Blurred Boundaries: The Role of Chinese Companies in CCP Policy

Via The Diplomat, a report on ow China’s advancement in the Central American region has largely been through Chinese companies – ones that are not usually considered among the main bearers of the CCP’s global influence:

In July 2024, a joint investigation between The New York Times and The Wire China revealed the connections between Xiao Jianhua, a Chinese businessman accused of corruption and bribery, and the business dealings of the famous Jack Ma. In the words of its authors, this work “offers a first-person view of Chinese capitalism.”

Journalists from The NYT and The Wire showed how Chinese entrepreneurs commonly find themselves pressured by the demands and interests of the Chinese Communist Party (CCP). As Jack Ma once stated, “I do whatever they [officials] ask me to do.” This research also pointed to the presence of actors linked to the upper echelons of government – for example, Xi Jinping’s sister – in large private Chinese firms, a fact that blurs the boundaries between the business class and political power.

Similar views have been developed in a recent report by the Central American think tank Expediente Abierto, “Más allá de la Franja y la Ruta: impacto de las empresas chinas en Centroamérica” (“Beyond the Belt and Road: The impact of Chinese companies in Central America”). Although this report focuses on the Central American reality and its relations with China, the cases studied there illustrate the fine line between Chinese state-owned and non-state-owned enterprises and their role in the CCP’s strategic objectives in Central America.  

Huawei’s instrumentalization as part of the Chinese government’s transnational influence operations is well known, which is why its 5G technology has been suspended in countries such as Australia, Canada, and the United States. More recently, public attention has been drawn to allegations in the United States against TikTok and its owner ByteDance – based in Beijing and allegedly linked to the CCP – which are allegedly jeopardizing their users’ privacy in the U.S. and beyond.

Despite this, the general public and decision-makers are often uninformed about the risks involved in the operations of lesser-known Chinese companies. One example is the international sanctions faced by the state-owned China Communications Construction Company (CCCC) for engaging in malpractice during the construction of highways in the Philippines. There is also the case of the World Bank’s actions against China National Electric Engineering Company Limited (CNEEC) due to its link to fraudulent operations while rehabilitating electricity infrastructure in Zambia.

The Expediente Abierto report connects concerns about China’s advancement in the Central American region with a critical study of certain Chinese companies – ones that are not usually considered among the main bearers of the CCP’s global influence. The report addresses cases such as Huawei and CCCC and scrutinizes other Chinese companies that engage in practices harmful to Central American economies, and which are also applied elsewhere in Latin America and other countries in the Global South.

Chinese Companies in Central America

Contrary to what one might think, Central America is today a significant recipient of Chinese influence in Latin America, thanks to numerous trade agreements – e.g. the recently signed Free Trade Agreement (FTA) between China and Nicaragua – media cooperation, and, to a lesser extent, investment in infrastructure. Although the latter has been only marginally significant, it is extremely useful to the CCP in projecting an image of itself as a regional benefactor and persuading governments to establish relations with Beijing.

The role of Chinese companies has been fundamental in this endeavor, as they are the ones developing the infrastructure projects that promise modernization and welfare for Central American countries. In the region, these firms have set up operations from the so-called Northern Triangle to the Panamanian isthmus, carrying out initiatives of varying complexity – not always with good results – including stadiums, condominiums, water purification plants, refineries, ports, and power plants.

One of the first projects by these companies was the National Stadium of Costa Rica, inaugurated in 2011 and built by the Chinese state-owned Anhui Foreign Economic Construction Group (AFECC). This project served as an incentive for the Chinese government to encourage former Costa Rican President Óscar Arias to accelerate the rupture of ties with Taiwan and establish relations with the People’s Republic of China (PRC), in what some have called “stadium diplomacy.”

China deployed the same strategy in El Salvador, granting $500 million in “non-reimbursable, non-conditional investment” shortly after establishing official relations in 2018. This investment package included the construction of a library, a tourist pier, a water purification plant, and the promise of building a stadium. While no progress has yet been made on the stadium, the library has already been inaugurated, while the pier has been developed by CCCC’s parent company, China Harbor Engineering Company (CHEC).

The Main Risks

Despite the many gifts from the Chinese government and the media interest that its eye-catching projects have generated, the reality is that Central America has a negative balance in its relationship with Chinese companies. Expediente Abierto’s report identified only a few initiatives that positively impacted the region, such as the Cañas-Bebedero water treatment plant in Costa Rica, carried out by the state-owned China Tiesiju Civil Engineering Group (CTCE).

On the other hand, the document highlighted the cancellation of projects such as the Soresco refinery in Costa Rica – managed by the China National Petroleum Corporation (CNPC) – or the Panamá Colón Container Port, developed by the private companies Shanghai Gorgeous Group and Landbridge Group.

Chinese firms, both public and private, have engaged in controversial practices that raise doubts about their efficiency, technical capacity, and openness to accountability. Costa Rica was again in the limelight when, for example, the company in charge of building the National Stadium – which was also contracted for a real estate development project – was accused of offering bribes to Costa Rican consuls in Beijing to allow more Chinese workers to be part of those projects.

A similar story was repeated in Panama, when CHEC and its subsidiary CCCC won the bid to build the fourth bridge over the Panama Canal, after former President Juan Carlos Varela personally met with senior officials from these companies. 

Acts of corruption have also been repeated in supposedly private investment projects, as in the case of the recently canceled Nicaragua Canal. The Chinese businessman to whom the concession for this initiative had been awarded, Wang Jing, was accused of obtaining phantom investment through it, despite no significant progress ever being made on the project.

It is clear, therefore, “that the geostrategic interests of the PRC could not be realized without the support and collaboration of Central American elites, who, for various reasons, facilitate the entry and expansion of [Chinese] companies into their respective national territories,” as concluded in the report by Expediente Abierto.



This entry was posted on Friday, October 4th, 2024 at 6:24 am and is filed under China, Costa Rica.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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