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Belgium’s intelligence service has been monitoring Alibaba’s main logistics hub in Europe for espionage following suspicions Beijing has been exploiting its growing economic presence in the west.
European governments have been increasing scrutiny of the alleged security and economic risks posed by Chinese companies, which has been part of a wider reassessment of the EU’s traditional openness to trade with China.
In specific reference to Alibaba’s logistics arm at the cargo airport in Liège, Belgium’s security services told the Financial Times they were working to detect “possible espionage and/or interference activities” carried out by Chinese entities “including Alibaba”.
Alibaba, which denies any wrongdoing, signed an agreement with Belgium in 2018 to open the hub in Liège, Europe’s fifth-largest cargo airport, ploughing €100mn of investment into the ailing economy of the French-speaking Walloon region.
But almost two years on from the site being opened, the Belgian State Security Service (VSSE) has continued monitoring Alibaba’s operations following intelligence assessments, said people familiar with the matter. One area of scrutiny includes the introduction of software systems that collate sensitive economic information.
The security service said the presence of Alibaba “constitutes a point of attention for the VSSE” because of legislation forcing Chinese companies to share their data with Chinese authorities and intelligence services. “China has the intent and capacity to use this data for non-commercial purposes,” the agency said.
Vincent Van Quickenborne, Belgium’s justice minister, told the FT the early negotiations with Alibaba were from “a former century”, adding that “times of naïveté have changed”. In July, a new law entered into force in the country to screen foreign investments in critical infrastructure.
The site in Liège is the only European logistics centre run by Alibaba’s logistics spin-off Cainiao. It mainly handles goods sold directly to European consumers through the online shopping site AliExpress.
The logistics hub is in an industrial area of warehouses, which has access to the airport’s airfield. Employees load and unload goods from planes and directly wheel them into the 30,000 square metre hangar to be sorted and sent on. Cainiao is applying for a permit to more than triple the size of its warehouses to 100,000 sq m.
Concerns about potential espionage at the site were first raised before the hub was built, including in the Belgian parliament. At the time China strongly denied the “unprovoked insinuations” over exaggerated “so-called security risks of Chinese companies”. The VSSE’s statement to the FT indicate its concerns over espionage still remain after the opening of the hub.
Cainiao denied any suggestion of wrongdoing. “Data security and privacy protection is of paramount concern to our business. We are in compliance with all laws and regulations, including GDPR,” the company said, referring to the EU’s data protection regulation.
One possible espionage risk relates to Cainiao’s software used to streamline logistics procedures, which is part of Alibaba’s “electronic world trade platform” (EWTP). The logo of the initiative, which aims to provide businesses with the infrastructure to improve ecommerce, flashes on the screens in the Liège warehouse, showing delivery times.
“The main concern is that this platform, alongside a couple of other logistical platforms that the Chinese have been proposing to European countries, is giving them a lot of insights into supply chains and into eventual vulnerabilities,” said Jonathan Holslag, a professor at the Vrije Universiteit Brussel.
According to a person familiar with Alibaba’s relations to China’s government, the logistics centres are expected to pass on information about local sentiment and report data about European trade and logistics to Beijing’s authorities.
Cainiao is able to access data about merchants, products, transport details and flows, said a person familiar with its IT systems.
Holslag said there was also a risk Cainiao could access information about final consumers. “Knowledge about important changes in consumption patterns and knowledge about the logistical chain is valuable for China as a country that tries to dominate the supply chain,” he said.
Cainiao said the data from its logistics hub in Liège was stored in servers located in Germany and operated by Alibaba Cloud, and that the data provided insights for its operations.
The espionage warnings, together with mounting cases of customs fraud involving Chinese companies at Liège airport, are a serious challenge for Belgium’s government, which had initially courted Alibaba. Both former prime minister Charles Michel, now the European Council president, and the Belgian King Philippe met with former Alibaba chief Jack Ma.
Belgian authorities had hoped the commerce facilitated by Alibaba would help close the trade gap with China and boost the economy. But Belgium’s trade deficit widened from €3.7bn in 2021 to €9.1bn in 2022, according to data by the National Bank of Belgium. Only one-fifth of the goods coming through the warehouse are exported back to China, according to Cainiao.
According to customs data, roughly 326mn packages and a volume of 1.1mn tons were handled at Liège airport last year, which acts as a sorting hub for purchases made across Europe. Cainiao said less than half of those parcels were handled at their warehouse but did not disclose the exact figure.