Since the onset of the COVID-19 pandemic, Southeast Asia has become a hub for one of the most lucrative criminal industries in the world: online scamming. These scam operations, run mostly by Chinese organized crime syndicates, have proliferated in loosely regulated parts of Myanmar, Laos, and Cambodia, and are also known to be present in the Philippines and Indonesia. These operations have defrauded billions of dollars from tens of thousands of victims around the world, while trafficking tens of thousands of people to work in prison-like scam factories, often attracting them with promises of legitimate employment.
Since the rise of this “scamdemic,” China’s response has been confusing. As Selina Ho, Xue Gong, and Carla P. Freeman wrote in a recent article for the Journal of Contemporary China, Beijing has ample reasons to crack down on these operations, due to the “negative publicity they generate affects China’s image, reputation, and influence in Southeast Asia.” However, there has been a great deal of variation in where China has intervened to quash scam operations – and how.
Ho, the co-director of the Centre on Asia and Globalisation at the National University of Singapore’s Lee Kuan Yew School of Public Policy, spoke to The Diplomat’s Southeast Asia Editor Sebastian Strangio about how China has viewed the scamdemic and what she and her co-authors’ concluded about its patterns of intervention in Cambodia, Laos, and Myanmar.
First off, how do you account for the origins of the Southeast Asian scamdemic? Why here, and why now?
Chinese transnational syndicates have been in the region for some time, facilitated by China’s “going out” policy since the 1990s. This is an unintended consequence of China’s opening up and reform. It is perhaps almost inevitable that shady businesses and businessmen move out of China in tandem with legitimate Chinese businesses. However, the scale of fraud, scams, human and drug trafficking, and money laundering committed by these criminal elements rose to an entirely new level when China launched the Belt and Road Initiative (BRI) in 2013. The BRI provided cover for these criminal groups, which tried to legitimize their activities by placing them under the BRI banner.
During the COVID-19 pandemic, these operations expanded. Devoid of (mostly Chinese) customers during the pandemic, casinos turned to online gambling. Online gambling turned out to be very lucrative and these activities have continued to grow despite efforts by Chinese authorities and host governments to stamp them out. Additionally, President Xi Jinping’s anti-corruption and anti-crime crackdown has forced these illicit operations to move outside China, first to Macau and then to Southeast Asia.
Southeast Asia is fertile breeding ground for these illicit activities. Geographical proximity and the porousness of shared borders with China made it easy for these criminal gangs to operate and difficult for authorities to crack down. Many of these “scam centers” or “gray special economic zones” are in weakly-governed parts of border regions, for instance, in the Golden Triangle area, at the borders of Myanmar, Laos, and Cambodia, where drug lords used to dominate. Some of these illicit businesses are also wrapped up in the internal politics of these states. For example, the profits from scam centers that are spread across the Northern Shan State in Myanmar, which borders China, are fueling the civil war in Myanmar.
According to your research, China has responded to the rise of transnational crime networks in mainland Southeast Asia in a variety of ways. As you write, “it has intervened in some cases but not others.” Give us a sense of the spectrum of responses that you identified in Cambodia, Laos, and Myanmar. What has intervention looked like?
Basically, China has intervened when it assesses that the extent of damage to its national interests have reached a critical level. China has a hierarchy of interests; the stability and security of its borders and citizens are high on its list. This has been the case historically and became even more important when Deng Xiaoping came into power and opened up the country in 1978. In more recent times, President Xi has made it clear that national security is his top priority. Additionally, as China rises, it wants to portray itself as a responsible great power. In this regard, its international reputation and the legitimacy of the Chinese Communist Party has become more important. Hence, China intervenes when the illicit activities of Chinese criminal syndicates reach proportions that harm stability along its borders, Chinese citizens overseas, its international reputation, and the credibility of the BRI.
How China intervenes depends on the cooperation of host countries, that is, the cooperation of both state and non-state actors in the countries where the illicit businesses are located. It intervenes more directly – for instance by conducting joint police and intelligence operations – or interferes in the domestic politics of host countries when local actors are willing to cooperate. For instance, in northern Myanmar, China has intervened in the civil war by playing off the junta and the resistance groups against each other as a form of pressure to get their cooperation to shut down scam operations. Many of these operations are affiliated with the junta or the ethnic resistance groups.
Its interventions are less direct when local authorities are less cooperative. For example, it exerted diplomatic pressure on the Cambodian government to clamp down on Chinese criminal gangs engaged in lawlessness in Sihanoukville, but it could not deploy Chinese police on the ground in Cambodia until the Cambodian government signaled its intentions to act against the Chinese criminal gangs. Subsequently, as the Cambodian government became more cooperative, Yunnan police and PRC Ministry of Public Security officials became directly involved in law enforcement operations against the Chinese gangs.
Where has China engaged most forcefully, and where has it been the most “hands-off”?
I think I’ve described when China will engage more forcefully in the previous answer. It has been more “hands-off” in criminal enclaves that are not along its borders, for example, in the Yatai New City case, which is situated along the Thai-Myanmar border. China has left it to Thai authorities to deal with the Chinese criminals there. Its interventions are “indirect” – it has expressed support for law enforcement activities there and has clarified that the Yatai New City is not a BRI project. But beyond that, it has not done much.
