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CCP, Master of Hostage Diplomacy

On October 11, 2023, Beijing concluded the latest episode of its “hostage game” with Australia, releasing Australian citizen Cheng Lei after three years of detention. Global Mail dubbed Beijing’s actions “hostage diplomacy,” suggesting that Cheng’s arrest was politically motivated.

The elevated tension between Beijing and Canberra started early in 2020 when the Australian government called for an independent inquiry into the origins of the COVID-19 virus. Beijing retaliated by imposing sharp restrictions on Australian imports and then, in August 2020, by  detaining Cheng Lei for several months without a charge. Later, Beijing charged her with espionage.

China held Cheng for over three years. She was released just earlier this month, on a date coinciding with the imminent arrival in Beijing of Australian Prime Minister Albanese. The Prime Minister’s trip was aimed at mending relations between the two countries.

There has been more international attention in recent years on the Chinese Communist Party’s (CCP’s) use of detention tactics to extract concessions, though the practice has a long history. A few weeks ago, the Wall Street Journal reported that foreign companies have been increasingly hesitant to send their executives to China due to fears that the CCP may prevent them from leaving the country. Some examples from recent months include the detention of Michael Chan from U.S. financial firm Kroll as well as the detention of Charles Wang Zhonghe from Japanese securities firm Nomura Holdings Inc. {2} {3} In each case, the CCP’s objective has been to gain leverage and exert influence over these companies.

The most notorious instance of the CCP’s hostage diplomacy was the arrest of two Canadian citizens, Michael Spavor and Michael Kovrig, in 2018. The detentions followed a U.S. extradition request which led to the Canadian arrest on financial fraud charges of Meng Wanzhou, CFO of Huawei and daughter of Huawei’s founder. Beijing seized the two Canadians shortly after the arrest, attempting to initiate a hostage exchange. The exchange eventually took place about three years later, in September 2021, with Meng returning to China after signing a “guilty plea” statement and China releasing the two Michaels. Simultaneously, China also released two U.S. hostages, siblings Cynthia and Victor Liu, whose story received less public attention. These two U.S. citizens had been visiting an ailing family member in China in June 2018 when the Chinese authorities barred them from leaving the country. The Chinese authorities demanded the surrender of the siblings’ father, Liu Changming, a former bank official who had fled China after allegedly making $1.6 billion in illegal loans. {4}

The CCP’s employment of hostage diplomacy has elevated to the level of mastery, moving beyond conventional ransom demands to involve more complex plays including influence over diplomatic and trade relations. It’s not just individuals who have been targeted for detention; a wide range of entities have been subject to the tactic. Company assets and even international trade relations have been taken hostage for the sake of gaining leverage or extracting concessions.

The CCP Has Been Taking Foreign Hostages Since the Beginning

The CCP’s kidnapping tactics date back to the party’s origins, starting as a practice for raising funds via ransom money. The Chinese Communist Party was founded in 1921, and its military force, the Red Army, was established in 1927 to rebel against the Nationalist Party (Kuomintang) government that ruled China at the time. Raising money was a critical issue for the Red Army, and ransom money became a significant source of revenue.

The CCP does not even try to conceal its history of kidnapping people for ransom. It displayed documents with titles like “Instructions for Fundraising” at the Revolutionary History Memorial Hall in Gutian County, Fujian Province. The document provides detailed guidance to soldiers on assessing the wealth of their targets, planning kidnappings, and leveraging the victims’ family members for ransom. {5}

Here are several notable examples of foreign hostages taken during the 1930’s:

  • In 1930, the Red Army kidnapped several foreign businessmen in Jingdezhen, a major Chinese manufacturing city in Jiangxi province. The kidnapping raised substantial funds from the families of the hostages. {6}
  • In 1934, another Red Army unit, also in Jiangxi province, arrested American missionaries John Stam and Elizabeth Alden Scott “Betty” Stam. The missionaries were executed after they refused to cooperate in extorting their contacts for ransom. {7}
  • Also in 1934, following a series of defeats by the Nationalist army, the CCP was forced to leave its southeastern rebel bases and flee to Northwest China. During this journey, the Red Army arrested several foreign missionaries, including British-born Sweden Rudolf Alfred Bosshardt and his wife Rose Piaget Ross, as well as New Zealander Arnolis Hayman. Although the Red Army was unable to obtain ransom for these hostages, it held the captives throughout its entire journey to the northwest. {8} {9}

During times of war, the Red Army kidnapped foreign nationals to secure a steady stream of revenue; in times of peace, the CCP has continued this practice. During the CCP’s Cultural Revolution, the CCP went so far as to hold two dozen British diplomats and private citizens as de facto hostages during the period from 1967 to 1969, using them for leverage in protracted and quiet negotiations related to political and economic issues. {10}

Expanding the Arsenal: Chinese Nationals as Leverage in War and Diplomacy

Over time, the CCP has evolved its tactics from simple monetary demands to more sophisticated objectives, taking Chinese nationals as hostages to advance strategic ends such as gaining advantages in military battles, obtaining political concessions, and securing economic benefits.

