The Empire Strikes Back: PRC crackdown on Chinese organised crime in South East Asia
The Asian Crime Century briefing 108
The People’s Republic of China (PRC) has stepped up action to combat organised crime groups operating online fraud and online gambling in South East Asia. Most of the efforts to combat the problem are coordination between countries involved, including Myanmar and Thailand. The PRC has appointed Liu Zhongyi, an assistant minister of Public Security, to coordinate efforts to crack down on online fraud syndicates as part of tri-lateral cooperation between the three countries.
Recent efforts involve a renewed and systematic crackdown on the organised crime syndicates operating online fraud compounds, and that the PRC is the only country with the resources, intelligence, and willingness to drive this crackdown.
More victims of people trafficking related to online fraud syndicates are continually being repatriated to their home countries after enforcement operations in Myanmar, although distinguishing between victims and active participants is a complex process that requires interviews and investigations by law enforcement agencies of the receiving countries.
The PRC led efforts are also having an impact in Thailand. As Liu Zhongyi has been moving frequently across the border between Thailand and Myanmar for coordination meetings, there have been questions in Thailand regarding whether his actions compromise Thai sovereignty. The Thai authorities have stated that they are fully aware of Liu’s multiple movements across the border during February and that these are part of the tri-state collaboration.
In early February, President Xi Jinping visited Thailand and during discussions with Thai Prime Minister Paetongtarn Shinawatra raised the issue of legalisation of casinos in the country and how this could cause even greater criminal activity. This direct question to the Thai PM indicates how important the issue of online illegal gambling is to the PRC government, which sees this as a major driver of organised crime activity targeting Chinese nationals in the region.
Also in February, a PRC Foreign Ministry spokesman stated that fighting online gambling and telecom fraud is important to safeguard the common interests of China and other regional countries and that bilateral and multilateral cooperation would continue. It is noteworthy that the PRC government clearly states “online gambling” along with online fraud, indicating how they are connected and also the seriousness of the illegal gambling problem.
The Dark Side
The reality is that the PRC is the only country in the region that can coordinate action against organised crime groups operating online fraud and other criminal business lines across national borders. This is partly due to the fact that Chinese organised crime groups lead a great deal of online fraud and online illegal betting, and partly because the PRC authorities have the scale and capabilities to lend to other national law enforcement agencies.
There are frequent comments appearing in news media suggesting that the PRC condones or encourages the organised crime activity around online fraud and online illegal betting, which indicates a lack of insight into the region. Some analysis of this is necessary.
Chinese organised crime has expanded internationally in parallel to Chinese business expanding in response to the long term opening up of the economy, the encouragement by the government to Chinese nationals to “go out” to the world, as well as the Belt and Road Initiative (BRI) that has led to tens of thousands of Chinese working on projects overseas. In parallel, Chinese criminals have also been able to expand their influence through the BRI trade and business networks that have facilitated the movement of Chinese people and capital.
Some PRC government agencies such as the Ministry of State Security (MSS) have a history of utilising criminals in the same way that they would utilise anyone who could be useful to their operations. The most visible example is Wan Kuok-kui (or ‘Broken Tooth’), former leader of the Macau faction of the 14k triad society, who was cultivated by the MSS before he was arrested by the Macau Judiciary Police (according to Portuguese officers who had surveillance of the contacts). In 2012 just before Wan was released from prison in Macau, he was visited in prison by several PRC government officials who persuaded him to promise that he would ensure peaceful coexistence with other triad factions, and set up a platform to promote peace, harmony and unity based on Chinese culture and history aimed at encouraging reunification with Taiwan (Asian Crime Century briefing 86). In return, Wan would be given his Mainland Travel Permit so that he could travel in the PRC and an assurance that he would not be a target if he did not cause any major unrest.
This is an example of “influencing” operations that are conducted by the assorted intelligence agencies of the PRC. They should not all be interpreted as action authorised or even instigated by the central government in Beijing. There is great complexity to the intelligence activities of the PRC government, which has been explained by experts such as Alex Joske and Matt Brazil.
Alex Joske has explained that “The immensity of the CCP’s intelligence community is another distraction from its influence operations”, which are conducted by the United Front Work Department, multiple departments of the People’s Liberation Army, the Ministry of Public Security, and the Ministry of State Security. The MSS has, according to Joske, offices and units in every region and major city in the PRC (Joske, ‘Spies and Lies’, 2022).
Matt Brazil has further explained this complexity of intelligence agencies, which under the PLA include the Information Support Force, which apparently performs signal intelligence; the Cyberspace Force, which would seem to perform hacking on military targets,; the Military Space Force, which involves satellite reconnaissance; and the Intelligence Bureau of the Joint Staff Department, formerly known as ‘2PLA’. There may be human intelligence aspects to the work of all of these departments.
There is likely to be a similar complexity to PRC government intelligence and influencing activities in Myanmar, Thailand and other countries in South East Asia where online fraud and online illegal betting operated by organised crime groups is taking place.
