Security scanners linked to the Chinese government and military

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In some of the world’s most sensitive locations, authorities have installed security screening devices made by a single Chinese company with close ties to the Chinese military and the highest levels of the ruling Communist Party.

The World Economic Forum in Davos. The largest ports in Europe. Airports from Amsterdam to Athens. NATO borders with Russia. All rely on equipment manufactured by Nuctech, which has quickly become the world’s largest company, by revenue, for cargo and vehicle scanners.

Nuctech has been frozen out of the US for years due to national security concerns, but it has made deep inroads across Europe, installing its devices in 26 of the 27 EU member states, records show. public, government and corporate contracts reviewed by The Associated Press. .

The complexity of Nuctech’s ownership structure and its growing global footprint have raised alarm bells on both sides of the Atlantic.

A growing number of Western security officials and policymakers fear that China could exploit Nuctech equipment to sabotage key transit points or gain illicit access to government, industrial or personal data from the items passing through its devices. .

Nuctech critics allege the Chinese government has effectively subsidized the company so it can undermine competitors and give Beijing potential influence over critical infrastructure in the West as China seeks to establish itself as a global tech superpower .

“The data processed by these devices is very sensitive. It’s personal data, military data, cargo data. It could be trade secrets at stake. You want to make sure it’s in good hands,” said Bart Groothuis, director of cybersecurity at the Dutch Ministry of Defense before becoming a member of the European Parliament. “You are dependent on a foreign actor who is a geopolitical adversary and a strategic rival.”

He and others say Europe does not have the tools in place to monitor and resist such potential encroachment. Different member states have taken opposing views on Nuctech’s security risks. No one has even been able to do a full public count of where and how many Nuctech devices are installed on the continent.

Nuctech rejects these concerns, countering that Nuctech’s European operations comply with local laws, including strict security controls and data privacy rules.

“It’s our equipment, but it’s your data. Our customer decides what happens to the data,” said Robert Bos, deputy general manager of Nuctech in the Netherlands, where the company has a research and development center.

He said Nuctech is the victim of unfounded allegations that have nearly halved its market share in Europe since 2019.

“It’s quite frustrating to be honest,” Bos told AP. “In the 20 years we’ve delivered this equipment, we’ve never had any issues with data breaches or data leaks. Until today, we have never had proof of this.

In addition to scanning systems for people, baggage and cargo, the company manufactures explosives detectors and interconnected devices capable of facial recognition, body temperature measurement and identification of ID cards or tickets.

Critics fear that under China’s national intelligence laws, which require Chinese companies to hand over data requested by state security agencies, Nuctech would not be able to resist calls from Beijing to hand over data. sensitive data about cargo, people and devices that pass through its scanners. They say there is a risk that Beijing will use Nuctech’s presence across Europe to collect big data on cross-border trade flows, extract information from local networks, such as shipping manifests or information on passengers, or sabotage trade flows in a conflict.

Airports in London, Amsterdam, Brussels, Athens, Florence, Pisa, Venice, Zurich, Geneva and more than a dozen across Spain have all signed agreements for Nuctech equipment, procurement and government documents, and business announcements.

Nuctech’s ownership structure is so complex that it can be difficult for outsiders to understand the true lines of influence and responsibility.

What is clear is that Nuctech, from its origins, has been linked to the interests of the Chinese government, academics and military.

Nuctech was founded as a subsidiary of Tsinghua University, an elite public research university in Beijing. It grew up with the support of the Chinese government and was led for years by the former Chinese leader’s son, Hu Jintao.

Datennaa Dutch business intelligence firm focused on China, mapped Nuctech’s ownership structure and found a dozen major entities spread across four levels of ownership, including four state-owned companies and three government entities.

Today, Nuctech’s majority shareholder is Tongfang Co., which holds a 71% stake. The main shareholder of Tongfang, in turn, is the investment arm of China National Nuclear Corp. (CNNC), a state-owned energy and defense conglomerate controlled by China’s State Council. The US Department of Defense classifies CNNC as a Chinese military company because it shares advanced technologies and expertise with the People’s Liberation Army.

Xi has further blurred the lines between China’s civilian and military activities and bolstered the power of the ruling Communist Party in private companies. One way: the creation of dozens of government-backed funding vehicles designed to accelerate the development of technologies with both military and commercial applications.

In fact, one such vehicle, the National Military-Civil Fusion Industry Investment Fund, announced in June 2020 that it wanted to take a 4.4% stake in majority shareholder Nuctech, along with the right to appoint a director to the board of Tongfang. It never happened – “changes in the market environment,” Tongfeng explained in a Chinese stock exchange filing.

But there are other links between Nuctech’s ownership structure and the merger fund.

CNNC, which has a 21% stake in Nuctech, has a stake of more than 7% in the fund, according to Qichacha, a Chinese business news platform. They also share staff: Chen Shutang, a member of CNNC’s party leadership group and the company’s chief accountant, is a director of the fund, according to the records.

Nuctech argues that its operations are shaped by market forces, not politics, and says CNNC does not control the management or decision-making of its business.

But Jaap van Etten, a former Dutch diplomat and CEO of Datenna, said the question was “whether or not we want to allow Nuctech, which is Chinese state-controlled and linked to the Chinese military, to be involved in crucial parts of our border security and infrastructure.

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Associated Press researcher Chen Si in Shanghai and journalists Menelaos Hadjicostis in Nicosia, Cyprus, Aritz Parra in Madrid, Nina Bigalke in London, Nicholas Paphitis in Athens, Justin Spike in Budapest, Liudas Dapkus in Vilnius, Lithuania, Zeynep Bilginsoy in Istanbul and Barry Hatton in Lisbon contributed to this report.

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