NOT CLASSIFIED China Newsletter n.6– July 2021

Francesca Buratti – SACT China Subject Matter Expert

What is published in NATO SACT China Newsletters and Reports do not constitute the official position or policy of NATO or member governments. SACT publications on China seek to inform the community of interest and promote understanding of China's military and strategy. The views expressed by the author(s) are their own.

In this newsletter:

 The other great power threat – China as a new challenge for NATO’s Eastern flank – MERICS  Beijing Expanding Size and Role of Its ‘Private’ Military Companies in Central Asia, The Jamestown Foundation  What Will China Do If Its Interests in Africa Are Threatened, 1945  U.S. and allies accuse China of global hacking spree, Reuters  China is pushing Japan to take on a growing military role in Indo-Pacific, Financial Times  Chinese surveillance ship Tianwangxing one of many ways China ‘listening in’, News.com.Au

The other great power threat – China as a new challenge for NATO’s Eastern flank – MERICS

The People’s Republic of China represents a newcomer to the NATO’s Eastern flank. To the CEE countries – which lack direct experience with China as a great power and thus miss the knowledge that would help them decipher China’s strategy – the PRC’s recent entry into the region was originally regarded as yet another addition to a group of standard, non-problematic Asian economic partners, on par with Japan or South Korea. China represented a promising new investor and a possible export alternative to primarily West-bound economic orientation of the region. Central and Eastern European states were thus overwhelmingly enthusiastic when, in 2012, China established a format for mutual co-operation (originally 16+1, today the 17+1 initiative). The Chinese co-operation platform opened a direct communication channel with Beijing, something that the CEE countries were keen to use to their advantage. In the years to come, however, China proved to be a problematic partner indeed. On the diplomatic front, Beijing turned adamant when its “core interests” – such as the question of Taiwan’s de facto independence, Tibet, Xinjiang, the South China Sea disputes, the potential exclusion of Huawei from the 5G networks build-up or the issue of human rights abuses – came to the forefront. Despite the recent experience with Beijing, Central and Eastern Europe has not perceived China as a direct threat on the scale or intensity as Russia. Nevertheless, the region of Central and Eastern Europe feels insulated from direct manifestations of China’s growing military power and assertiveness, which have been much more visible to Beijing’s Asian neighbors. CEE countries also – in a rather realistic assessment – do not even consider themselves to be a primary target for China’s political and economic ambitions in Europe, which have concentrated largely (but not exclusively) on the Western part of the continent.

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Europe’s internal differences naturally hold implications for the possibility of forging a transatlantic strategic consensus towards Beijing. The European understanding of the threat posed by China still differs significantly from the US. For most Western European countries, China represents not just an economic competitor but also an important trade partner. On the other hand, for some Eastern and Southeastern European nations, the sensitiveness of China’s rising global presence has also been demonstrated through naval military exercises which China conducted in the Mediterranean and Atlantic in the vicinity of the Baltic states. These countries have also noticed, with increasing concern, Beijing’s deepening co-operation with Moscow. Hence, while missing a robust platform of historically shared interests vis-a-vis China, forging strategic unity within NATO out of growing security concerns may still be within reach. What should, then, be the role of Central and Eastern Europe in this new strategic endeavor? As a necessary minimum, CEE countries should implement or upgrade their investment screening mechanisms and support the expansion of the East StratCom Task Force to vigorously counter Chinese propaganda. or starters, though, the Alliance would certainly benefit from reiterating its status of not just a military alliance but also as a political organization. While these steps represent some progress for NATO’s shared perception of China, crucial obstacles against shaping a more robust consensus towards Beijing persist. First and foremost, not all European NATO members share the sentiment that China is a security threat. Moreover, the countries of Central and Eastern Europe are increasingly nervous that the United States will trade strategic prioritization of the Indo-Pacific region – since a recent intense focus on Russia’s revisionism will remain their primary security concern.

