The Belgian intelligence service is monitoring Alibaba’s major logistics hub in Europe to detect espionage. This follows suspicions that Beijing may be exploiting the growing economic presence of its western counterpart.
European governments are increasing their scrutiny over the alleged economic and security risks posed to the EU by Chinese companies. This is part of a broader reassessment on the EU’s openness towards trade with China.
The Belgian security services said they were looking for “possible spying and/or interfering activities” by Chinese entities, including Alibaba.
Alibaba denies all wrongdoing. In 2018, it signed an agreement with Belgium to open the hub at Liege, Europe’s 5th largest cargo airport. This investment of €100mn will help the struggling economy of French-speaking Walloon.
People familiar with the situation said that the Belgian State Security Service has been monitoring Alibaba’s activities for almost two years after the site was opened. The introduction of software that collects sensitive economic data is one area under scrutiny.
The security service stated that the presence of Alibaba is “a matter of concern for the VSSE”, due to legislation that forces Chinese companies share their data with Chinese intelligence services and authorities. The agency stated that “China intends and has the capacity to use these data for noncommercial purposes.” Vincent Van Quickenborne is the Belgian justice minister. He said that early negotiations between Alibaba and Belgium were from “another century”, adding “times of ignorance have changed”. A new law was passed in July to monitor foreign investments into critical infrastructure.
Cainiao, Alibaba’s spin-off logistics company, operates the only European logistic centre in Liege. The site mainly deals with goods that are sold directly to European customers through AliExpress.
The airport’s logistics hub is located in an industrial warehouse area with direct access to the airfield. The employees load and unload planes, and then wheel the goods directly into the 30,000 sq m hangar where they are sorted and sent to other locations. Cainiao has applied for a permit that would allow it to triple its warehouse size to 100,000 sq. m.
Before the hub was constructed, concerns about possible espionage were raised in the Belgian Parliament. China at the time strongly denied “unprovoked” insinuations about exaggerated “so called security risks of Chinese firms”. VSSE’s response to the FT indicates that its concerns about espionage remain even after the hub was opened.
Cainiao denies any wrongdoing. Data security and privacy are of paramount importance to our business. “We are compliant with all laws, regulations and GDPR,” said the company, referring the EU’s Data Protection Regulation. One possible Espionage Risk is related to Cainiao’s software, which streamlines logistics procedures and is part of Alibaba’s “electronic global trade platform” (EWTP). On the screens of the warehouse in Liege, the logo for the initiative that aims to give businesses the infrastructure they need to improve their ecommerce flashes, and shows delivery times.
The main concern is this platform and a few other logistical platforms the Chinese have proposed to European countries are giving them a great deal of insight into supply chains, as well as into potential vulnerabilities,” said Jonathan Holslag a professor at Vrije Universityiteit Brussels.
A person familiar with Alibaba’s relationship to the Chinese government said that the centres would be expected to provide information on local sentiment as well as data about European trade, logistics and business to Beijing’s authorities.
Cainiao can access data on merchants, products and transport details, according to a person who is familiar with the IT systems.
Holslag also said that there was a risk Cainiao might access information on final consumers. He said that China, as a nation attempting to dominate the supply chains, would benefit from knowing about changes in consumption patterns.
Cainiao stated that data from its logistic hub in Liege is stored on servers in Germany, operated by Alibaba Cloud. The data provides insights into its operations.
The espionagewarnings and the mounting cases of customs fraudulentness involving Chinese firms at Liege Airport are a major challenge for Belgium’s Government, which initially courted Alibaba. Former Prime Minister Charles Michel (now the president of the European Council) and Belgian King Philippe both met with Jack Ma, former Alibaba CEO.
The Belgian authorities hoped that the commerce enabled by Alibaba would close the trade deficit with China and stimulate the economy. According to the National Bank of Belgium, Belgium’s trade gap widened between 2021 and 2022 from €3.7bn to #9.1bn. Cainiao claims that only one fifth of the goods passing through the warehouse is exported to China.
Customs data shows that last year at Liege Airport, which is a sorting hub used for all purchases in Europe, 326 million packages were processed. Cainiao stated that less than half of these parcels were handled in its warehouse, but didn’t disclose an exact number.