In order of growing its economic interests, China is increasingly turning to unregulated security companies.
The analysis by the Washington-based non-profit C4ADS found that 24 of the 49 foreign private security companies in Cambodia and Myanmar were owned by Chinese nationals as Beijing encourages the use of these firms to protect the increasing number of Chinese businesses and tourists.
This includes the Zhongbao Huaan Group, which runs security for the Sihanoukville special economic zone on the Cambodian coast, a development that Beijing regards as its landmark belt and road project in the country.
“By providing support to state security forces and aid in times of health crises, Chinese private security companies are increasing China’s soft power in Mekong countries,” the report said. “They also down the line, could serve as vectors of hard power.”
Beijing’s efforts to cultivate a private security industry for the growing number of businesses and nationals in Mekong countries – Laos, Cambodia, Vietnam, Thailand and Myanmar – means the state or military do not have to get involved.
But while the companies can provide important services in the areas, it also raises concerns about them operating in a legal grey area or the potential reputational costs to China as some of its projects face a backlash in the countries affected.
C4ADS said that the companies are “poorly accounted for in most legal frameworks”, adding that they were reported to have clashed with local police in Cambodia.
It warned that the private security companies (PSCs) – primarily run by ex-policeman and military veterans – can also attract figures such as Wan Kuok Koi, a former Macau triad leader known as Broken Tooth
who established his own security venture, Hongmen Security Company, in 2018, and has invested in projects such as the Shwe Kokko special economic zone in Myanmar.
Even if many of the other security companies are “dependable conduits of geopolitical influence” for China, individuals like Wan – who was hit by US Magnitsky sanctions for corrupt activities in the region– could highlight potential reputational liabilities as well, it said.
“There is nothing inherently dangerous about a PSC run by an ex-Chinese police officer partnering with a local company to secure Chinese investments in an EDZ,”.
“But the PSC industry also provides cover for people with ties to organised crime, like Wan, to run armed companies in a host country, and can thus introduce broader geopolitical risks for the host countries. Without adequate regulation, PSCs may bring more risk than they do security.”
In recent years, Chinese influence in the region has ramped up along with its investments there, particularly in critically needed infrastructure projects under the Belt and Road Initiatives.
But critics have criticised Beijing for holding back the Mekong’s water flow at a hydropower dam while the countries downstream experienced severe droughts, and for disrupting fisheries and communities along the waterway that provides a lifeline for some 60 million people.
China is still the largest investor for key Mekong countries, providing 43 per cent of foreign direct investments in Cambodia valued at nearly US$3.6 billion before the pandemic in 2019, according to the country’s central bank.
Beijing has also sought to cultivate closer ties in the region by offering vaccine access during the pandemic and water control information for the Mekong River.