Key Points: Well-made analysis from the Mercator Institute for China Studies (MERICS), successful in reviewing the challenges and opportunities that China poses to the NATO’s eastern flank. As the author explains, finding a joint, NATO-wide stance on China is complicated by the fact that its perception as a threat varies not just among the Central and Eastern European NATO members but also across the Alliance. Just a handful of NATO members have been looking beyond Europe’s immediate neighborhood or formulated a strategy for the Indo-Pacific region where the implications of China’s rise reign supreme. The 17 plus 1 platform is reasonably defined in the article as a “Trojan horse” in Europe; in other words, it is a direct communication channel through which CEE countries continued to engage in this co-operation disregarding some criticism from the “old” member states of the European Union, and despite their own problematic partnership and increasing criticism toward Beijing. Nevertheless, the 17+1 platform represents just one of a more complex set of problems undermining NATO cohesion: the countries of Central and Eastern Europe are increasingly nervous that the United States will trade strategic prioritization of the Indo-Pacific region – since a recent intense focus on Russia’s revisionism will remain their primary security concern. Considering these obstacles, in the expert’s view reaching a working consensus between Western Europe’s fear of entrapment in the US’s increasingly conflictual relationship with Beijing, and Central and Eastern European countries’ fear of abandonment, will be though. However, the benefit coming from the politicization of the Alliance will drive NATO towards a targeted- renovated transatlantic consensus on China, not unlike it was reached on Russia during the Cold War.

Beijing Expanding Size and Role of Its ‘Private’ Military Companies in Central Asia, The Jamestown Foundation, July 20

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China has made use of its own private military companies (PMC) to guard Chinese industrial sites and transportation networks across Central Asia that it views as essential to its broader “One Belt, One Road” (more recently known as the Belt and Road Initiative—BRI) project. Beijing’s reliance on imported PMCs to guard local strategic infrastructure will be an important new form of security assistance to Central Asian countries after the US withdrawal, against any threat from the outside. Like Russia and the US, China has developed so-called private military companies, groups that operate in the gray area between formal military establishments and private enterprise. These companies in effect serve as armed guards. Both because of that and because the Chinese have been reluctant to speak about what else they may be doing, information about such “private” Chinese military companies is relatively scarce. Earlier this year, a Kyrgyzstani news agency used a Jamestown EDM report as its basic source about what is going on. In large part, that reality reflects what had heretofore been the basic division of labor between China and the Russian Federation in the region: Beijing focuses on economic development, and Russia provides security. Now China’s desire is to provide Central Asia with both “traditional” and “nontraditional” forms of security assistance. The latter, apparently, is to consist of inserting greater numbers of PMCs not just to guard local Chinese facilities but also to provide training and even leadership to the militaries of the Central Asian states. Until now, Russia had guarded the latter role—hard military cooperation—for itself, especially given its concerns about Turkish expansion. But increasingly both Russia and China are worried about the possibility of a Taliban incursion into Central Asia, with Beijing rating that possibility “extremely high. And so, the two countries are taking steps to beef up their regional security assistance—Russia via the conduct of joint military maneuvers with Uzbekistan now taking place, and China with the dispatch of more private military company personnel. At present, these efforts are complementary; but there is the risk that with the rising Chinese presence, they will become competitive. Moscow is particularly concerned about such a Chinese presence in Kyrgyzstan and Tajikistan. So far, China has been remarkably cautious about dispatching private military companies to the region, the Moscow analyst noted. Their personnel in the region presently number only in the hundreds. Beijing may have adopted this posture because of the rising tide of anti-Chinese attitudes in many parts of Central Asia.

Key Points: This analysis from the Jamestown foundation provides insights of Beijing expanding size and role of Its ‘Private’ Military Companies in Central Asia. It would be in the interest of NATO’s Allies and Partners to understand how the Chinese strategy in this region will evolve once the western troops are gone. Interestingly, the expert notes that the resurgence of the Taliban in Afghanistan and the danger that it will seek to expand its influence into Central Asia—either by direct incursions or as a role model for local radicals—has refocused China’s attention and changed its calculations as well as those of the Central Asian governments. The latter may have concluded that in the face of the growing Taliban threat, they have no choice but to turn to China, while Beijing appears to have decided to exploit this in the first instance by using its private military companies as its preferred method of operation. Such assumptions open food for thoughts for NATO analysts and strategists: what is the chain of command for these Chinese PMCs in Central Asian countries? Do these forces represent possible PLA theatre commanders stationed within the PRC proper?