The military regime in Myanmar has had a good relationship with the PRC due to the similar views of governing, which put national security ahead of human rights. This cooperation extends to the purchase by Myanmar of Chinese surveillance equipment, such as CCTV cameras with facial recognition capability which have been deployed to multiple cities across Myanmar since 2022. The common security outlook from Myanmar and the PRC is also reflected in the reported formation of a joint security company that is intended to safeguard projects on the China-Myanmar Economic Corridor as well as other Belt and Road Initiative (BRI) related projects. The committee formed in October 2024 to prepare the establishment of the security company has responsibilities that include scrutinising the import of “weapons and special equipment”.
This trend of expansion of PRC security influence has continued, with the Myanmar military regime last week passing a new ‘Private Security Services Law’ which enables Chinese private security organizations to be stationed in Myanmar to protect Chinese interests. The success of opponents of the military regime as well as the varied armed ethnic military groups around Myanmar means that the government cannot effectively protect external investors, including Chinese people and companies engaged in BRI projects. The new Private Security Law allows private contractors to carry firearms, and that the companies must assist the authorities with security and law enforcement operations. The law will open up Myanmar to PRC private military contractors and security companies, which have expanded around the world to protect Chinese people and assets.
The expansion of Chinese security companies in Myanmar may also benefit criminal groups benefitting from the BRI. Wan Kuok-kui stated in a speech in February 2018 that he planned to establish a “Hongmen Security Company” for Chinese merchants on the “One Belt One Road” initiative and that the motto of the Association is “loving and supporting the country, Macau, and Hong Kong.” Wan said in his speech, leaked in a video clip, that “I will do my utmost to promote the national policy and assist in whatever way for peaceful and united cross-straits relations.”
“Hongmen” (洪門, or Hung Mun) is another name that originates from the Tin Tei Wui (Heaven and Earth Association), one of the variations of Chinese secret societies which are not all criminal. “Hongmen” exist in many overseas Chinese communities as mutual aid associations, but the use of the term for his security company by Wan is doubtless as a cover for the criminality.
The PRC government clearly has a vested economic interest in security for Chinese investments in Myanmar, but also political benefit from being able to exercise some control over the country because of its proximity. The PRC and Myanmar share a border that stretches for over 2,000 kilometres. This is a complicated region with multiple ethnic groups on both sides of the border. Yunnan includes ethnic Bai, Dai, Miao, Naxi, Zhuang, Yi, Yao, Wa (many also in upland Myanmar), and at least a dozen others. Many of these groups are common to the region, and hence there are villages in both Myanmar as well as the PRC.
This is not a controllable border due to the topography, which is largely thick forest and hills. It is hence a region with multiple ethnic groups who share tribal bonds in both countries and can move freely if they wish to do so along the porous border. The PRC authorities know the threat from the region well as it was the redoubt of the last Kuomintang army that retreated from Yunnan Province to Myanmar in 1950. Those KMT forces fought on for over a decade, and also extended their intelligence activities into Thailand as part of their guerrilla war against the Chinese communists. The threat of instability in this south west corner of the PRC continues to prey on the mind of the central government.
In October 2024, former military intelligence officers from Myanmar reportedly met with PRC think tank officials to discuss the extent of infiltration of Myanmar by anti-Chinese intelligence agencies, including the CIA and Taiwanese intelligence. The (retired) Myanmar intelligence officers visited two PRC think tanks in Beijing for discussions “on issues of mutual concern”, which provides a back-door means of communications with PRC intelligence and foreign policy officials. Think tanks in the PRC are subordinate to or simply part of the government and must adhere to the official guidelines in their research and publicity activities (Li and Song, The Rise of Think Tanks as Institutional Involution in Post-Socialist China). Some are simply a front for PRC intelligence agencies, such as the China Institutes of Contemporary International Relations which is reported to be operated by the 11th Bureau of the Ministry of State Security (Mattis and Brazil, Chinese Communist Espionage).
Clearly the PRC government has economic, political, and most importantly security interests in Myanmar. The explosion of online fraud and online illegal betting operations in Myanmar, especially in Karen State, have no benefit to the PRC. Throughout the operation of these centres a large number of the victims have been Chinese nationals inside their own country. Huge amounts of capital have been transferred out of the country through online fraud, but more so through online illegal betting. In addition, Chinese organised crime groups have profited and grown through these illegal businesses and become international as well as transnational, which will be a long term problem for the PRC as it will have to combat these cash rich and increasingly sophisticated groups.
The Emperor is Not as Forgiving…
The PRC empire of law enforcement and intelligence agencies is striking back against online fraud and online illegal betting operators based in Myanmar, illustrating a common response of Chinese enforcement. Typically, emerging crime problems in a province or a region of the PRC are not reported quickly to the central government in Beijing. For instance, financial crime in Macau grew to huge proportions and became a major conduit for the exit of capital from the PRC, but it took the central government a decade to understand the scale of the problem and act. The response from around 2018 was comprehensive and triad run casino junkets in Macau, which were responsible for facilitating the growth of money laundering and capital outflow, were largely eradicated.
As a Chinese government official explained to me when I asked him why the central government had not acted earlier against the huge triad run casino junket and money laundering in Macau, “Why would anyone in a Province or City report such problems to Beijing – This would show failure at the local level.” The same is true of the problem of online fraud – It took the central government in Beijing many years to understand the extent of the problem and to act, but when they did so they act with overwhelming force and a determination to wipe out the problem. We should expect the empire to keep striking back against online fraud and online illegal betting activities in South East Asia for some time to come.