China In Eurasia

Debate has raged for decades over whether Beijing is actively exporting its authoritarian system abroad, but a new report based on a trove of previously unexamined government documents shows how China is experimenting with spreading its model to other countries.

The new report released on June 13 by the Atlantic Council, a Washington think tank, is based on 1,691 files from China's Commerce Ministry that were logged online in 2021 and 2022. The dataset describes 795 governmental programs made up of trainings and exchanges with foreign officials that the documents state are designed to promote ideas and practices from China's economic and political model among countries in Eastern Europe and the Latin American, African, and Asian countries that make up the so-called Global South.

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"This is real evidence to support what has been becoming a growing belief among the expert community," Niva Yau, the report's author and fellow at the Atlantic Council's Global China Hub, told RFE/RL. "We can now demonstrate in China's own words from its internal planning documents what it is trying to do."

Chinese officials have repeatedly said Beijing isn't exporting its authoritarian system for governing, but the collection of government files add to an emerging body of evidence showing that China is trying to sell the merits of its model to officials across the Global South while also developing new initiatives and practical programs to speed up their adoption.

The China Model

The Chinese Communist Party (CCP) has held an exclusive grip on power for more than 70 years and seen its economy boom in recent decades using a model based on single-party authoritarian political rule married with a state capitalist economic system.

Promoting this system to other countries around the world is seen by analysts as a way to cultivate an authoritarian-friendly political bloc that could help Beijing reshape global institutions and counterbalance Western attempts to isolate China with economic sanctions or criticism of its commercial practices, territorial claims, or human rights record.

Many of the documents in the report describe training programs on trade-related areas like port management guidelines, adopting BeiDou -- China's answer to the U.S.-created Global Positioning System (GPS) -- and sectors like blockchain and other new technologies.

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The files, however, also delve into other areas traditionally outside of the Commerce Ministry's purview. Some promote exchanges centered on how local think tanks can help implement the Belt and Road Initiative (BRI) -- China's multibillion-dollar infrastructure project -- and also push Chinese government policies through programs focused on issues like integrating ethnic minorities, managing new forms of media, and training in Chinese governance practices tailored for presidential advisers from foreign governments.

The programs themselves are set up through bilateral agreements or through Chinese-led multilateral regional organizations where they focus on specific geographic regions and groups of countries that share a similar language.

For example, multiple documents describe training courses for local government leaders, university presidents, and political advisers "from Russian-speaking countries," while other programs are specifically designed for officials from member states of the Shanghai Cooperation Organization (SCO), which includes China, India, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan, and Uzbekistan.

Yau says these programs are designed to sell a narrative to the Global South that the swift economic advancement experienced by China over the last three decades is the direct result of the country's authoritarian approach to governing.

"These files show that China is exporting not only the hands-on knowhow for its economic success but is also spreading the idea that this success directly stems from the governing methods of the [Chinese Communist] Party," she said.

'An Intelligence-Collection' Dimension And Beyond

While many governments around the world promote practical exchanges and trainings with officials from foreign countries, the tranche of files documented by Yau stand out in that many use dry government language to explicitly endorse a nondemocratic approach to issues like regulating national media, managing legal affairs, and controlling the flow of information online.

Another dimension documented by Yau's report is that many of the programs, especially those geared toward government officials, appear to "serve intelligence-collection purposes" because they require "each participant to submit reports detailing their prior exchanges and engagements between them and other foreign countries in the specific area of cooperation related to the subject of training."

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Yau says this requirement from the programs serves multiple ends by first providing an important stream of data collection on foreign government officials. But she says it can also serve as a way to assess the openness of each individual official to the views and policies being advocated during the exchange.

"It can allow [the Chinese side] to decide if this person can be developed as a kind of middleman to facilitate further cooperation with China and their country," she said.

China's outreach and training programs with foreign governments have existed for decades under the purview of the International Liaison Department (ILD), an agency under the CCP's Central Committee, whose core function is party-to-party diplomacy.

But while the ILD was traditionally tasked to engage with countries with one-party rule or similar communist structures, it has expanded in recent years to run programs and exchanges regardless of the orientation of a political party, and has recently held meetings with top-level officials from countries like Kazakhstan and Serbia.

The report highlights how other sections of the Chinese government have also begun to hold similar types of exchanges. In addition to the Commerce Ministry, at least 10 Chinese ministries and departments have held training programs for foreign government officials in the past three years, according to Yau's research.

Given the newly examined files and other evidence, Yau says it's becoming clear that Beijing is trying to export aspects of its political model abroad. Less clear, she says, is the impact that such efforts are having across the world.

"In these files, we can see the intent of what Beijing wants to achieve," Yau said. "Maybe it's too soon to feel the effects yet, but these programs have substantially increased since the late 2010s and they are involving thousands of officials from across the Global South."

With Western officials looking to hamper Beijing's support for a Russian economy reoriented around the war in Ukraine, China’s smaller banks have emerged as a new target.

How to deal with the small Chinese financial institutions that are helping Moscow evade Western sanctions will be a top agenda item at the Group of Seven (G7) summit in Italy on June 13-15. U.S. officials have said that going after booming Chinese-Russian trade -- particularly the supply of nonlethal but militarily applicable dual-use products -- is a priority.