China has also not intervened in the Golden Triangle Special Economic Zone (GTSEZ) in Laos. Zhao Wei, the boss of the Kings Romans Group, which runs the GTSEZ, has implemented a poverty alleviation program and opium substitution program in Bokeo province, Laos, along with the shadier businesses he has in the GTSEZ. The legitimate parts of his business are in line with China’s strategy of bringing development to the countries along its periphery. Moreover, the Lao national government and Bokeo province saw Zhao’s poverty alleviation and opium substitution programs as beneficial for the region.
While you note the similarity of Cambodia, Laos, and Myanmar, one major difference is that Myanmar is currently in a state of civil war, with ethnic armed groups and civilian militias occupying large portions of the country. How has China sought to engage with Myanmar, and how have the country’s fractured state jurisdictions impacted its response?
China has leveraged its ties with the junta and the ethnic armed groups and opposition groups to safeguard its interests in Myanmar. Securing its border with Myanmar and protecting its citizens from being harmed in the conflict zones are among its top priorities. But China also has other priorities in Myanmar. These are primarily economic, for instance, the China-Myanmar natural gas pipeline that delivers gas from Rakhine State to Kunming, Yunnan province. As you can imagine, this very critical pipeline runs through the conflict zones in Myanmar, from Rakhine State to Shan State, before entering China. It is designed to deliver 5.2 billion cubic meters of natural gas annually. It is critical for China’s energy security. This is just an example of the significant interests that China has in Myanmar. Apart from these interests, China seeks to maintain its influence in Myanmar vis-à-vis India and the Western powers. Myanmar is an important plank of its strategy to be the regional hegemon.
Let me elaborate more specifically on how China has dealt with the scam centers near its border with the Northern Shan State, many of which are linked to the Border Guard Force (BGF) in the Kokang region that is affiliated with the junta. China has long historical ties with ethnic groups particularly in the Wa and Mongla areas. These ethnic groups have traditionally rebelled against the central government and the Chinese side (Yunnan province) has been a key source of supplies, ranging from arms to food. The ethnic groups on both sides of the borders also share the same language and culture. Given these close ties between Yunnan province and the Wa state, in September 2023, China launched operations in the Wa and Mongla areas of Northern Shan State, where many local leaders in the scam compounds hold Chinese identity cards. Chinese public security officials and Yunnan police rounded up Wa officials operating crime syndicates and arrested tens of thousands of Chinese nationals operating scams in Northern Shan State.
Subsequently, on October 27, 2023, an alliance of ethnic armed organizations known as the Three Brotherhood Alliance launched a coordinated offensive against the Myanmar military in Shan State, known as the Operation 1027. To get China’s support, the Alliance explicitly stated as that it aims to rout out scam centers and illegal activities in the area in addition to ousting the junta. Beijing’s response was to play off the Alliance against the junta: while Beijing negotiated with the Alliance to help the junta reach a temporary ceasefire with the rebels, it also capitalized on the Alliance’s advances by strengthening its law enforcement presence in the area. Since November 2023, the PRC Ministry of Public Security has issued arrest warrants for suspects operating in the criminal compounds, among them junta-affiliated high-profile Kokang officials and business leaders. In January 2024, Chinese public security authorities and police successfully arrested criminal figureheads backed by the BGF, including Bai Suocheng, the former chair of the Kokang Special Administrative Zone.
Finally, how has China squared its decision to intervene in certain cases with its much-mooted principle of “non-interference” in other nations’ internal affairs? And has this played a role in constraining the extent of Chinese intervention in certain cases, such as in Cambodia?
China’s “non-interference”/ “non-intervention” policy has been evolving for some time now. Since the PRC’s founding, China has stuck closely to its “non-interference” in the domestic affairs of others rhetoric, so as to prevent others from meddling in its internal affairs. This “non-interference” principle was formalized in its foreign policy framework following the Bandung Conference in 1955. However, as it rises and as its economic and security interests expand globally, this non-interference principle is a lot more nuanced in practice. China needs to protect its overseas assets and citizens abroad. For instance, the PRC Ministry of Public Security has an agreement with its counterparts in Laos, Myanmar, and Thailand to conduct patrols on the upper reaches of the Mekong following the October 2011 killing of Chinese sailors on the Mekong. It has also developed citizen evacuation facilities in the PLA base in Djibouti. China’s 2015 National Security Law has specifically called for protecting its citizens abroad.
China also needs to portray itself as a responsible great power, and hence it has contributed to U.N. peacekeeping forces and played a mediating role in intra-state conflicts in Africa. Its interference has been variously described as “soft intervention,” “consultative intervention,” and predicated on two principles: host country consent and non-military intervention. In practice, however, China has been a lot more intrusive, working with opposition forces in Afghanistan, Pakistan, and Myanmar. Some studies have also shown that China has interfered in the domestic politics of Cambodia to prop up the Hun Sen regime in exchange for Cambodia’s alignment with Chinese interests.
Our study on China’s interventions in managing the scam crises perpetrated by Chinese criminal groups thus builds on these earlier studies on China’s evolving non-intervention policy. It is pioneering in examining how China uses legal tools, law enforcement, and security mechanisms to protect its interests abroad. Chinese interventions have yet to significantly alter regional security norms and institutions. But over time, these interventions, such as such as joint law enforcement operations, training of local police, establishment of Chinese private security companies, mobilization of Chinese communities against criminal networks, and deployment of Chinese surveillance technologies, will likely tie the security frameworks of countries and regions to China. This will in turn impact the regional security architecture and shape the global security order in the longer term.