During the civil war against the Nationalist army from 1946 to 1949, the CCP employed a morally bankrupt tactic, forcing unarmed Chinese civilians to march forward as “human shields” on the battlefield. By forcing these innocent countrymen to act as the first wave advancing towards the Nationalist army, the CCP put the enemy soldiers into an ethical quandary, ultimately leading to a number of critical victories for the CCP. This approach was strongly denounced even by the pro-CCP media such as Da Kung Pao, which called the tactic “Cruel to the extreme! And despicable to the extreme!” {11}

In 1948 the CCP laid siege to Changchun, a major city in northeastern China. Cutting off food supplies for months and preventing civilians from leaving, the CCP used threat of force to return fleeing people to the city, aiming to maximizing the number of hungry mouths within. There were an estimated 200,000 civilian deaths during the blockade. {12}

During negotiations surrounding China’s Most Favored Nation (MFN) trade status, the CCP introduced a “hostage for MFN” strategy, taking Chinese human rights activists as hostages and offering their release in exchange for the renewal of the country’s MFN status. To garner attention from Western governments, the CCP frequently exaggerated the hostages’ conditions, claiming that they were in poor health, had suffered mental breakdowns, or were on hunger strikes. Several instances of this tactic include the release of Wei Jingsheng, a democracy and human rights activist, in 1993, as well as the release in 1994 of Wang Juntao, a figure associated with the Tiananmen Students Movement.

The U.S. tried to use MFN negotiations to force China to improve its human rights performance. However, the CCP’s “hostage for MFN” strategy largely defused those efforts, and China’s record on human rights did not improve much over the years. China received permanent MFN status after joining the World Trade Organization (WTO) in 2001, so the “hostage for MFN” strategy is no longer needed.

Threatening the Families of Chinese Residing Abroad

As an increasing number of Chinese citizens abroad understand the CCP’s nature and voice their criticism of the regime, the party has adapted its tactics to compel compliance of its overseas critics.

One example involves the family members of political commentator Chang Ping, who resides in Germany. In 2016, the CCP arrested five of his family members, including his father and brother, demanding that Chang Ping retract his criticism of the CCP. {13}

Other examples include CCP’s coercion of Chinese students studying abroad, some of whom have been pressured to act as informants for the CCP under threat that the CCP would retaliate against their families at home in China. In 2020, at least five Chinese students in the United States and Australia reported that the CCP had taken their parents as hostages, and that the CCP had been pressuring them to remain silent on the topic of their detained relatives. {14}

Ms. Xue Yinxian, a former doctor for China’s national gymnastics team, ran afoul of the regime by revealing that the CCP had systematically administered performance-enhancing drugs to athletes on all of its sports teams. In response to Xue’s disclosures, Chinese authorities forced her son and brother, who were staying in China, to contact Xue’s other son, who was staying abroad in Germany. They urged Xue and her other son to return to China so that their family would be spared further harassment. The authorities even went so far as to destroy the tomb of Xue’s father, a clear attempt at intimidation. {15}

In 2020, the CCP reacted to criticism posted online by Chinese student Li Taobao (a pseudonym used for his protection) who was studying in the U.S. Li’s parents had their passports confiscated, and they were brought to a police office where they had to call the student while police were present. During this call, the police pressured Li to act as a spy, ordering him to monitor a dissident group on messaging app Telegram and to take screenshots. The police officer repeatedly told him that this was a way to atone for his “sin” and avoid arrest upon his return to China. {16}

Coercing Foreign Businesses: Holding Individuals, Assets, and Access to Markets Hostage

China rose to economic power during the era of “reform and open up” starting in the late 1970’s. During this period, the CCP began a practice of pressuring foreign businesses by detaining affiliated individuals.

