- “While some measures can be taken, several Chinese investments are quite substantive. It is not possible to fully block them. A worrisome factor is that these Chinese companies have linkages of some sort with the Chinese military,” one government official said on condition of anonymity.
- In June 2017, China passed a national intelligence law, which gave Beijing powers over Chinese companies’ overseas investments as well — “Military and Security Developments involving the People’s Republic of China 2019”, requires Chinese companies, such as Huawei, ZTE and TikTok to support, provide assistance, and cooperate in China’s national intelligence work, wherever they operate.
- Moreover, Article 7 of the law states, “Any organisation or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law... The state protects individuals and organisations that support, assist and cooperate with national intelligence work.”
- It has direct security implications for all overseas FDI from China, a second official said.
- Intelligence assessments have flagged some large Chinese companies with major presence in India having direct or indirect links with the PLA. They include Xindia Steels Limited, China Electronics Technology Group Corporation (CETC), Huawei, Alibaba and Tencent.
- For instance, Xindia Steels Limited is considered one of the largest joint ventures between India and China and has commissioned a 0.8 mtpa iron ore pelletisation facility in Koppal district of Karnataka at a cost of over ₹250 crore. Its main investor is Xinxing Cathay International Group Co. Ltd. which, as per its website, is “reorganized, reconstructed and unhooked from previous production department and subordinate enterprises and institutions of the General Logistics Department of the PLA”.
- CETC in 2018 announced $46 million investment in a 200 MW photo-voltaic manufacturing unit in Andhra Pradesh. Officials pointed out that CETC is China’s leading military electronics manufacturer, and also makes Hikvision CCTV cameras.
- It has been implicated by the U.S. Department of Justice in at least three cases of illegal exports and many employees have been convicted for military espionage, the second official stated.
- CETC also provides technology used for human rights abuses in Xinjiang, where around one million are held in re-education camps, assessments noted.
- Another aspect that raised red flags is Chinese investments in Indian technology start-ups. The U.S.-China Economic and Security Review Commission, a U.S. Congressional commission, said in its 2019 report, “The Chinese government’s military-civil fusion policy aims to spur innovation and economic growth through an array of policies and other government-supported mechanisms, including Venture Capital VC) funds, while leveraging the fruits of civilian innovation for China’s defence sector.”