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WHO GUARDS THE ‘MARITIME SILK ROAD’?


JUNE 24, 2020

As China expands its global maritime interests, all eyes are on its navy. But Western policymakers concerned over China’s military capabilities and expanding geopolitical role are missing another security solution altogether: Chinese private maritime security companies. Little is known about them, though it appears that the few companies with a public web presence primarily operate across the Indo-Pacific, recruit Chinese military veterans and foreigners alike, and offer a range of armed and unarmed vessel protection services. The foreign companies traditionally dominating this industry, such as G4S, are reportedly losing some of their appeal, with Chinese companies that operate abroad in search of more affordable services and a better cultural fit. By offering services to protect what China calls the Maritime Silk Road, Chinese private maritime security companies stand to capitalize on business opportunities that are “on brand” with Chinese government interests.

But it is clear that this nascent industry within China is in need of greater regulation and professionalization in order to avoid potentially destabilizing conduct at sea, as well as reputational damage and diplomatic incidents for China. Chinese policymakers have already realized this with regards to their land-based private security companies, and some Chinese industry representatives are already calling for greater regulation and professionalization in the maritime space. It would be a mistake to view this as a matter of pure commercial interest. While there is currently no known link between Chinese private maritime security companies and the government, the strategic value of protecting Chinese commercial maritime interests is significant. If the protection of Maritime Silk Road projects and trade falls to private maritime security companies, this helps the government avoid conflating its Belt and Road Initiative — which, the government argues, is a strictly economic endeavor — with strategic military interests. It also helps free up navy resources. The question of who guards the Maritime Silk Road is therefore equally about who guards the rest of China’s interests.

 

 

Protecting the Maritime Silk Road: The Case for Chinese Private Maritime Security Companies

The number of Chinese citizens, investments, and assets overseas continues to increase as President Xi Jinping further develops his flagship Belt and Road Initiative, which is composed of hard and soft connectivity projects that span every continent as well as cyberspace and outer space. China’s Maritime Silk Road project, which centers around port construction, international shipping, ocean governance, and more, is part of the Belt and Road Initiative, but official documents say very little about the protection of relevant investments and persons at sea or on coasts. Against this background, various actors have come into greater focus as potential protectors of the Belt and Road Initiative.

Given that the primary geographic focus of the Maritime Silk Road covers vital sea lanes of communication across the Mediterranean, Indian Ocean and the Pacific, speculation has grown that this responsibility will primarily fall on the People’s Liberation Army Navy. This is a reasonable assumption. Since 2008, the Chinese navy has participated in United Nations-mandated anti-piracy patrols in the “high-risk area” for piracy in and around the Gulf of Aden and Somali waters. It is equipped to undertake a range of responsibilities, from responding to the hijacking of commercial vessels to non-combatant evacuation of citizens, such as from war-torn Yemen in 2015. Chinese policy guidelines also point toward a potential role for the Chinese navy in protecting aspects of the Belt and Road Initiative. Since Beijing’s 2013 white paper on the “Diversified Use of the Chinese Armed Forces,” successive national defense white papers have indicated that the Chinese navy would take an increasingly prominent role in maritime escorts and evacuations of overseas citizens.

Complete reliance on the Chinese navy may be difficult and expensive given the vast expanse of Chinese interests around the world. But Beijing continues to invest in modernizing and professionalizing its armed forces with the aim of creating a modernized force with regional power-projection capabilities by 2035 and a world-class military by 2049. If commercial interest protection could be left to private security companies, the Chinese navy would be able to focus on more traditional sovereign-rights protection and military diplomacy. Moreover, in light of heightened Western concern over China’s militarily assertiveness under President Xi, the Chinese government has been at pains to emphasize that the Belt and Road Initiative is an economic initiative that is not underpinned by a military strategy. Interweaving the Chinese military into the Belt and Road Initiative would cause further scrutiny of China’s actions that the country cannot currently afford in its attempt to build its image as a benevolent and responsible global power.

Alternative options to the Chinese navy, of course, exist. Scholars like Andrew Erickson have examined the role of a Chinese blended civil-military effort for maritime security. This “maritime militia” integrates civilian assets into China’s military system to strengthen national defense capabilities, as seen in the South China Sea. However, in incidents like the 2014 standoff between a Vietnamese fisheries inspection vessel and Chinese state-owned commercial vessels, China has relied not only on the maritime militia but also on significant support from the China Coast Guard, which now falls under direct military command from the Central Military Commission. It remains an open question whether China would employ maritime militia forces, used to operating in waters claimed by China with which its personnel are deeply familiar, in distant oceans. And, while China has the world’s largest coast guard fleet, with some global-operations capability, it is not yet able to offer consistent security support far from China.