What Will China Do If Its Interests In Africa Are Threatened, 1945, July 2021

Over the past 20 years, China has almost completely displaced the United States as the primary trading partner for countries in Africa. Djibouti itself is especially important for China. Not only does Djibouti now host China’s first overseas naval base but Beijing apparently also sees Djibouti as its gateway to East Africa and the Sahel. In 2016,

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China inaugurated the Djibouti to Addis Ababa railroad, providing landlocked Ethiopia an outlet. Ethiopia’s increasing political instability and declining security, however, may soon threaten China’s ambitions. The Ethiopian National Defense Force (ENDF) is in disarray; the Tigray Defense Forces have entered the neighboring province of Afar. If the offensive continues, both disrupt the new Chinese rail project in the region. The question then becomes what China might do, if anything, to protect its economic interests and ambitions. Xi might want to make a larger point. Four years ago, Stanford’s Oriana Skylar Mastro and RAND’s Kristen Gunness wrote an article in Asia Policy speculating that the People’s Liberation Army might want to develop an expeditionary capability in part to protect China’s economic interests abroad. With Abiy so weak, the Ethiopian army in a state of collapse, and Xi perhaps desirous to appear decisive in order to project an image of strength against the backdrop of the Pakistan incident, Mastro and Gunness could be prescient. China does not have a record of intervening in local conflicts in the way the United States, France, and Russia do, but Ethiopia’s crisis may soon put that precedent to the test.

Key Points: This article from 1945, a peer accredited security journal, reviews China’s strategy and aspiration in Africa with a special focus on Beijing’s possible trajectory in Ethiopia. The country is, in fact, mentioned as fertile ground for the People’s Liberation Army interference in a local conflict. As the author stresses, weather China does not have a record of intervening in local conflicts in the way the United States, France, and Russia do, Ethiopia’s current crisis may soon put that precedent to the test. This would be in line with President Xi’s interest of protecting Chinese interest in Africa. It remains to be seen to what extend this intervention will take shape. No doubt that China’s aggressive posture in Africa and its increasing military interventionism are both factors that NATO should keep eyes on.

U.S. and allies accuse China of global hacking spree, Reuters, July 19

The United States and its allies accused China on Monday of a global cyberespionage campaign, mustering an unusually broad coalition of countries for an initiative angrily rejected by Beijing. The United States was joined by NATO, the European Union, Australia, Britain, Canada, Japan, and New Zealand in condemning the spying, which U.S. Secretary of State Antony Blinken said posed "a major threat to our economic and national security". China's foreign ministry spokesman Zhao Lijian said the accusation was "fabricated out of thin air" for political goals. While a flurry of statements from Western powers represents a broad alliance, cyber experts said the lack of consequences for China beyond the U.S. indictment was conspicuous. Just a month ago, summit statements by G7 and NATO warned China and said it posed threats to the international order. Some of Monday's statements even seemed to pull punches. While Washington and its close allies such as Britain and Canada held the Chinese state directly responsible for the hacking, others were more circumspect. NATO merely said its members "acknowledge" the allegations being leveled against Beijing by the U.S., Canada, and Britain. The EU said it was urging Chinese officials to rein in "malicious cyber activities undertaken from its territory" - a statement that left open the possibility that the Chinese government was itself innocent of directing the espionage. The United States was much more specific, formally attributing intrusions such as the one that affected servers running Microsoft Exchange earlier this year to hackers affiliated with China's Ministry of State Security. Microsoft (MSFT.O) had already blamed China.

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The senior administration official said U.S. concerns about Chinese cyber activities have been raised with senior Chinese officials, and further action to hold China accountable was not being ruled out.