Examples from recent decades include the controversial 2009 arrest of Stern Hu, an Australian citizen working for Rio Tinto, and the 2015 arrest of Phan Phan-Gillis, a U.S. citizen of Chinese origin. Allegedly, both arrests were politically motivated. The arrest of Stern Hu may have been retaliation against Rio Tinto for backing out of a $19.5 billion investment bid by Aluminum Corporation of China (Chinalco), {17} or perhaps it was used to gain an upper hand in ongoing negotiations with Rio Tinto over iron ore prices. {18} Meanwhile, Phan Phan-Gillis was arrested during a visit by a Texas business delegation, accused of being a spy for the U.S. {19}

The tactics used to coerce businesses extend beyond the detention of individuals. For instance, the CCP targeted Taiwan’s Chi Mei Corporation, a major manufacturer of Acrylonitrile Butadiene Styrene resins, imposing fines, making arrests, and issuing warnings to customers not to buy Chi Mei’s products. Chi Mei reported a financial loss of $3.61 billion and, along with its downstream manufacturers, laid off half a million workers. Using Chi Mei’s factories and workers as hostages, the CCP forced the company’s founder and chairman, Shi Wen-long, to sign a statement supporting the “One China” policy and to retire from his position. {20}

In addition to Chi Mei Corp., many other Taiwanese businesses have been targeted after establishing factories in mainland China. Typical demands by the CCP include support for the “One China” policy and discontinued support for Taiwan’s Democratic Progressive Party (DPP). For example, Far Eastern Group, one of Taiwan’s largest conglomerates and a significant investor in mainland China, faced repercussions when it was accused of supporting the DPP. The CCP imposed fines and restrictions on the company, forcing Chairman Xu Xudong to publicly declare that he is “against Taiwan independence” and “supports the One China principle.” The CCP’s mouthpiece Voice of China went further, calling to verify that Xu had indeed taken actions to stop supporting the DDP. {21} {22}

Western companies have not been exempted as targets of the CCP’s pressure. For example, during the 2019-2020 Hong Kong protests, Apple succumbed to pressure to remove a map app from its app store. The protesters had been using the app to coordinate their actions. In this case, it was Apple’s access to Chinese markets that were used by the CCP to gain leverage. Similar examples include apologies extracted from the leadership of JP Morgan Chase Bank and Intel Corporation. In the first case, CEO Jamie Dimon of Chase Bank was forced to apologize after making remarks perceived as disrespectful to the CCP, with Chase Bank under threat of losing access to China’s financial market. {23} In the second case, Intel was forced to apologize after asking its suppliers “to ensure that its supply chain does not use any labor or source goods or services” from Xinjiang, a region where the CCP has been conducting ethnic cleansing of the native Uyghur population. {24}

Using Trade Relations for Leverage Over Foreign Countries

The CCP’s use of hostage diplomacy even extends to trade relations with other nations. For example, following the 2010 award of a Nobel Peace Prize to Chinese dissident Liu Xiaobo by the Norwegian Nobel Committee, Beijing targeted Norway’s salmon exports to effectively ban Norwegian salmon from China. It took six years of negotiations before trade relations between the two countries were normalized. In the end, Chinese Foreign Minister Wang Yi claimed that “Norway has reflected deeply upon the reasons why bilateral mutual trust was harmed, and it has made conscientious, solemn consultations with China about how to improve bilateral relations.” {25}

The CCP resorted again to using trade for leverage in response to Australia’s demand for accountability regarding the origins of the COVID-19 pandemic. As Beijing attempted to pressure Australia into submission, Australia’s exports faced bans and hefty tariffs on a range of products, including wine, cotton, seafood, beef, copper, and coal.

Following Lithuania’s decision in 2021 to let Taiwan set up a “Taiwan Representative Office” – Beijing only allowed it to be called “Taipei Economic and Cultural Representative Office” to suppress Taiwan – in the country, Beijing used similar tactics again. Not only did it block all exports from Lithuania to China, but it also demanded that Western companies doing business in China not buy Lithuanian products. If the companies did so, they could be sanctioned by the Chinese government. Ultimately, the European Union stood up for Lithuania, saying that it would firmly support Lithuania as an EU member.

The CCP has even used access to pandas as a negotiation tool to advance its political agenda. The tactic starts with loaning out or leasing pandas to zoos in foreign countries. For example, Beijing sent pandas to zoos in Australia, France, and Canada after those countries sold nuclear technology and uranium to China; they sent pandas to Scotland after the Scottish government agreed to share offshore drilling technology with China and supply salmon to China; and they sent pandas to the Netherlands after it agreed to provide advanced medical services to China.

This “panda diplomacy” gives the CCP a tool for punishing countries that deviate from policies favorable to Beijing: the terms of the loans allow for the pandas (and their descendants) to be recalled from the zoos. In 2010, Beijing called back the first batch of panda cubs born in the U.S., two days after warning President Obama not to meet with the Dalai Lama. Pandas were retrieved from the San Diego Zoo amid tensions over the U.S.-China trade war in 2019, and more pandas retrieved from the Netherlands after it supported U.S. restrictions on the sale of advanced semiconductor processing equipment to China. This year, Beijing is taking back the panda from the U.S. National Zoo in Washington, DC. {26}

In conclusion, the CCP has expanded its hostage diplomacy formula to target a wide array of vulnerable, valuable entities, holding hostages of one form or another to pressure individuals, groups, or even countries to make concessions. Things held hostage include individuals, corporations, assets, economic opportunities, market access, and international trade.