Thirdly, the security forces of host governments, such as those used in the China-Pakistan Economic Corridor, have not been seen as successful by some Chinese companies operating overseas in protecting their projects and personnel from high-level security risk. Indeed, in the case of Pakistan, the limits of such local security arrangements were highlighted in February 2018 when the general manager of COSCO Shipping Lines in Pakistan was killed in an attack in the port city of Karachi, while a bus of Chinese miners was attacked in Baluchistan province not long after.

Finally, well-established Western private security companies are considered financially unaffordable for Chinese companies, with foreign security services proving so costly that it has impacted the profitability of some Chinese businesses. Therefore, Chinese private maritime security companies offer a potentially cost-effective service specifically tailored to local business and culture.

A Patriotic Chinese Security Service

Little is known about Chinese private maritime security companies as these companies have a limited public presence. It is clear that the Chinese private maritime security company industry seeks to offer a tailored service for Chinese business. So far, however, China’s total private security company industry is estimated to only account for one-tenth of total spending by Chinese companies on overseas protection.

One reason for this is that while the number of Chinese private maritime security companies is growing, there are relatively few industry leaders. Hua Xin Security Services is one of them, representing the first Chinese maritime security company approved by the Chinese state to operate overseas. Another is Zhongjun Junhong Security Group “Sea Guards”, whose CEO Wu Guohua has over recent years sought to professionalize China’s overseas security service industry and has helped establish the China Overseas Security Association. Other companies actively promoting their services include Hanwei International Security ServicesChina Security Technology Group, and DeWei Security Group. There are likely more, but these companies offer a glimpse into this growing industry.

These companies offer a range of services, from armed and unarmed escort services for merchant ships and fishing vessels passing through the Gulf of Aden and Somali waters, as well as further along the Maritime Silk Road, to risk mitigation plans for vessels, personnel safety training before dispatch, real-time tracking, and security consulting (for example, regional security risk assessments). Private maritime security companies primarily orient their services towards Chinese enterprises operating abroad, offering them a recognizable and trusted Chinese service. Companies note their dependability in protecting their clients’ trade secrets. Foreign, non-Chinese competitors might not be so inclined to support the national cause. Another example of this is China Security Technology Group’s specific mention of high-tech services, such as real-time target monitoring through its Beidou satellite central control roomBeidou, China’s national global positioning system, offers navigational services to countries along the Belt and Road Initiative’s corridor. Bolstered by patriotic language, the information available on these companies’ websites and in news articles builds a wider picture of an industry committed to protecting Chinese businesses, citizens, and Belt and Road Initiative-projects overseas.

The industry’s patriotism extends to the recruitment pool as well, with companies hiring across China’s state security enterprise, including the army, navy, and police service. While both Hua Xin and China Security Technology Group stress that some of their security personnel have participated in the Chinese navy’s escort missions in the Gulf of Aden, others clearly value recruiting more widely from the Chinese navy or maritime-related forces. The Zhongjun Junhong Security Group’s maritime “Sea Guard” branch is specifically staffed by former Chinese military officers from the special forces, amphibious reconnaissance forces, and marine corps. The China Security Technology Group notes that it also recruits from the naval special warfare brigade. Hua Xin goes further and notes that 80 percent of the security personnel are members of the Communist Party of China.

Not all staff, however, are Chinese and there are indications that Chinese private maritime security companies are internationalizing to a greater extent than initially believed. China Security Technology Group employs third-country nationals, specifically Ukrainian and Nepalese nationals, as security guards. In addition, both China Security Technology Group and its “Sea Dragons”  as well as Hua Xin have established local branches or joint ventures staffed by local employees. It is unclear, however, whether Chinese and foreign staff are given different responsibilities within companies.

Chinese Private Maritime Security Companies Go Global

So far, Hua Xin is the only Chinese private maritime security company that has officially obtained permission to conduct armed escort missions overseas with the blessing of the Sri Lankan government and the Chinese Embassy in Sri Lanka. It has since reportedly obtained licenses from the national authorities of Djibouti and Egypt to conduct the same services, with other reports noting that Hua Xin has similar “bases” in these countries. For Hua Xin, these licenses appear to be used for escorting transits through the high-risk area off the coast of Somalia.

But it is not the only one to operate globally. Piracy, various articles note, is a global phenomenon and takes place in the Gulf of Guinea, Sulu Sea, Straits of Malacca, and Venezuela, among other places. The “Sea Guards” echo this, offering armed escorts in the Indian Ocean and along Africa’s west coastChina Security Technology Group has established branches or subsidiaries in Pakistan, Sri Lanka, Kenya, Algeria, Iraq, and Angola. Likewise, Hanwei International has established subsidiaries and office branches in Laos, Sri Lanka, Pakistan, Iraq, Nigeria, South Africa, and Papua New Guinea to support oil drilling platform guard services in addition to land-based projects. The services offered appear to be tailored to their local context. The “Sea Guards” offer unarmed escorts in the South China Sea and Malacca Strait, where the Junhong Group has established strategic alliances with national government agencies and security peers across Southeast Asia.