“We will address [China’s] support for the Russian defense industrial base,” White House National Security Communications Adviser John Kirby told reporters on June 11. “We’re going to continue to drive up costs for the Russian war machine. And this week we will announce an impactful set of new sanctions and export control actions.”

Western officials have not commented publicly about plans to target smaller Chinese banks, but Reuters reported that the United States and other members of the G7 bloc of wealthy democracies -- Britain, Canada, France, Germany, Italy, and Japan -- are set to focus on how to respond to the issue during their private meetings but are not expected to issue any immediate sanctions against the banks.

China has emerged as a top partner for Russia since its full-scale invasion of Ukraine with analyses of Chinese customs data showing that in 2023, 90 percent of dual-use goods deemed “high priority” and used to make Russian weapons came from China.

Worried about being targeted by U.S. secondary sanctions, China’s big banks have begun to limit their cross-border transactions involving Russia and Russian firms, with Chinese companies that trade with Russia instead moving to smaller banks or underground financing channels that are difficult to track and have less exposure to the international financial system.

“This is what I call the ‘burner bank’ strategy,” Tom Keatinge, director of the Center for Financial Crime and Security Studies at the Royal United Services Institute, told RFE/RL. “If the United States or other G7 countries sanction these banks, there is likely to be very limited contagion and the impact on the bank will likewise be limited as the bank has no need for access to the international banking system.”

What Kind Of Response?

Growing concern over how to handle Russia and China dominated meetings in April and in May when G7 ministers met in Italy to try and forge a united front on critical matters and leverage their combined economic power.

That will carry over to the upcoming G7 leaders’ summit, where they are expected to tackle a range of issues, from leveraging profits from Russian assets frozen in the West for Ukraine to the Israel-Hamas war and growing tensions in the Indo-Pacific.

On the eve of the summit, the United States issued new sanctions targeting hundreds of individuals and companies for helping Moscow circumvent Western blocks on obtaining key technology, including seven Chinese-based companies.

The Chinese Foreign Ministry had already preemptively hit back over Western pressure, saying on June 11 that it will take all necessary measures to “firmly safeguard the legitimate rights and interests of Chinese enterprises,” in response to warnings from Washington and its partners about the links between smaller Chinese banks and Russia.

The United States and its partners have so far been reluctant to go after Chinese financial institutions over their Russian links, particularly the major banks because sanctions could have ripple effects across the global economy and increase tensions between Beijing and Washington.

Senior U.S. officials have said Beijing is providing Moscow with drone and missile technology, satellite imagery, machine tools, and other dual-use goods, and stepped up their criticism of Beijing in recent months.

U.S. Treasury officials have repeatedly warned financial institutions in Europe, China, and elsewhere that they face sanctions for helping Russia skirt Western sanctions. In December, Washington said it is prepared to use sanctions and tighter export controls to reduce Russia's ability to navigate sanctions, including imposing secondary sanctions that could be used against banks and other financial institutions.

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Those warnings appear to have yielded some results, with large Chinese banks stepping up scrutiny of their transactions with Russian entities and other institutions, even halting processing deals with some companies. Trade flows between China and Russia have also slowed amid renewed warnings from the West, with Chinese data for March and April showing that exports to Russia are declining, reportedly due to concerns by Chinese banks of being hit by secondary sanctions from Washington.

But the renewed discussion set for the G7 indicates that Western officials are concerned that some Chinese financial institutions are still facilitating trade in civilian goods with military applications at significant levels.

Keatinge says the United States and its G7 partners risk making empty threats without taking action against Chinese banks or other entities helping fuel Russia’s war effort against Ukraine.

“The risk is rising given the lack of overt action since December 2023,” he said. “Put simply, without action, there is no reason for foreign financial institutions to genuinely fear consequences.”

Sanctions Proofing

Calls for a tougher approach on China over its support for Ukraine have also exposed divisions within the West and even among G7 members.

While the grouping has managed to stay largely united in support of Kyiv and has taken other measures against Chinese overcapacity in trade, including the European Union recently unveiling new tariffs against Chinese electric vehicles, targeting Chinese banks is less straightforward.

Some members have stronger trade relationships with China and are cautious to jeopardize their bilateral ties -- and curbing Beijing’s support for Russia may be difficult to do with sanctions.

The United States has hit smaller Chinese banks in the past, such as when it sanctioned the Bank of Kunlun in 2012 over various issues -- including working with Iranian institutions -- but many of China’s smaller banks involved in dual-use trade also have limited or no exposure to the Western financial system.

Added to that, China and Russia have worked to generate more trade using China’s yuan instead of the dollar in the wake of the Ukraine war, potentially shielding their economies from any U.S. sanctions.

Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations, says it’s unclear how G7 countries intend to tackle China’s growing support for Russia and that any action would be “ineffective if Chinese banks handling sensitive transactions between Beijing and Moscow had no ties to Western financial instruments.”

“Imposing ineffective sanctions would likely backfire by boosting Chinese and Russian false claims that such measures are useless,” she said. “This conundrum illustrates how China is gradually sanctions-proofing its economy, which is becoming increasingly immune to Western economic statecraft.”