Chinese state-owned enterprises as political instruments

Investments by Chinese state-owned enterprises (SOEs) in Estonia should be evaluated with a clear understanding of their deep politicisation and strong ties to the Chinese Communist Party (CCP). These enterprises are often required to carry out numerous strategic visions defined by the CCP, making them more akin to political instruments than traditional business entities.

According to CCP regulations, party members stationed abroad must establish a party cell (dang zhibu) with other members. These cells may consist of employees from a single company, but if numbers are insufficient, members from different organisations, such as embassies, research institutions or media outlets, may also be included.

Party cell members are required to complete exams on ideological content.

Party cells serve as political tools, holding regular meetings to review ideological materials and enforce control over state-owned enterprises and individuals associated with the state. Their tasks include ensuring that companies adhere to China’s strategic visions. Party cell members are required to periodically complete exams on ideological content or submit self-reflection essays for evaluation. The CCP also dispatches inspection teams to oversee the activities of party cells in Chinese SOEs operating abroad.

China’s economic activities often go beyond business interests and are deeply tied to implementing strategic visions developed by the CCP. For example, in Europe, China deliberately implements a “Chinese elements” strategy aimed at expanding its influence in the region by involving various Chinese stakeholders through a multi-layered approach. Such coordinated efforts must be conducted through Chinese embassies. This strategy allows embassies to leverage various tools during diplomatic tensions effectively.

CHINA WILLINGLY INVESTS TO EXPAND ITS INFLUENCE

One example of the “Chinese elements” mechanism in action is loans issued by China for foreign projects. The loans frequently come with requirements to use Chinese suppliers and technology. Alongside regular business operations, Chinese banks act on political directives, subsidising projects that prioritise influence over economic returns to expand China’s political reach.

The political ties of Chinese SOEs provide them with competitive advantages that distort global markets. These enterprises and strategically important private companies have privileged access to capital, information and political leverage. They can secure loans from China’s central political banks (the five largest) at below-market rates, benefit from favourable repayment terms and, in the event of financial difficulty, gain easier access to refinancing either from the banks or other state-owned enterprises. Such advantages often lead to Chinese companies winning international procurement bids.

Several state-created funds in China, often linked to the country’s broader strategic goals — most notably the extensive Belt and Road Initiative — contribute to unfair competition and market distortion.

A larger presence of Chinese state-owned enterprises in Estonia increases the risk of becoming dependent on China.

China is building a politically and technologically autonomous ecosystem designed to challenge the West, with integrated solutions
among Chinese enterprises playing a central role. As a result, a larger presence of Chinese state-owned enterprises in Estonia, combined with private companies possessing strategic expertise, increases the risk of Estonia becoming technologically dependent
on China.

Chinese SOEs closely coordinate with various government ministries and agencies, such as the Ministry of Foreign Affairs, the Ministry of Commerce, the Ministry of Transport, the Ministry of Culture, the National Development and Reform Commission (NDRC), and the State-Owned Assets Supervision and Administration Commission (SASAC). They also collaborate with Chinese embassies.

These enterprises serve as “frontline” organisations that are tasked with gathering cutting-edge information for the state, including information on technology and legislative developments abroad.

Engaging with Chinese SOEs often means interacting directly with the Chinese central government, as the above authorities are among the key state bodies responsible for developing strategic plans.

SASAC, which operates under the State Council (the Prime Minister’s Office), oversees approximately 90 national-level conglomerates with extensive subsidiary networks. Additionally, SASAC has local offices managing a large number of enterprises that typically fall outside central government oversight. Through SASAC and the NDRC, the CCP implements its strategic visions. Doing business with a SASAC-managed enterprise often involves direct ties to the central government, the CCP and, in many cases, the military. Regular ideological sessions within these enterprises further reinforce their political alignment, making them highly ideologised legal entities.