One thing after another

The British newspapers have made for difficult reading in the past week or so for those concerned about PRC influence within the UK.  The most high-profile story was of course the revelations that one of Prince Andrew’s closest advisors was for a number of years was operating within the United Front Work Department.  The UFWD is a well-funded organization under the Chinese Communist Party, which seeks to bolster support for CCP positions and policies both domestically within China and in the rest of the world.  It’s role is sometimes described as making the world safe for the CCP!

The notoriously wild British press has described the advisor, Yang Tengbo, as a spy, but that isn’t really true.  A spy conjures up James Bond images, and MI6, the CIA or the old Soviet KGB, but Yang is very unlikely to be employed by the Chinese Ministry of State Security, the MSS.  In fact, the UFWD is much more nuanced and subtle than the traditional spy operating undercover and stealing secrets or recruiting agents.  The UFWD seeks to influence debate and engagement with China always with a bias to supporting the CCP’s position.  Letters of introduction, invitation to events in China, hosting high level delegations can all be gotten for those willing to go along with broad UFWD agenda, but more of that later.

Other somewhat “minor” stories of the week included the revelation that around 30,000 Chinese shell companies had been registered in the UK with the very likely intent of avoiding taxes.  Many companies would be registered at the same address which had nothing to do with the underlying business, and then trade on eBay or similar sites as a UK company but in practice be a fully overseas company and when a tax demand was due would cease to operate and register as a new company.  Of course, it is the continuing growth of online discount sites where Chinese goods are available at incredibly low prices at times that has fueled such activity and shown how the taxation regime has failed to keep pace with the retail environment realities.

To add further insult to injury The Telegraph, citing a forthcoming report from UK China Transparency charity, reported that a high-level interpreter for the foreign office had been running a Chinese language website promoting CCP news and policies (it too coming under the broad umbrella of the UFWD).  The interpreter Chen Shirong was pictured in 2015 at a dinner only 2 seats from Xi Jinping.

For those China watchers concerned about the PRC’s growing influence around the world and especially in the UK it was sobering reading.  While the folly of the David Cameron and George Osborne “Golden Era” of relations with China had become increasingly clear these recent revelations of influence dating back years exposed very clearly how deep the UFWD penetration into the political and business worlds had become.

A Turning Point?

Prince Andrew’s judgement when it comes to his choice of friends has long been questioned.  He is no longer a working royal and his “brand” as marketing people would say is forever tainted by his friendship with Jeffrey Epstein the convicted, and now deceased sex offender.  That Prince Andrew had then seemingly allowed a Chinese “spy” such close access to him only debases him even further.  Although the royals have no political influence with the UK political system, they can clearly attract a crowd and few will ever turn down an invitation to a royal event.  It was Prince Andrew’s pitch@palace events which attracted Yang Tengbo.  This was a program where young innovators, entrepreneurs and startups could come and meet potential investors at events held at Buckingham Palace.  It was into this mix and Yang inserted himself.  Yang then took this idea and developed a mirror program in China to the extent that an advisor to the Prince told Yang that he could effectively speak on behalf of the Prince when it came to China related events and engagements.

This gave Yang a front row seat for seeing new ideas and technology within Britain, information which he could then pass onto others in China which would then allow the CCP to craft strategies to try and buy, steal or copy technologies which might potentially be useful to them.  It is a decades old policy of the CCP to bring leading foreign technology to China by any means possible.  Many countries have their own depressing experiences of Chinese IP theft and reverse engineering.

Needless to say the PRC embassy in London denied that Yang was a spy and that the UK side should “stop making trouble”.  Indeed, Yang is not a spy and this is the “beauty” of the UFWD, they underpin a number of society based organizations whether they be business associations, friendships associations designed to encourage travel and engagement across borders or student associations.  Nothing suggests spy craft except the message always cleaves to the CCP line and to push back against that which result in some form of exclusion from further engagement.

But amongst this dreadful week of exposures there could well be a silver lining, and an opportunity to really reset China policy.  Prince Andrew maybe the catalyst which pushes the political debate regarding Chinese influence to the top of Prime Minister’s inbox.

What can the UK do now?

For too long the UK policy on China has been unacceptable.  The naivety of the Cameron years has passed but nothing has replaced it, certainly nothing that could be called a principle or a China view.  Huawei telecoms was eventually banned within the UK but many Chinese tech companies still provide a slew of surveillance and telecoms technologies.  Is China a competitor, a threat, a partner?  Listening to Prime Minister is it never really clear.  His mantra when asked about China is to repeat his 3 Cs: challenge, compete and cooperate, but how this is applied in practice is seldom obvious.  But in the new year there are two real opportunities to grasp the China problem and set out meaningful policy which can guide business, politicians and others for the coming years, especially if Xi remains in power and continues on his current path.