In June of this year, Bob Pickard, the former global communications chief of the Asian Infrastructure Investment Bank (AIIB), fled China quickly after resigning from his post at the company. He said that the AIIB had been thoroughly captured by the CCP and that he wanted to leave China quickly to avoid a fate similar to that of the Canadians Michael Spavor and Michael Korvig. {27} Apparently, Bob’s experience working with the CCP taught him about the dangers posed by the CCP’s hostage game. What will it take for other people, companies, and countries to learn the lesson as well?

{1} Daily Mail, “Cheng Lei: Australian TV presenter is freed by China and finally returns home to Melbourne after three years in a ‘black jail’ accused of spying,” October 11, 2023.
{2} Wall Street Journal, “China Is Becoming a No-Go Zone for Executives,” October 6, 2023.
{3} Kyodo News, “Hong Kong-based Nomura banker faces exit ban from China amid probe: FT,” September 25, 2023.
{4} VOA, “After Meng’s Release, Two Chinese American Siblings Trapped in China for More Than 3 Years Were Allowed to Return to the U.S.,” September 28, 2021.
{5} China News Digest, “The Relationship Between the CCP and the Christianity: the Red Army.”中国共产党与基督教的恩怨情仇(八):红军手里/.
{6} Ibid.
{7} Beijing Sprint, “Fang Zhimin Killed the Hostages After Didn’t Get Huge Ransom Payment,” April 4, 2011.
{8} China News Digest, “The Relationship Between the CCP and the Christianity: the Red Army.”中国共产党与基督教的恩怨情仇(八):红军手里/.
{9} Biographical Dictionary of Chinese Christianity, “Rudolf Alfred Bosshardt.”
{10} Taylor & Francis Online, “Hostage Diplomacy: Britain, China, and the Politics of Negotiation, 1967–1969,” November 3, 2009.
{11} Weiming Observation website, “Ta Kung Pao Denounced the Communist Army for Fighting the Civil War and Forcing the Civilians to Be in the Front Line When Charging.”
{12} Epoch Times, “Changchun Military Lockdown caused Several Hundred Thousand Deaths,” October 3, 2018.
{13} VOA, “Chang Ping Criticized by His Family Member; Chang Ping Said His Family Became Hostage,” March 30, 2016.
{14} VOA, “Chinese Police Not Only Monitors the Speech of Chinese Students, but Also Coerces Them to Become Undercover Agents,” October 30, 2020.
{15} Epoch Times, “Expert’s Analysis on Why China’s Men’s Soccer Team Lost to Vietnam,” February 2, 2022.
{16} VOA, “Chinese Police Not Only Monitors the Speech of Chinese Students, but Also Coerces Them to Become Undercover Agents,” October 30, 2020.
{17}, “(Exclusive) Rio Tinto’s Chairman Exposed Why The Company Backed out of the Deal: Issuing Stock to Raise Money Than Getting the Infusion from Chinalco,” June 8, 2009.
{18} Economic Information Daily, “China and Australia leaders Intervened in Rio Tinto’s ‘Spy Case,’ Iron Ore Talks Continue,” July 17, 2009.
{19} BBC, “China deports US ‘spy’ Sandy Phan-Gillis after conviction,” April 29, 2017.
{20} Epoch Times, “Shi Wen-long Case: Not Signing CCP Statement Would Cause Chi Mei Lose US $3.6 Billion,” May 12, 2005.
{21} Chinascope, “Taiwan: CCP Imposed Hefty Fines Because a Company Supported the DPP in Taiwan,” November 28, 2021.
{22} Chinascope, “Taiwan: Voice of China Commented on Far Eastern Group’s Statement of “Anti-Taiwan Independence,” December 2, 2021.
{23} BBC, “JPMorgan boss regrets saying bank will outlast Chinese Communist Party,” November 24, 2021.
{24} The Guardian, “Intel apologises to China over Xinjiang products and labour directive,” December 23, 2021.
{25} New York Times, “Norway and China Restore Ties, 6 Years After Nobel Prize Dispute,” December 19, 2016.
{26} ChinaScope, “China’s ‘Panda Diplomacy,’” October 20, 2023.
{27} Asia Financial, “Canadian AIIB Exec ‘Fled’ China After Quitting Over CCP Meddling,” June 15, 2023.