Why in news?
- The 57th Director General of Police conference discussed the issue of influence wielded by Chinese commercial firms.
Chinese commercial companies and India’s internal security
- A disturbing picture of Chinese Commercial Entities (CCE) has emerged after a series of actions by Indian authorities since 2020.
- The investigation began after the June 2020, incident in Ladakh’s Galwan.
- Actions by Indian authorities included busting of spying rings, tax raids on major Chinese telecom companies, a crackdown on mobile apps and a study of incoming investments into India.
- The actions by these agencies revealed a web of companies and individuals indulging in espionage, profiling of high value individuals, large-scale tax evasion and exfiltration of bulk data.
- These facts point to Beijing’s growing hunger for data and secrets.
What were the findings of investigating agencies?
- The assessment by agencies found that the Chinese commercial entities operate in India with five primary objectives:
- influencing minds,
- build economic control,
- acquisition of data,
- espionage and
- target scientists to compromise innovation and intellectual property rights (IPRs).
- The objective of counterintelligence is pursued through top officials of Chinese companies in India.
- Small-size shell companies were also used as financial conduits to fund espionage rings and resident agents.
What is the modus operandi of these entities?
- Hundreds of small companies controlled by Chinese nationals have dummy Indian directors and managers for a show of legitimacy.
- Many of these companies did not physically exist at their registered offices. However, their banking accounts were active and being operated from abroad.
- A cheap (and sometimes below production cost) pricing model that has given them control of a large chunk of the telecom and hardware markets in India.
- Investigations also show that some senior Chinese employees of these companies are documented members of the Chinese Communist Party.
- Hence, Beijing has a strong leverage on their operations in India.
- Agencies also found a seamless flow of data to Chinese servers through remote access of modems, switches, routers and networks sold and installed by these companies in India.
- Similarly, a seamless data link through Chinese origin mobile phones was also established during investigations.
- The data collected has helped Chinese artificial intelligence (AI) engines create portraits, with biometric details of millions of Indians.
Chinese Commercial Entities: Threat for India’s Internal Security
- Access to personal data of Indians
- Investments by Chinese companies such as Alibaba and Tencent were used to manage and control Indian companies which had a repository of large set of personal data of Indians.
- Chinese entities have been storing away information and data using multiple methods, with the objective of gaining strategic advantage over India’s economic and security systems.
- Influencing minds
- Deep cover resident agents, posing as officials of these companies, are attempting to fund and influence masses in India.
- This is being done to foment (incite) the sentiments of masses and create internal disturbances.
- Such entities are also used to influence Tibetan monks living in India.
- Chinese national Luo Sang (aka Charlie Peng), who was arrested for money laundering in August 2020, was actively sending money in packets to Tibetan monks.
- Agencies are suspecting that it was intended to gather information about the Dalai Lama and the Tibetan government in exile.
- Espionage and money laundering
- Charlie Peng, is believed to have laundered over Rs 1,000 crore, with some of the proceeds used to gather intelligence in India.
- Recently, a top executive of a telecom company found in the possession of sensitive documents.
- The investigation also revealed of exhaustive profiling of key business leaders.
Steps Taken By The Government
- Crackdown by investigating agencies
- Chinese commercial entities are under sustained investigation by the intelligence agencies since 2020.
- Multiple raids have been conducted by the ED under the provision of Prevention of Money Laundering Act.
- Clampdown on Chinese investment
- In 2020, Central govt declared that foreign investments from countries with which India shares land border shall be under approval route.
- Since China shares a land boundary with India, this announcement clamped down on investments from China making prior government clearance mandatory for all forms of investments, even indirect ones.
- Ban on Chinese app
- The govt of India has banned more than 250 Chinese apps including PUBG Mobile, Tiktok, Shein, AliExpress and more.
- Other steps
- The Intelligence Bureau created a new wing — China Coordination Centre — to collaborate with financial enforcement agencies to investigate Chinese companies.