Treatise On China’s Clandestine Financial Warfare: China’s Intelligence Community & The Communist Party As Key Players In Geofinance
Military might is no longer the end-all, be-all. While financial warfare is an unexplored frontier, truthfully, it is also a grim-sounding term. It involves the deliberate efforts of weakening the financial system underlying the domestic economy of aa target country. The financial infrastructure of a country can be weakened through the form of well-known sanctions or exclusion from international financial organizations and intermediaries. It can also take place by means of, for example, currency devaluation, which must involve at least one other nation-player that is poised on either the winning or the losing side. In addition, some insider trading schemes carry the mark of deliberate attack perpetrated by agents in another country. In today’s realm, national security embodies far more than physical borders and is far less straightforward than eyeing the perimeter for invaders. National security has become much more complicated, multifaceted, and can easily be compromised via nefarious infiltration of capital markets or clandestine activities aimed at disrupting critical components of a financial system.
This book is about the financial weapons of war, their growing importance in China’s national affairs, and the wide-ranging clandestine use of these weapons by the Communist Party of China with the support of the Chinese intelligence community. This book offers an early, broad examination of the realities of modern financial warfare as waged by China, both from a doctrinal, legal, and cultural perspective. This book descriptively and normatively explores the new financial theater of war, analyzes China’s modern arsenal of financial weapons, highlights the role of the Communist Party of China and the Chinese intelligence community, and proposes key recommendations for current and future financial warfare.
The Communist Party of China, through its government, has learned a lot from Sun Tzu’s ‘The Art of War’, and one of his guiding principles revolve around ‘…subdue the enemy without fighting...’. Financial warfare is one of the tools of war in the arsenal of the Chinese to achieve just that: gain control and influence across the world without resorting to military engagement. To that respect, the CPC has been flying quite low below the radar without paying enormous sums of money to concretize its ambitions.
Not only did the Chinese authorities penetrate Western universities and research labs to subdue scientific and industrial secrets or carefully took control of critical shipping routes (cf. using the COSCO shipping company) around the globe, but they also in a stealth way pioneered the creation of a Chinese-led global financial system that gradually aims to become an alternative to the U.S.-sponsored one. Look at the CIPS (i.e., Cross-Border Interbank Payment System) clearing and settlement platform as an alternative to SWIFT. What about the establishment of the AIIB (cf. Asian Infrastructure Investment Bank) as a regional multilateral counterweight to the World Bank and the Asian Development Bank? Or, the creation of Chinese renminbi-denominated oil futures? The rapid expansion of Chinese banks on a global level?
Blinded by short-term profits, the mirage of cheap labor, promises of inexpensive products, and a na?ve belief that the CPC would embrace liberal democratic values, Western governments and multinationals over the last twenty years have been pumping hundreds of billions of U.S. dollars in the Chinese economy. These large sums of money, not to mention the hijacked transfer of technology, enabled the Beijing dictatorship to become ever more powerful, economically as well militarily, but also more self-confident. Unsurprisingly, Western political and business elites have been duped and now seem to be caught like rabbits in the headlights of a car: so frightened and surprised that they seem to be unable to move or think.
And, why? Mainly, because the Western thinking about great power status has been rested on military and geopolitical terms. Economics, and finance in particular, have been considered subordinate to politics and war, and not as a means to achieve or maintain great power status. While the Chinese government is greatly familiar with the notions expressed in this book, Western geostrategists are not too much acquainted with these ideas. This book aims to change that way of thinking, by embracing the concepts of geofinance and financial warfare.
In 2018, a book introduced the concept of geofinance as a tool for a country to help achieve its geostrategic ambitions. This new book is an outgrowth on the research I conducted on geofinance to apply it to the great power rivalry between China and the West in a context of intelligence and financial warfare. The ambitions of this book are multiple:
- develop the notion of geofinance as it applies to financial warfare and see how it interacts with geopolitics.
- expose the existence of a Chinese intelligence community that is much broader than the officially known Ministry State Security and PLA Military Intelligence.
- demonstrate how financial warfare can profoundly disrupt an enemy’s war machine and help advance the geofinancial national interests of a country, such as China.
- provide a framework for interpreting the current global power rivalry through the prism of global finance and financial warfare.
- create awareness about the need to link the concept of financial security to overall national security.
Ever since I started my company Value4Risk back in Australia in 2012, I have continued to remain driven and passionate about the topics of global finance and the nexus with geofinance. While I am not the first one to elaborate the aspect of financial warfare, I am, however, one of the first ones to study the role of the Chinese intelligence community as a tool of the Communist Party of China as it relates to financial warfare.