While private maritime security companies clearly operate far from Chinese shores, it is less clear how they are doing so. More information is needed on the legislation under which these companies operate in foreign countries. Indeed, some Chinese commentators note that while Beijing encourages Chinese companies to “go global” through the Belt and Road Initiative, it offers insufficient support to the private security sector. According to one article in China Security, a magazine for the Chinese security-service industry sponsored by the China Security Association, industry representatives claim that the lack of national guidance and regulation, licenses for armed services, or training on relevant laws and industry standards limits the ability of Chinese security companies operating overseas to professionalize to the standards of their Western competitors.

China’s Inadequate Legal Framework

So far, China has sought to manage the domestic security market. According to 2009 State Council legislation on domestic security companies providing armed services in China, private security companies are entirely under the control of the Ministry of Public Security and at least 51 percent of total registered capital must be state-owned. But this gave private security companies a measure of legal ambiguity when operating overseas. Additional regulations restricted the provision of domestic armed private security services. Such legislation includes the 2002 Regulations on the Use of Guns by Full-Time Guards and Escorts Operating within China, the aforementioned State Council legislation, and measures published in 2010 concerning State-issued Chinese Security Service Licenses.

In 2015, the Chinese government’s Maritime Safety Administration issued basic administrative measures that require Chinese-flagged ships sailing abroad through the Western Indian Ocean, off the coast of Somalia, or other areas subject to piracy to apply for a private armed security guard escort certificate. While unspecified by the regulation, a 2017 academic article in the Journal of Social Sciences clarified that the measures sought to regulate the contracting of foreign armed escort services on Chinese ships. Indeed, China’s Ministry of Commerce in 2018 offered further clarification. It noted that Chinese private security companies operating overseas are bound to the local laws and regulations of the country in which they operate. It also underscored that Chinese security personnel operating overseas can only perform security management and internal security duties, and must not conduct armed escorting or carry firearms while guarding.

However, the guidance is not a sufficient substitute for clear Chinese legislation, particularly in the private maritime security sector. Companies are therefore likely unaware of or ignoring their legal requirements in order to operate abroad.

A Non-Binding International Landscape

The international regulatory landscape is not much better, though several initiatives are worth mentioning.

For companies present in armed conflict, the intergovernmental Montreux Document on Private Military and Security Companies sets out obligations under international humanitarian and human rights law.

In its efforts to help regulate this industry, the Baltic International Maritime Council’s GUARDCON offers a standard contract for employing armed private security personnel. Some Chinese private maritime security companies recognize this certification because — though imperfect and non-binding — it helps build their reputation as professional companies. Hua Xin is currently the only Chinese private maritime security company certified by the International Code of Conduct Association, which describes its mission as “promoting responsible private security.” However, both Hanwei and China Security Technology Group are members of the Association and thereby committed to becoming certified.

Room for Maneuver and Error

Although these non-binding frameworks are a start, Chinese private military companies could easily and unwittingly break laws or purposefully exploit grey areas and loopholes. This is potentially already happening.

One article published by experts from Zhejiang University’s Center for Non-Traditional Security and Peaceful Development Studies notes that the lack of national regulations for private security companies operating firearms abroad is a significant hurdle that limits the type of services that can be offered to companies operating in territories with complex security environments.

Despite this, Chinese companies are clearly providing armed services by finding alternative solutions. While Hua Xin does so openly with the approval of the Chinese government, companies like Hanwei note that they have managed weapons entry or disembarkation operations in the ports of 19 littoral states across the Indian Ocean region. Little information is available on which regulations and laws were met in doing so.

A 2017 article in Caijing Magazine notes that the Chinese government did not regulate Chinese security companies operating overseas. Instead, these firms were only required to obtain a license from the country in which they are located if required by local law. Other Chinese private security companies, according to the article, simply formed temporary teams abroad, therefore avoiding any registration in China, after winning a contract through personal relationships or competitive underpricing.

Local subcontracting units offer another avenue for armed services. According to a Financial Times article, Chinese private security companies believe they can “borrow” weapons in emergencies. Recently updated guidance from the Baltic International Maritime Council underscored that the use of rented or borrowed weapons is illegal, as weapons are usually licensed to the end user, suggesting that this too may be happening onboard ships in cases of emergencies or to save operating costs.

Equally, little is known about Chinese private security companies’ use of floating armories — effectively, weapons storage vessels that lease out weaponry to security firms when firearms cannot enter or exit ports. As floating armories are not subject to any national or international laws and regulations, they benefit from a lack of oversight in how they, and the companies that use them, operate. This offers potentially another grey area that Chinese private maritime security companies, like others, are exploiting.

