Identifying Networks of Chinese State Influence on Chinese Firms

The Chinese Communist Party (CCP) has long exerted influence over Chinese firms. In some cases, this influence takes the form of direct ownership, but in others, the influence is more opaque, hidden by layers of intermediary shell companies or company executives. Identifying specific connections between the CCP and private companies — particularly when these companies are attempting to invest in or acquire U.S firms — is important in order to safeguard various Department of Defense and U.S. Navy equities:

• Preventing theft of sensitive military or civilian technology and intellectual property
• Preventing U.S. companies, particularly in industries related to national security, from coming under CCP influence
• Preventing Chinese companies from spying on U.S. targets on behalf of the CCP

Since 2016, CNA has been developing the capabilities and tools needed to identify such connections. In a recent pilot project, CNA’s China experts teamed with its data scientists to explore how social network analysis, a set of analytical techniques for characterizing and visualizing complex relationships, could identify potential sources of influence on Chinese firms.

Using publicly available Chinese-language materials, the team compiled a database of more than 65,000 Chinese companies and the corporate relationships between them. Social network analysis quickly identified the shortest paths between private companies and elements of China’s state‑owned enterprise network — even when these paths were obscured by multiple layers of intermediaries and personal connections.

The database provides detailed information about each business, such as its industry and operating capital, as well as the identities of its subsidiaries, shareholders and key executives. Such information is critical in identifying potential sources of influence on Chinese firms.