On October 5, very interesting information appeared in the international media regarding the activity of the Belgian State Security Service (BSSS) [1] which suspects that the logistics branch of a Chinese company in Liège is using private information.

More specifically, the BSSS is monitoring the main European logistics center of the Chinese technology and e-commerce company Alibaba Group Holding due to concerns about its possible espionage actions. Referring to the company's logistics center at Liège airport, the Belgian security service stressed that it was working to detect "possible espionage or interference activities" by Chinese entities, including Alibaba. This firm has denied any action related to this case on which it is significant to note that neither the Chinese nor the BSSS immediately responded to requests for statements and comments.

Alibaba signed an agreement with the Belgian government in 2018 to open an e-commerce trade center run by its logistics subsidiary Cainiao, which would also include investments in logistics infrastructure.

In this context, the BSSS told the international media that the presence of Alibaba "monitored" by the institution, due to some legislative provisions in China, which oblige Chinese companies to send data and information to the Chinese authorities and intelligence services.

It is significant to mention here that last month the Chinese e-commerce giant Alibaba listed Cainiao on the Hong Kong Stock Exchange, which would make the unit the first spin-off since Alibaba announced earlier this year that it would restructure its own organization and divide its business into six units.

"We strongly deny the allegations based on previous assumptions" and "Cainiao complies with all laws and regulations in which it operates," representatives of Alibaba's logistics subsidiary said in a statement.

In this context, it can be assumed that the BSSS is monitoring the operations of a logistics center run by the Chinese technology giant, Alibaba, based on fears that this company could use software to collect sensitive economic data, the official statement given to the media by the Belgian intelligence and security service being that it seeks to "detect and combat possible espionage and/or interference activities carried out by Chinese entities, including Alibaba."

The Chinese company, Alibaba, which has also denied any wrongdoing in the media, opened the logistics hub on the cargo side of Liège airport in 2018 – one of the largest airports in Europe – and invested more than 100 million euros: "Our economic activities are closely linked to China – even in the strategic sectors. This is one of the reasons why, in recent years, the BSSS has closely followed China's overt and behind-the-scenes efforts to advance its interests in our country.”

And, as the media let know, one of the espionage concerns appears to be Alibaba's Electronic World Trade Platform (EWTP) – a software that could be used to provide China with information about Western supply chains and vulnerabilities, as explained by Jonathan Holslag[2], professor at the Vrije Universiteit Brussels. "Knowledge of important changes in consumption patterns and knowledge of the logistics chain are valuable to China as a country trying to dominate the supply chain," said J. Holslag. "The main concern is that this platform, along with several other logistics platforms, which the Chinese have proposed to European countries, gives them a lot of information about supply chains and possible vulnerabilities," said J. Holslag, who also pointed out the fact that there is a risk that Cainiao may also access information about end consumers.

As a new law to monitor foreign investment in critical infrastructure came into force in July, Vincent Van Quickenborne[3], Belgium's justice minister, pointed out that early negotiations with Alibaba were from a "last century", adding that "the times of naivety have changed."

The Liège site is the only European logistics center run by Cainiao, the logistics spin-off[4] of Alibaba. It mainly deals in goods sold directly to European consumers through the online shopping site, AliExpress.

The logistics hub is located in an industrial warehouse area, which also has access to the airport. Employees load and unload the goods from the planes and transport them directly to the 30,000 square meter hangar to be sorted and shipped. Cainiao is applying for a permit to triple the size of its warehouses to 100,000 sq m.

Concerns about potential spying activities at the site were raised at a high level for the first time before the hub was built, including in the Belgian parliament. At the time, China strongly denied "insinuations" about the "so-called security risks of Chinese companies". The statement of the BSSS indicates its concerns about espionage activities even after the opening of the hub.

Cainiao denied any involvement in illegal activities, with the company highlighting and referring to the EU data protection regulation: “Data security and privacy protection is a primary concern for our business. We comply with all laws and regulations, including GDPR."

Belgian authorities hoped that the trade facilitated by Alibaba would help reduce the trade gap with China and boost the economy. However, according to data from the National Bank of Belgium, Belgium's trade deficit has increased from €3.7 billion in 2021 to €9.1 billion in 2022.

According to customs reports, around 326 million parcels and a volume of 1.1 million tonnes were handled last year at Liège airport, which acts as a sorting center for purchases made across Europe. Cainiao said less than half of those packages were handled at its warehouse, but did not disclose the exact figure.