Key Points: Well-made article from Routers, explaining basic facts of the latest US and Allies accusation on China’s cyber hacking attacks. In July, the United States, NATO, the European Union, the United Kingdom, Canada, Japan, Australia, and New Zealand jointly accused the Chinese government of hacking Microsoft Exchange servers earlier this year, among other malicious cyber activities. As the Atlantic Council speculates, what does NATO’s buy-in mean for the world’s response to Chinese hacking? What tools do these allies have to fight back? According to Christopher Skaluba, Director of the Scowcroft Center’s Transatlantic Security Initiative, and former principal director for European and NATO policy at the US Defense Department, “Rallying so many allies to the cause of countering China is “an impressively smart act of policy and diplomacy” by the administration of US President Joe Biden. In one fell swoop, it found a tangible issue around which to bridge recent US-EU, NATO-EU, and UK-EU divides, worked out a way for NATO to engage on China while building up NATO’s ‘political’ role, linked transatlantic and transpacific allies, and stressed NATO’s relevance to modern security challenges.” Further, the expert argues that by weighing in on this matter, NATO is responding to persistent questions about the Alliance’s ability to unite its thirty members around deterring China’s aggressive actions. “In classically passive-aggressive NATO fashion,” he observes, NATO’s statement points to how allies have blamed China for the hacks, rather than pointing the finger itself. “Nevertheless,” the Director continues, “it is an unusual and unmistakable rebuke of China and one that undercuts Beijing’s careful cultivation of European clients through aggressive infrastructure investments (e.g., in Greece and Italy) and regional diplomatic arrangements like the 17+1. On top of recent sanctions related to human-rights abuses [in Xinjiang province], this signals that European scrutiny of China is on the rise.” When NATO Secretary-General Jens Stoltenberg appeared at the Atlantic Council last month, he stressed that the Alliance’s Article 5 collective-defense pact applied to cyberattacks. “Today’s statement is a natural extension of that policy, clearly signaling that NATO is deterring threats and preparing to defend its members across all domains of warfare and against all adversaries,” the expert concludes1.

China is pushing Japan to take on a growing military role in Indo-Pacific, Financial Times, July 21

Japan is putting stronger emphasis on defense and taking on a bigger role in regional security. Front and centre is China, the giant neighbor on which Japan’s economy depends heavily but which the country’s politicians have also identified as its primary security threat. The new Japan’s annual defence white paper released last week accuses China of attempting to change the status quo in regional waters. The document also states that “stabilizing the situation surrounding Taiwan is important for Japan’s security and the stability of the international community” — the latest of a recent string of high-profile mentions of the island which China claims as its territory and threatens to take by force. Finally, Tokyo stresses the need to focus on developing advanced technologies such as AI vital for the future of warfare and to protect them from China.

1 FAST THINKING: A turning point on Chinese hacking, Atlantic Council, July 19, https://www.atlanticcouncil.org/content-series/fastthinking/fast-thinking-a- turning-point-on-chinese-hacking/

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Japanese expressions of alarm about China are often drowned out in the global cacophony of concern over Beijing’s military expansion and assertive behavior. But the white paper reflects what may be the largest shift in Tokyo’s security stance in more than 70 years. Since its defeat in the second world war, Japan has lived under a constitution that renounces any use of military force. But in 2014, Shinzo Abe, then prime minister, reinterpreted the relevant article to allow military action even outside Japan proper for the purpose of what it calls ‘collective self defence’. Since then — and boosted by reforms which streamline policymaking on security issues — Tokyo has taken a more active role in shaping regional security. Japan has steadily increased its military engagement with friendly nations that share this goal. Earlier this year, Japanese, American and French troops held their first-ever joint drills on Japanese territory. Tokyo is also helping to strengthen the capabilities of littoral states in south-east Asia to push back against China’s moves designed to enforce its expansive maritime claims in the disputed waters of the South China Sea. It has, for example, equipped Vietnam and the Philippines with patrol ships.

Key Points: Detailed and insightful article on Japan’s new foreign and defense policy. The author stresses how the new Japanese white paper puts stronger emphasis on defense and taking on a bigger role in regional security, primarily given the increasing role of China as security threat in the area. Indeed, understanding Tokyo’s grand strategy comes at the interest of NATO’s Allies and Partners in the Indo- Pacific. NATO and Japan have had formal relations in the last thirty years. However, the growth of Japan-NATO relations accelerated under the tenure of former Prime Minister Shinzo Abe, with Japan and NATO conducting their first joint military exercises and establishing an Individual Partnership and Cooperation Programme in 2014. These developments, along with security reforms passed in 2015, appear to provide Japan and NATO with the platform necessary to move their relationship to a new phase.2 As the Financial Times has recalled in this article, Japan clearly navigates changing regional and global power dynamics. Its growing alignments with non-U.S. partners have taken on increasing significance. It will be challenging for NATO to see how the Alliance fits into this evolution and how Tokyo intends to exploit future potentialities of their bilateral cooperation, taking in consideration the growing role of China in the Indo-Pacific.