Shortcuts to providing armed services undercut the security companies that adhere to relevant laws and have chosen to implement the various standards and guidelines. Companies looking to circumvent legal requirements or recognized standards also run the risk of armed personnel conducting themselves unprofessionally at sea. This race to the bottom of Chinese private security companies has already prompted Chinese calls for stronger domestic and international regulation.

A Rising Tide for China’s ‘Sea Dragons’?

While Chinese private maritime security companies clearly offer more international services, Chinese observers stress that the sector still faces many challenges ahead. As a 2020 China Africa Research Initiative Working Paper notes, Chinese private maritime security companies will have to professionalize their services in logistics planning, armed executive protection, and maritime security in hostile environments. With relatively limited experience operating overseas, Chinese security personnel typically lack the necessary linguistic skills and understanding of foreign cultures needed to carry out missions abroad and compete effectively with more established Western private maritime security companies.

Moreover, few veterans will have experience in active combat situations. For those who participated in Chinese navy escort missions in the Gulf of Aden, these will have been governed by different rules when compared to the services provided by civilian and commercial enterprises. Clear rules for the use of force are therefore critical. One Chinese source asserts that Chinese private maritime security company maritime bodyguards can use lethal weapons to defend themselves when they encounter pirates, while the Chinese navy can only respond with warning shots unless their ship is directly attacked. This leaves the use of lethal force up to the discretion of the individual holding the weapon. What the Chinese navy has actually done vis-à-vis pirates when far from foreign eyes out at sea remains murky, but there is no public evidence of assertive rules of engagement.

By failing to better regulate and professionalize its private maritime security industry, China risks reputational damage or diplomatic incidents when armed private security companies operate in unfamiliar territory and without the relevant skills. Furthermore, the maritime domain brings with it added complexity when compared to land-based operations of private security companies. A ship on which a private security company operates, for instance, navigates a complex patchwork of legislation from the ship’s flag state, the port and coastal states whose waters it traverses, and the country of registration of the private maritime security company. The geographical area of operation has also expanded beyond that of the internationally regulated “high-risk area” around the coast of Somalia, leaving space for Chinese private maritime security companies to operate in areas with less regulation and oversight. These challenges are substantial and won’t be overcome easily. This is acknowledged by Chinese industry representatives and research experts in their calls for better regulation in Chinese domestic law for this sector, and for China to join the international community in ensuring binding regulations.

But Beijing also stands to gain more than simply damage control. The scale of the Maritime Silk Road projects and the security services that will be required necessitates a move away from relying solely on unaffordable foreign competitors, local security services, or a dependence on a navy still developing its “blue water” capability. Furthermore, the government is already at pains to point out that the Belt and Road Initiative is not part of a military strategic objective. Chinese private maritime security companies can therefore potentially provide a culturally recognizable, but also patriotic, service to protecting national commercial interests overseas. While there is no indication yet that the Chinese state seeks to direct or influence the operations of Chinese private maritime security companies, this may not be entirely ruled out in the future. Nevertheless, by relying more on the private sector and Chinese military veterans to handle commercial interest protection also helps free up Chinese navy resources for other more urgent tasks.

Despite the significant hurdles ahead, Chinese private maritime security companies are unlikely to sail into the sunset any time soon. Global policymakers monitoring Chinese maritime security actors should take note and closely monitor this nascent industry. However, more needs to be done. There remains a need for globally binding regulation and greater standardization in this sector. As efforts so far suggest, this is not an easy task. In the interim, policymakers should work with the Chinese government and Chinese industry to share lessons learned and best practices on setting national standards for private maritime security companies operating abroad and for those operating on vessels registered in their own country. While determining such best practices will likewise not be straightforward, as previous research shows a great variety of approaches to such regulation, continued engagement on this matter would be in China’s interest. Potential reputational damage and diplomatic incidents involving Chinese private security companies will continue to exist as long as Chinese companies feel there is money to be made and they are at liberty to operate abroad with little oversight. Finally, the operations of Chinese private maritime security companies operating in countries overseas requires greater transparency. Working with partners around the world in examining whether and how private maritime security companies, including those from China, are operating within their borders allows for more targeted policymaking responses. Ultimately, greater regulation, understanding, and transparency of the Chinese private maritime security sector is in everyone’s interest.

 https://warontherocks.com/2020/06/who-guards-the-maritime-silk-road/

 

Veerle Nouwens is a research fellow in the International Security Studies department of the Royal United Services Institute, focusing on geopolitical relations in the Asia-Pacific region. Her research interests include China’s foreign policy, cross-strait relations, maritime security, and the Association of Southeast Asian Nations

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