The Labour Party said little about China during its election campaign earlier this year.  China, as important an issue as it is, was simply not a major election topic.  Domestic issues, relations with the EU, immigration and the war in Ukraine all took precedence over it.  Labour’s sole reference to China was the promise of a full review or audit of the UK’s relations with the country.  Since they came to office there has been little public and official discussion of the review and while is has certainly been started and various people and groups have been approached to provide input into the topic the remit of the review seems pretty loose and so far promises little change from the 3 Cs mantra.  Reuters even reported this week that the review was pared back so as not to criticize China too much and allow Starmer to try build more economic ties with China.  But the insertion of Prince Andrew into the China influence debate has made China front page news and it is hoped will force Starmer to take such a review seriously and put Britain’s interest rather than the PRC’s interests first.  The pro-China lobby remains strong and well financed in the UK with many large companies continuing to promote the need for greater economic cooperation.  But it seems perverse that British banks and companies continue to promote China ties regardless while their Germany corporate counterparts who had invested far more into China are now realizing their folly and seeing their own businesses coming under tremendous economic pressure.

The second opportunity for Starmer is to complete the foreign influence registration scheme which was first proposed under the Conservative government and would require all those working for foreign governments to declare their interests.  There will be a tiered scheme, the highest tier requiring the highest scrutiny when it came to dealing with those individuals or organizations.  It is obvious that countries like North Korea, Russia or Iran would be put in that top tier but the real test for Labour will be whether China too is put in this tier.  While China, even under Xi Jinping is not Kim’s North Korea, the size and scope of Chinese interference and influence is staggering, with no similar programs or easy comparisons to other countries.  The UK security services, MI5 and MI6, have made it clear that such a scheme would be worthless without China being in the highest tier demanding the highest level of scrutiny.

Ideally a foreign registration scheme would catch operators like Yang Tengbo but direct spying won’t disappear, and others might simply try and avoid the scheme entirely but it sends a clear message that British politicians, businesses and universities are no longer for sale, or willing to be compromised in their dealings with the PRC.  Prime Minister Starmer has two clear ways to act, he needs to be bold, because his 3 Cs mantra is already wearing thin and just doesn’t provide the support and protections that are needed.

Lessons for other countries

It would be foolish for leaders in other countries to think this is a UK problem, or to think that it is a handful of individuals who are operating on behalf of the CCP.  A 2023 Newsweek report estimated that there were around 400 UFWD associations around the UK which at first glance are simply promoting business, educational, social or cultural ties but were in fact backed by the CCP and their mandate through these ties was to influence discussion and viewpoints to align with the CCP.  But the UFWD is global in reach.  It is operating in every country in the world where the PRC has investments or engagements.  It often hides in plain sight and wherever there are PRC nationals the UFWD will be there trying to manage and control their actions in some way.  It would be wrong though to imply that all PRC nationals overseas are spies.  As this column has pointed out before Tokyo and other cities have been a refuge for professional Chinese who want to live a better life than they can in Xi’s China.  But the CCP is very afraid of overseas Chinese embracing universal values of human rights and democracy and bringing those ideas back to China.  The UFWD role is to subtly and at times not so subtly encourage alignment with the CCP and its goals.  For a university that means help teaching Chinese language or running calligraphy classes, but it means zero help for hosting programs and lectures about cultural assimilation of Tibetan or Xinjiang ethnic minorities.  For the bank executive who raises concerns about the future of Hong Kong he will find his bank struggling to get a new business license perhaps while his competitor praising Xi’s economy plan will be welcomed in Beijing.

Britain clearly has much to do to get a grip on the depth of Chinese influence across the political and economic spheres, but the recent headlines should be forcing other countries to take stock too of how they engage with China and who they actually engaging with.  Registration of foreign operatives is only the first step to managing this problem, but it isn’t enough by any means.  After decades of engagement with China it should be clear that economic interaction cannot be separated from political decisions.  All engagement with China is political and limits must be in place to ensure a fair playing field for trade and business.  But business leaders have shown themselves to be unable to manage the political risks of dealing with China.  It falls back to the elected officials, like Prime Minister Starmer to set the limits of engagement.  The coming months will tell if he has been bold enough and understood the threats that have come to light.