Though I am talking about the Chinese intelligence community, this book elaborates the concept of intelligence collection much further than merely the one conducted by the Ministry of State Security (MSS) and the PLA military intelligence. It illustrates how a myriad of other intelligence actors is also deeply involved in gathering intelligence by adopting the method of a ‘Thousand Grains’. Such actors are:
- other government agencies (such as the Ministry of Public Security, the Ministry of Education, the Ministry of Foreign Affairs, Ministry of Commerce, and the Overseas Chinese Affairs Office, for example).
- semi-official organizations (such as Confucius Institutes, student organizations, business groups. or Chinese friendship associations).
- Chinese banks and corporates.
- Chinese students and academics.
- Chinese tourists and netizens.
The book consists of several sections that map a road toward a gradual understanding of how financial warfare and geofinance are deeply interconnected, and the specific role of the Chinese intelligence community, under the auspices of the Communist Party of China.
In the first section—’The Theory’—I go over the concept of geofinance and how it interconnects both with global finance as well as the Chinese intelligence community. In the second section of the book, ‘The Leader,’ I trace how Chairman Xi Jinping, through various official statements and speeches, introduced the motion of financial warfare in a context of global dominance aspiration. In the third section about ‘the Doctrine’, I look at how financial warfare is part of the broader strategy of unrestricted warfare heralded by the Chinese authorities. In the fourth section, I elaborate on the legal framework that governs the aspect of financial warfare and the role played by the Chinese intelligence community played to that respect.
In the fifth section, I go over the various schools of thought that influence China’s intelligence doctrine. In the sixth part, I describe briefly the leading actors that compose the Chinese intelligence community, describing the officially known agencies as well as the less-known agencies and organizations that help implement this ‘Thousand Grains’ approach. In the seventh section, I explore the new theater of war that is the modern financial infrastructure, and in particular I describe China’s financial system as well as the interplay between the actors of the Chinese financial system and the Communist Party of China (not to mention the Chinese intelligence community). In the eight part, related to the activities of the financial stakeholders, I explore how China’s arsenal of financial weapons (AIIB and the new Silk Road, for instance) help Beijing assert its global ambitions and how the Chinese intelligence community uses these projects as vehicles of intelligence collection. In the ninth part, I discuss the possible options for the West and its Asian allies to contain and deter China’s financial warfare tactics. In the last and tenth section, I go over a couple of take-away messages on the future of the Chinese intelligence community in a context of financial warfare.
Given that this book leverages the aspect of geofinance from a perspective of financial warfare and intelligence as it applies to China, my goal has been to provide a more profound awareness of the subject. I am fully cognizant that since there are (almost) no research on the topic of geofinance, and equally not too many studies about financial warfare waged by the Chinese authorities, I am exposing myself to potential theoretical mishaps and wrong postulations. I am equally aware that although I have spent a longtime studying China’s intelligence community, I still do not know much about China’s vast intelligence apparatus. Yes, there are many books on China’s espionage and intelligence services, but honestly speaking, one will notice that more than 90% of the content of these books are merely repeating or consolidating what others have said about the history of China’s spies. Instead, I have focused more on the present time and future of the Chinese intelligence services and how they (under the governance of the Communist Party of China) relate to financial warfare.
While I am not a full-time academic (even though I am currently completing a PhD with a British university), I feel that my vast professional experience backed by more than twenty-five years as a senior risk executive in commercial banking are a true asset for writing this book. Additionally, the very diverse international exposure I benefited from, allows me to be among the first to jump into the water and pioneer the establishment of these new concepts of geofinance and financial warfare as it applies to China. I have put together some of the principal building blocks that will allow for these ideas of geofinance and financial warfare applicable to China to serve as a vector for further awareness, research, and even policy.
The relatively recent upsurge of public interest in China’s geopolitical ambitions and what it means in terms of threats to the free world have produced many excellent books designed for graduate students, academics, professionals, and public officials. This book provides an introduction to geofinance and how it can be a stepping-stone to a better understanding of financial warfare as conducted by the Chinese intelligence community. I aim to ease and promote the concept of geofinance and financial warfare and provide access so that more scholars and professionals are equipped with a critical understanding of it. I feel lucky and privileged to have had the opportunity to train and write on these topics. I hope that the reader finds my way of looking at current events, geofinance, and financial warfare helpful.
After reading this book, one will:
- understand how global finance is shaped by geopolitical ambitions and it can be used as a weapon of unrestricted war;
- be able to use theoretical perspectives surrounding the aspect of geofinance and develop a deeper a more critical understanding China’s financial warfare methods, and how it fits in the Communist Party of China aim for global dominance.
- be aware that China’s intelligence collection is a vast and complex enterprise conducted by a myriad of (non)official actors
- have a good understanding of global power rivalry from the perspective of global finance.