Five Eyes intelligence alliance builds coalition to counter China

The five nations in the world's leading intelligence-sharing network have been exchanging classified information on China's foreign activities with other like-minded countries since the start of the year, seven officials in four capitals said.

The increased co-operation by the Five Eyes alliance — grouping Australia, Britain, Canada, New Zealand and the United States — with countries such as Germany and Japan is a sign of a broadening international front against Chinese influence operations and investments.

Some of the officials, who spoke on condition of anonymity because of the sensitivity of the talks, said the enhanced co-operation amounted to an informal expansion of the Five Eyes group on the specific issue of foreign interference.

While China has been the main focus, discussions have also touched on Russia, several said.

China rejects influence claims

"Consultations with our allies, with like-minded partners, on how to respond to China's assertive international strategy have been frequent and are gathering momentum," a U.S. official told Reuters. "What might have started as ad hoc discussions are now leading to more detailed consultations on best practices and further opportunities for co-operation."

All the governments involved, including Germany and Japan, declined to comment.

China, faced with a growing backlash from Washington, Canberra and other capitals, has rejected accusations that it is seeking to influence foreign governments and that its investments are politically driven.

The enhanced co-ordination by the Five Eyes network suggests that, despite signals from U.S. President Donald Trump that he is prepared to go it alone in the confrontation with China, members of his administration are working hard behind the scenes to put together an informal coalition to counter Beijing.

Talks 'below the radar'

It also represents another blow to China's fading hopes of convincing European countries, unsettled by Trump's "America First" policies, to distance themselves from Washington and move closer to Beijing.

The officials who spoke to Reuters said the talks have been taking place "below the radar" and mainly bilaterally. Two sources said France was also involved, but on a less regular and comprehensive basis.

None suggested that Germany, Japan or other nations outside the Five Eyes network had been invited to meetings of the intelligence alliance, which was set up after World War Two to counter Soviet influence.

But a statement issued after a Five Eyes meeting on the Gold Coast of Australia in late August hinted at closer co-ordination. It said the group would use "global partnerships" and accelerate the sharing of information on foreign interference activities.

Australia, U.S. have new laws on foreign influence

International co-ordination has accelerated in parallel with a wave of national measures to limit Chinese investments in sensitive technology companies and counter what some governments view as a growing campaign, under President Xi Jinping, to sway foreign governments and societies in China's favour through a mix of pressure and inducements.

Last December, citing concerns about Chinese influence, the Australian government unveiled a package of new laws that tightened rules on foreign lobbying and political donations, while broadening the definition of treason and espionage.

The United States has pushed through a law, known as FIRRMA, which gives Washington new powers to block certain types of foreign investments.

The text of that legislation mandates Trump to conduct a "more robust international outreach effort" to convince allies to adopt similar protections.

Germany may introduce new measures

Earlier this month, in a scathing attack on China's foreign activities, U.S. Vice-President Mike Pence accused Beijing of interfering in the domestic arena by "rewarding or coercing American businesses, movie studios, universities, think-tanks, scholars, journalists and local, state and federal officials." Beijing has denied the charges.

The German government, which tightened its rules on foreign investments last year only to determine months later, after a fresh wave of Chinese acquisitions, that they were still inadequate, is poised to lower the threshold at which it can intervene.

Last year, Berlin quietly launched an inter-ministerial drive to assess the broad range of Chinese activities in the country. Government sources say that analysis is broadly complete and new policy measures could follow, although they say far-reaching steps like those taken by Australia are unlikely.

The U.S. official said the foiled takeover of German semiconductor firm Aixtron in 2016 had underscored the need to build a broader coalition of countries to share information and co-ordinate responses to China.

'We are living in a new world'

Two years ago, the German government approved a Chinese investment fund's acquisition of Aixtron, only to reverse course a month later when U.S. officials raised security concerns that Berlin had overlooked.

The officials who spoke with Reuters described a "flurry of consultations" in recent months, with Washington driving co-ordination on the investment side and Canberra taking a lead role in raising awareness about political interference.

Talks have taken place between diplomats, intelligence officials and heads of government, they said.

"We are living in a new world," said a person from a Five Eyes country who has traveled extensively to other capitals over the past year to discuss China's foreign activities.

"The sudden shock from authoritarian regimes is prompting closer co-ordination and a real expansion of intelligence sharing," this person said.