Investing in Chinese private security firms

The Chinese leaders are very much aware that the protection of the infrastructure built in foreign lands as part of the gigantic Belt and Road Initiative will be a major issue. Such infrastructure will face a variety of menaces. They also know they can’t exclusively count on each participating country’s security apparatus. It’s a fact they will increase the security cooperation with the States concerned. We will see in the next few years a serious push in the area of bilateral security cooperation. State to State cooperation, the official side of the matter, will be competing with the security assistance coming from Western countries. It will become a new front of tension as well.

However, the Beijing leaders do not consider that form of cooperation as enough. Consequently, and without any fanfare, they have opened a new door in their domestic economic edifice. We are now witnessing a rapid expansion of the private security firms in China. This is a fast-growing sector of the economy.

My sources tell me that there are already more than 4,000 Chinese companies ready to operate overseas and protect their country’s investments. In addition, the industry related to the production of security gadgets for the use by private companies is also expanding fast. It is a high-tech sector of the economy. We should have no illusions about that. Two weeks ago, in Kunming, the capital of the Yunnan Province, an area that borders Myanmar, Laos and Vietnam, a beautiful region for that matter, there was a major exhibition of Chinese-produced security items. Without going into the details, the show was a major eye-opener. One could see the Chinese are far more advanced in that industry than what we can guess.

Japan and the EU, on the same side

I am not sure that Friday afternoon is a good time for great political moves. At least, from the perspective of public information and support. The weekend is around the corner and the media tend to go slow. If they mention the action, it will be in a lazy line that gets lost fast. On Monday, it is already an old story. And it would have been overtaken by events happening during the weekly break.

The deal signed on Friday between the President of the European Commission and the Prime Minister of Japan seems to have fallen into this trap. Jean-Claude Juncker and Shinzo Abe put their signature of approval on an ambitious agreement that will see both sides cooperating in different parts of the developing world, including in the Balkans and other countries of Europe outside the EU, to build infrastructure and promoting digital industries. A lot of emphasis will be placed on thorough development projects, sustainability, transparency, national ownership and partnerships with the recipient countries and the appropriate multilateral organisations.

They called it a connectivity partnership between the EU and Japan. It can work, if we consider these are two of the largest economies. Together, they represent over 23 trillion US dollars of GDP, which is larger than the US ($21 trillion). And much bigger than China (USD 9.2 trillion).

The point is about politics. Both sides must make this cooperation a priority when dealing with developing nations. And they will be competing with China’s offer, the fast-moving Belt and Road Initiative. That will not be an easy competition. The Chinese leadership are deeply invested in the Initiative. To compete, the Europeans and the Japanese have no choice but to insist on projects that have the support of the populations – not just of the political leaders in the concerned countries – and are financially sound and proper. These are no technical or money matters. They are about strategic political engagements.