Chinese surveillance ship Tianwangxing one of many ways China ‘listening in’: Barnaby Joyce, News.com.Au, July 15

Deputy Prime Minister Barnaby Joyce claims a Chinese surveillance ship monitoring Australian-American exercises off the coast of Queensland is just one of many avenues Beijing is “listening in” on Australian affairs. A Chinese auxiliary general intelligence (AGI) vessel called Tianwangxing is watching the Talisman Sabre 2021 war games involving Australia and the United States. The fortnight-long war-games exercises are being closely monitored by the Chinese Type 815 ship, which is expected to remain outside Australian territorial waters but within Australia’s exclusive economic zone (EEZ) in the Coral Sea. Tianwangxing is expected to motor up and down Australia’s 22km territorial boundary. It is entitled to be there because it is not performing any economic activity Defence Minister Peter Dutton said the Australian Defence Force (ADF) had been closely monitoring the Chinese military vessel for “several days”. But Nationals Leader Mr. Joyce said it was just one of several ways China was attempting to glean information about Australia.

2 Navigating by Sun and Compass Policy Brief Three: The Future of Japan-NATO Relations, https://www.jiia.or.jp/en/column/2021/01/PDF/FINAL_Japan_NATO_Next_Steps_End_Notes_12320.pdf NOT CLASSIFIED Page 6 of 7

“We can't do anything about (the ship in Queensland), quite frankly. They can sit in international waters and do their job,” Mr Joyce said on 2GB on Thursday. “But that’s one section of the listening and there are other sections where they try to hack in. “They have computers that will basically try and break into our computers and into our secret areas and communication networks. “(China wants to learn) how well your platforms work together in comparison to their platforms and their military (exercises).” Prime Minister Scott Morrison said on Wednesday he was “very wary” of the Chinese ship’s presence. “Of course, we’re watching them,” he said. “And they’re watching us. The law of the sea says we can be up in the South China Sea. “And so, we simply say that we think the same tolerances and the same appreciation of those international laws should apply.” The Talisman Sabre also involves Canada, Japan, New Zealand, the Republic of Korea and the United Kingdom, while Australian-based personnel from India, Indonesia, France and Germany will also observe. At the 2019 Talisman Sabre war games, the same Chinese vessel was also tracked by the ADF as it travelled to Australia. It’s the ninth iteration of the war games and incorporates force preparation activities, amphibious landings, ground force manoeuvres, urban operations, and air combat and maritime operations.

Key Points: This article well summarizes Australia’s concerns towards China assertive maneuvers in the Indo- Pacific. The Chinese surveillance ship monitoring Australian-American exercises off the coast of Queensland, which is expected to remain outside Australian territorial waters but within Australia’s exclusive economic zone (EEZ) in the Coral Sea, has been monitored with suspect from Canberra, whose Defence Minister claims that a Chinese ship sitting off the coast of Queensland is doing more than just watching military exercises. This is not the first time that the Canberra authorities’ express concerns on this kind of events regarding China. In June 2021, Australia and Japan organized an online meeting between their respective foreign and defense ministers in the 2 + 2 format and agreed to intensify their security ties in the face of growing concerns raised by China in the region Indo-Pacific. Tokyo and Canberra have agreed to strengthen maritime security cooperation, considering Beijing's activities in the South China Sea and the East China Sea. 3The meeting was the ninth to be organized in the 2 + 2 format from Tokyo and Canberra and was attended by the foreign and defense ministers of Japan and their Australian counterparts, Marise Payne and Peter Dutton. Australia and Japan are intensifying their bilateral relations. On November 17, 2020, the parties also signed a military alliance pact called Reciprocal Access Agreement (RAA) which was the first defense agreement signed by Japan since the signing of the Status of Force Agreement, contract with the USA, in 1960.

3 For reference see: https://www.mofa.go.jp/a_o/ocn/au/page1e_000327.html NOT CLASSIFIED Page 7 of 7