The alert: protect Europe’s strategic infrastructure from China’s sights

Politics - January 25, 2023

Days ago, ECR Group MEPs signed – among others – a letter addressed to the EU Commission, aimed at denouncing the risks to Europe’s strategic infrastructure in the crosshairs of an ever-growing Chinese influence strategy.
The MEPs alerted the executive to the risk that the €1 billion fund for EU Customs Control Equipment (CCEI) would not see its position in European supply strengthened by the Chinese company Nuctech.
The position of the parliamentarians, expressed in the letter viewed and quoted by Politico.eu, is that any agreement made with Nuctech for the supply of X-ray scanning equipment would seriously jeopardize the national security of member states and the Union, because it could allow the information collected by the equipment about goods and travelers to fall into the hands of the Chinese Communist Party government. Hence the request to the EU Commission led by Ursula von der Leyen to keep Nuctech out of the deal by excluding it from the CCEI’s tenders.

CCEI: the Customs Control Equipment Facility.

With a budget of about 1 billion euros for the period 2021-2027 which will be implemented every seven years by the European commission, the Customs Control Equipment Instrument – CCEI is available to member states for the purchase of customs control equipment. The CCEI also supports the maintenance and upgrading of equipment to enable EU countries to always have state-of-the-art technology in the control activities of goods and people in transit at their borders. The Customs Union can thus rely on ever-new tools such as scanners, automated license plate detection systems, sniffer dog teams, and mobile laboratories for sample analysis. The CCEI is one of the two components of the Integrated Border Management Fund, the other being the Border and Visa Management Instrument (BMVI). According to what Politico.eu was able to read in the MEPs’ letter, the main concern expressed to the Commission is that “The use of EU funds to further consolidate Nuctech’s presence in Europe’s critical infrastructure represents a unique opportunity for the company and the Chinese government to collect sensitive customs data that could be detrimental to the commercial and security interests of EU member states.” The warning also refers to the security of European borders that could even become dependent on the very personnel from Nuctech that would necessarily be employed to operate and maintain them. This management scenario would certainly present another risk.

Nuctech: Chinese company to supply customs control and inspection equipment at the center of MEPs’ dispute

Nuctech Technology Co. Ltd. is a company founded in 1997 as an offshoot of Peking Tsinghua University. It is officially a partially state-owned company since the “parent company” from which Nuctech originated is Tsinghua Tongfang, a state-owned software development company in turn controlled by China National Nuclear Corporation, a state-owned enterprise founded in 1955. The top management of this company, President and Vice President are appointed by the Premier of the People’s Republic of China. The CNNC oversees all aspects of China’s civil and military nuclear programs. Tsinghua Tongfang owns two-thirds of the shares of Nuctech, while China National Nuclear Corporation owns 21 percent of the shares of Tsinghua Tongfang, which is listed on the Shanghai Stock Exchange. In contrast, CNNC owns 16 percent of Nuctech. These are the few clear tidbits of information about what appears to be an intricate web of correlations within which it is very complicated to be able to correctly trace who actually owns Nuctech. It is worth noting that one of Nuctech’s chairmen was Hu Haifeng , son of former Chinese Communist Party General Secretary Hu Jintao.
However, as it reports on its website, Nuctech produces technology solutions in the area of security inspections. Its services are provided in civil aviation, customs, railways, trucking, building security and during major events. The body temperature screening technology we saw at work during the Covid-19 pandemic is also in the Nuctech portfolio, while in the United States for example, the corporation has in the past provided body scanners used for security in the prison system.

Key criticisms and controversies about the security of Europe’s vital infrastructure

As mentioned, because of more than likely ties to the Chinese Communist Party-led regime, the MEPs who signed the letter, alert the Commission to security concerns arising from entrusting Nuctech with the supply of inspection technology first for Strasbourg airport and now, potentially for other strategic European infrastructure. According to MEPs, Nuctech would only be operating in pursuit of deals on so-called “vital” infrastructure, which is alarming when one considers that with their technologies they could come into possession of hundreds of thousands of data concerning travelers, cargo and other traffic within the Union. On the other hand, the Chinese company has responded to the allegations, through its Dutch branch headed by Robert Bos, by rejecting the disputed assumptions and giving reassurances about data retention. In a statement to Politico, Nuctech said that: it provides scanning equipment, but customers have ownership of the images that its X-ray technology processes, “We are providing the technology but the information comes from our customer. So they are processing this information according to their local policy and rules.” However, the ever-increasing exposure to China is now a widely debated issue in Europe, so much so that the issue of airport scanning technology is likely to be just the tip of the iceberg. It should be added that the company has not explained in any way how it could evidentially rule out the possibility that the data might not end up in the hands of Chinese intelligence anyway.

Other disputes related to security and legality in the rest of the world

In the rest of the world, Nuctech Technology Co., Ltd. has already been at the center of several controversies related to security risks and other assumptions of illegal actions. In 2020, the Canadian government, after an internal investigation, found itself forced to reject an agreement to supply it to the Canada Border Services Agency. Since 2014, the Transportation Security Administration has banned Nuctech equipment from U.S. airports for security reasons. In 2020, the U.S. placed the company on its security blacklist. U.S. officials recently protested to Mexico, according to a Washington Post report, urging it not to purchase Chinese technology to monitor its borders because their equipment is not considered “trustworthy in terms of data integrity and transmission.” Other controversies in the past have arisen in Namibia and Taiwan where corruption scandals have led to arrests and convictions of Chinese state and corporate officials. Those arrested in Namibia were later acquitted and released, while in Taiwan the former head of aviation security was convicted of bribery in procurement. In July 2009, Nuctech came under the lens of an anti-dumping investigation by the European Union, which in 2010 imposed a five-year tariff on Nuctech products for alleged dumping in the European market.

The position of European conservatives on Chinese influences and European strategic security

The European Conservatives and Reformists Group-ECR argues that China’s footprint in terms of strategic foreign investment in infrastructure is growing rapidly, including in the EU. In several member states, for example, Chinese state-owned companies have acquired parts of key infrastructure such as ports. The ECR Group believes that the EU and its member states need to take a tougher stance to protect their strategic infrastructure from Chinese influence.