China is supporting the establishment of private security contractors, based on the model established by the American Blackwater security in the early years of the war on terror. Erik Prince, the former SEAL who founded Blackwater in 1997 has become something of a celebrity in China because Prince came up with so many innovations for providing world-class security services for those working in the most hostile environments on the planet. Western mass media decided that companies like Blackwater made excellent villains for the competitive news business. Along the way, the mass media left out the fact that firms like Blackwater continue to be used by government agencies (like the State Department, CIA and others) who had personnel working in dangerous parts of the world. That business continues to expand and the Chinese noted what was really going on with Blackwater and sought to emulate it. To that end, they went into business with Prince, who had founded other international security companies after he sold his interest in Blackwater.
The Chinese could have duplicated Blackwater themselves because details of most of the innovations Blackwater implemented were no secret. But in China Prince was seen as a brilliant innovator and even though doing business with Prince meant details of the new Chinese international security firms would be available the U.S. government, it was a price worth paying. Prince was particularly popular with the thousands of newly rich Chinese entrepreneurs who felt increasingly vulnerable when they visited their operations parts of the world where wealthy Chinese were seen as excellent targets for kidnapping for ransom. Chinese overseas operations were also often exposed to extortion, theft and intimidation in general. Blackwater provided more effective security for American firms doing the same work in dangerous locations where other foreign firms (especially Chinese) were also operating. These Chinese firms had long depended on local security firms, or local governments, for security. Using local firms was often not enough, which American firms had long ago learned. and found a solution for.
What Blackwater did was develop better techniques for hiring the most qualified security personnel (usually former military, especially special operations veterans), paying them what they were worth and equipping them with what they needed (including communications, small arms, armored vehicles and helicopters). These security professionals were dealing with their security assignments with the same thoroughness (in planning and execution) they had learned, and often used, in the military. The Chinese were impressed by the thoroughness and efficiency Blackwater used to become and remain the best. China had all the components to build their own Blackwater and by partnering with Prince there was less hassle with the Chinese bureaucracy, which was often hostile to new ideas.
Over the last five years, China has developed an even greater need for effective private security companies because of growing Chinese investments in remote areas (where security was a major problem) and most critically because of the Obor (One Belt, One Road) project. Back in 2013, when the Chinese government began developing an economic and military expansion plan, they came to refer to it internally as Obor. The object of Obor was to coordinate Chinese overseas infrastructure proposals being planned by Chinese commercial firms, into one strategic plan that the Chinese government could coordinate to provide diplomatic and military assistance to carry out all the projects more efficiently and with a minimum of duplication. The government would also provide easy access to capital and diplomatic support as needed. What the government would not supply was military support. That was seen as counterproductive. Private security arrangements were an accepted and much less controversial way of doing business.
In early 2017 China went public with Obor via a PR campaign that described it as a revival of the ancient “Silk Road.” That’s not accurate as the ancient Silk Road was only partially run by the Chinese. Most of it was operated by other major powers (Iranian, Indian, Turks and Arabs) and was largely put out of business after the 16th century by European innovations in ship building and management of sea routes that provided a safer and cheaper way to move goods worldwide. Moreover, until the late 20th-century Chinese leaders never encouraged (and often banned) foreign trade. For most of Chinese history, the leaders believed China had all it needed (largely true) and considered all non-Chinese and their products inferior. The big change now is that China needs international trade and Obor is the Chinese plan to control and protect as much of it as possible. This is essential for a prosperous economy because without that the communists are in big trouble.
Obor means China owning or otherwise controlling as many of the new roads, railways, ports, pipelines and sea routes as possible. China is investing nearly $200 billion in Obor construction. This includes land routes through Central Asia to Europe and the Middle East, another through the Himalaya Mountains to the Indian Ocean (soon to be under new management if China has its way) and new land connections into Southeast Asia. The key to China’s new sea routes is asserting ownership of the South China Sea. Pakistan, Nepal and Burma are all demanding renegotiation of terms and rejecting Chinese interpretations of some of the deals. For example, China assumed that trade along the Obor would accept the Chinese yuan as an international currency similar to the dollar, yen or euro. Many nations are not ready for that and let the Chinese know that when China tried to implement its interpretation of how the yuan was to be treated.
Another feature of Obor is that it offers business relationships that are more acceptable (than Western ones) to most of the areas Obor is investing in. The Chinese can, as they like to put it, be more flexible and respectful of local customs. In other words, the Chinese don’t see bribes and corruption as a defect but an opportunity. This is great for the foreign political and business leaders but less so with most of the others and this is causing problems. Africans and Asians living near many Chinese foreign operations complain that China is the major investor in illegal extraction of raw materials and keeping local gangsters and corrupt politicians in business. The Chinese also violate local labor laws with impunity and often hire their own armed security personnel who will shoot to kill if threatened by angry workers or local residents. Keeping local tyrants in power serves Chinese interests when it comes to things like establishing new military bases or preventing other nations from doing so. Corrupt locals also make it easier to carry out espionage operations (locally or in nearby areas). Helping to keep unelected leaders in power also serves to maintain the legitimacy of the current Chinese government which is basically a communist police state and the CCP (Chinese Communist Party) wants to keep it that way. All this is nothing new. For example, once China got its seat in the UN back (from Taiwan) in 1971 it has been notorious for encouraging and using corrupt practices in the UN. Many nations play along and as China became wealthier they were willing and able to buy whatever they needed inside the UN. The latest example of this is how Chinese pressure has caused the UN to withdraw investigators (responding to local complaints of serious crimes) looking too closely at Chinese owned operations in Africa.
Building an overseas empire consisting of many outlaw operations, in addition to mostly legitimate ones, puts a lot of Chinese at personal and financial risk. Until recently China had few security companies authorized to work overseas and most of the security firms (about 5,000) in China were doing little beyond providing watchmen (some armed) and bodyguards. Overseas this was inadequate, thus the need for Blackwater-type methods and standards. A firm like Blackwater would not be allowed to operate inside China, as it smacks too much of a private army that could be used against the state. That is something that has happened frequently in Chinese history. But overseas is another matter. If the new generation of Chinese security firms misbehave overseas that is something the Chinese can simply condemn and distance themselves from. In the meantime, there are many Chinese overseas investments that cannot operate without adequate security. This is something the local government is often unable or unwilling to provide and those foreign governments are usually tolerant of Chinese security firms because those, and the Chinese investments they protect, can be ordered to leave. This is often self-destructive but that is a risk Chinese firms accept when they operate in areas like the Middle East to Venezuela.