On September 25, the European Commission's executive vice-president, Valdis Dombrovskis[5], told China that its security laws and politicized business environment risked alienating investors. Beijing's apparent support for Moscow didn't help either, he added.

The warning that China needs to do more to reduce risk perception came as Dombrovskis visited Beijing for high-level trade talks. The EU's trade leader raised the concern during his appearance alongside the Chinese Vice Premier He Lifeng, but spoke about it in more detail during an earlier speech. At Tsinghua University in Beijing, V. Dombrovskis said that some EU companies are questioning their future in the world's second largest economy.

A new foreign relations law, intended partly to defeat foreign sanctions, plus an update to anti-espionage laws were "a big concern for our business community," Dombrovskis said. "Their ambiguity allows too much room for interpretation. This means that European companies struggle to understand their compliance obligations: a factor that significantly lowers business confidence and discourages new investments in China," the European commissioner warned.

Beijing's silent support for its ally, Russia, amid the war in Ukraine was also a major "reputational risk" factor for China, V. Dombrovskis warned. However, the EU's trade chief said that Beijing and Brussels would resume "regular exchanges on macroeconomic issues".

China says it is ready to import more and hopes to end restrictions on the exports of advanced technology. Chinese customs reports show that the EU's trade deficit with China rose to €261.4 billion in 2022, up significantly from 2021.

According to a person familiar with Alibaba's relations with the Chinese government, the logistics hubs should transmit information on local sentiment and report data on European trade and logistics to Beijing authorities. Cainiao is able to access data about merchants, products, shipping details and flows, another person familiar with its IT systems said.

The espionage warnings, along with increasing cases of customs fraud, pose a serious challenge to the Belgian government, which initially courted Alibaba. Both former Prime Minister Charles Michel, now President of the European Council, and Belgium's King Philippe met with former Alibaba boss Jack Ma[6].

[1] The State Security Service (BSSS) is a Belgian intelligence and security agency. Established in 1830, it is the oldest intelligence service except for the Vatican. State Security is a civilian agency under the authority of the Ministry of Justice, while the military intelligence agency, the General Intelligence and Security Service, operates under the authority of the Ministry of Defence. The current General Administrator is Jaak Raes, after his predecessor Alain Winants held the position between 2006 and 2014. The VSSE participates in a number of international cooperation relationships in the field of information, such as the Club de Berne and the CTG. He has contacts with more than 90 intelligence services on four continents.

[2] Jonathan Holslag is a Professor of International Politics at the Vrije Universiteit Brussel, where he teaches diplomatic history and international politics. He also lectures on geopolitics at various defense academies in Europe and the NATO Defense College.

[3] Vincent Paul Marie Van Quickenborne is a Belgian politician, Minister of Justice in the government of Prime Minister Alexander De Croo, since 2020. Van Quickenborne was a Senator from 1999 to 2003, Secretary of State (2003–2008), Minister (2008–2011) responsible for administration simplification and Deputy Prime Minister and Minister of Pensions (2011–2012). On 17 October 2012, he resigned as minister to become mayor of Kortrijk for the term starting in February 2013. Van Quickenborne is also a member of the city council of Kortrijk, where he currently lives.

[4] Spin-off is a term meaning derivative or secondary product and represents a new entity or organization formed by breaking off from a larger one, such as a new television program, radio program or video game.

[5] Valdis Dombrovskis is a Latvian politician, the Executive Vice-President of the European Commission for the Economy from 2019 and the European Commissioner for Trade from 2020. He was previously the European Commissioner for Financial Stability, Financial Services and the Capital Markets Union from 2016 to 2020 and first -Minister of Latvia from 2009 to 2014. V. Dombrovskis served as Minister of Finance of Latvia from 2002 to 2004. Then he was a Member of the European Parliament (MEP) for the New Era Party from 2004 to 2009.

[6] Jack Ma Yun is a Chinese businessman, investor, technology and internet entrepreneur, and Chinese philanthropist. He is the co-founder of Alibaba Group, a multinational technology conglomerate. In addition, J. Ma is also the co-founder of Yunfeng Capital, a Chinese private equity firm. As of June 2023, with a net worth of $34.5 billion, J. Ma is the fourth-richest person in China, as well as the 39th-richest person in the world, as ranked by the Bloomberg Billionaires Index.