom equipment market. Over the years, it has installed 5G infrastructure in thousands of telecom domains around the world. This has given China the capability to conduct surveillance operations and/or disable communications if it has to.

Last March, New York-based cybersecurity firm SentinelLabs reported that a Beijing tech security firm hacked the servers of more than a dozen governments and infiltrated social media accounts and personal computers.

Tiktok is another means of surveillance for China. According to the U.S. Department of Justice, the ByteDance app is able to extract personal data from its users.

Controlling critical infrastructure through debt traps. By providing easy money to impoverished countries through its Belt and Road Initiative and official development assistance, China has gained control of critical infrastructure in strategic areas, including seaports, airports, and military bases.

Countries like Sri Lanka, Pakistan, and Djibouti have fallen victim to China's debt trap. As such, they were forced to cede control of valuable infrastructure for debts they could not pay.

Economic Coercion. Beijing uses trade to impose its will over certain countries or punish them for calling-out Chinese bad behavior. Recall how China imposed export restrictions on Australian coal, timber, wine, beef, and barley following Canberra's demand for an investigation on the origins of the Wuhan virus. This caused Australia $13.6 billion in forgone export revenues.

In the Philippines, Beijing punished Manila by banning banana imports for resisting Chinese incursions on its sovereign territories in the West Philippine Sea.

Investment and Acquisition of Strategic Assets. Chinese state-owned enterprises and private companies (with state backing) invests heavily in strategic sectors abroad such as energy, technology, and infrastructure. These investments give China control over critical industries with national security implications.

Supply chain disruption. There are 17 rare earth materials critical to manufacturing intelligent defense weapons such as precision-guided munitions, unmanned aerial vehicles, and autonomous underwater vehicles. They are also used to manufacture computers and smartphones. As it happens, China is the source country for 60 percent of the world's rare earth supply. It also controls 90 percent of rare earth processing. This has given China a virtual monopoly of this valuable commodity. China has since banned the trade of rare earth materials in the open market even if doing so defies provisions of the World Trade Organization.

Disinformation. China spends billions to push its narratives to a worldwide audience via traditional and social media. In certain countries, it has been proven that an elaborate disinformation network is in place composed of politicians, journalist, opinion makers, and influencers, all of whom are funded by Beijing.

Influence in International Organizations. China has sought to increase its influence in international organizations such as the World Trade Organization and the International Telecommunication Union. By shaping international rules and standards to its advantage, China can tilt the playing field in favor of its own economic and strategic interests.

While China remains the biggest trading partners of most countries, nations will do well to insulate themselves against economic security threats perpetuated by the Chinese. They can do so through supply chain resiliency and minimizing the dependence on China for critical commodities in favor of alternative suppliers or building local manufacturing capabilities. Relative strategic autonomy is key especially for basic goods like food, medicines, steel, cement and petrochemicals.

They can also: Diversify their export markets; mitigate Chinese control over strategic industries in the homeland; protect against cyber threats and security breaches by way of stronger legislation and strengthening controls on cybercrime; strengthen strategic alliances and partnerships with like-minded countries to combat unfair trade practices; more strictly enforce laws relating to treason; and make the private sector aware of the vulnerabilities of their economies as well as their trade rights.

Above all, governments must call out every instance of China's bad behavior in the international media and fora. Economic security threats have become a potent tool used by the Chinese Communist Party to undermine adversarial countries. Resistance, resilience, and reprisal are key to blunting these assaults.

*Andrew J. Masigan is the MEMRI China Media Studies Project Special Advisor. He is a Manila-based economist, businessman, and political columnist for The Philippine Star. Masigan's articles in MEMRI are also published in The Philippine Star.


[1], November 16, 2022.

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