The spooks and the merchants: Germany’s arrest of a suspected MSS agent and the CCP’s cultivation of business associations

MSS-commissioned tech transfer is but the climax of chamber of commerce engagement.

PRC intelligence’s role at the core of CCP influence operations has come to the fore in the claims against individuals arrested this week in Germany. In two separate cases, relationships with PRC intelligence services are alleged to have been established in environments known for their public engagement with the CCP influence apparatus. Of these environments, the one surrounding top far-right politicians has attracted abundant media attention. This post presents new data and discussion of the other, business-themed operation.

CCP influence on European parliamentary politics is the setting of the better known case. Guo Jian (also spelt 郭建 in the context of some of his alleged infiltration of dissident groups) was an assistant to Alternative für Deutschland (AfD) MEP Maximilian Krah who helped organise exchanges between Germany’s far right and PRC interlocutors such as the CCP International Liaison Department. Coopted parliamentary aides are known vectors of influence work — known from, notably, a European Parliament China friendship cluster that has included Krah. Guo’s relationship with Krah was most recently discussed in a treatment of PRC intelligence’s exploitation of Russian-coopted networks in Europe’s resurgent far-right scene, published ten days before his arrest. Media coverage of the Guo case — and its overlap with Russian operations — is bringing to public attention an aspect of CCP influence work once little known outside a small research community.

Such attention has not reached the arena of CCP influence work where the other detainees’ case unfolded: the party’s cultivation of business associations. Based on new data from open sources, that background is outlined below, followed by some of its implications for the understanding of PRC agencies’ use of business-themed engagement to advance CCP goals in Germany.

1. The detainees and their company

On 22 April, the Office of the Federal Prosecutor announced three German citizens had been arrested and their homes and workplaces had been searched in Düsseldorf and Bad Homburg, under suspicion of working for Chinese intelligence and exporting dual-use goods without authorisation.

According to the office’s announcement, one of the suspects acted as an agent for a China-based Ministry of State Security (MSS) employee, who tasked him with collecting information on German technology with military applications. A Düsseldorf company run by the other two detainees then commissioned research from a German university on state-of-the-art ship engine technology, for a PRC partner used as cover by the MSS handler. The suspects are also alleged to have procured in Germany and exported to China a “special laser”, paid for by the MSS.

Non-specialist sources — such as a press release — may use “MSS” as shorthand for the whole PRC state-security apparatus, which comprises province and lower level departments and bureaus in addition to the national ministry. Thus, it does not necessarily follow from the announcement that the relationship prosecutors allege involved ministry, rather than local-level state-security personnel. State security departments, as well as bureaus in major cities like Shanghai, play a key role in external operations.

While the detainees’ full names have not been disclosed, information about their company — Innovative Dragon Ltd — given in German media reporting makes their identification straightforward. The alleged state-security agent is, in all likelihood, the consultant Thomas Reichenbach, on whom more below. Reichenbach’s fellow suspects are the engineer and businessman Herwig Fischer and his wife Ina.

The prosecution has not yet named the German university said to have provided information to the MSS. Media reports refer to an unnamed technical university in eastern Germany. Innovative Dragon itself names two such partners or customers — TU Dresden and TU Chemnitz — but also universities in the West. Of these, that of Duisburg-Essen — which confirmed it has cooperated with Innovative Dragon “circles” — has invited local media attention, against the backdrop of Duisburg — featuring a Huawei “smart city” project — and its university’s ties to CCP-engagement advocates in German politics. However, no deal with the detainees matching the description in the prosecutor’s office announcement appears to have been made public by these or other German universities.

2. The alleged agent’s background in German business associations’ United Front engagement

Comparing Reichenbach’s pictures on online profiles and public appearances leads to a fuller biography.

An interest in the CCP-driven political system’s relationship with foreign business — in particular, through business associations — was already clear in Reichenbach’s academic background in sociology and Chinese studies. Over two decades ago, in Volkswagen Foundation-supported work with the political scientist Heike Holbig, Reichenbach introduced PRC chambers of commerce as “valuable contact partners” for German SMEs in China.

Reichenbach’s endeavours with the Fischers were more varied than their German-owned company, Innovative Dragon. They also included a Bad Homburg-based Smart City Association for Urban Mobility, as well as, since 2014, ownership stakes in a Hebei subsidiary of a Yunnan electric vehicle company.

In addition to his positions alongside the Fischers, Reichenbach had a “marketing manager” role with the Hong Kong Trade Development Council, a government business promotion body, possibly as late as the time of his arrest. In that capacity, he promoted the CCP’s “Greater Bay Area” initiative (which subsumes Hong Kong into a Mainland region) with German business associations in late 2023.

Previously, Reichenbach worked for the German Confederation of Small Business and Skilled Crafts’s (Zentralverband des Deutschen Handwerks, ZDH) partnership programme in China. This work had already begun in the early 2000s and continued into the late 2010s, possibly into this decade. The programme’s PRC partners were the All-China Federation of Industry and Commerce (ACFIC), a key united front organ, as well as some of its provincial and city-level equivalents.

Reichenbach’s public appearances in China put the ZDH China office’s activity in the broader context of China’s political system’s engagement with German politics and business. In 2018, he represented ZDH at a Sino-German SME conference in Shandong, held under the auspices of the PRC Ministry of Industry and Information Technology (MIIT) and the provincial government. The event was adressed by former European Parliament president and Social Democratic Party leader Martin Schulz. Co-organisers included the German-Chinese Business Association (Deutsch-Chinesische Wirtschaftsvereinigung, DCW).

DCW is the main German partner of the China Council for the Promotion of International Trade (CCPIT), an external influence organ in the party-state’s economic system whose main targets include local governments and business associations. DCW is part of a network of CCPIT partners, some of which — e.g., in France and Poland — share leading personnel and facilities with the local CCPIT representative offices.

3. The overlap between the detainees’ business endeavours and the CCP united front system’s business association engagement

Reichenbach’s partnership with his alleged co-conspirators could, in principle, be disjoint from his work representing German business interests in China. That is not the case.

The three detainees’ smart city association — a partner, per its website, of Innovative Dragon — became active while Reichenbach headed the ZDH China office. In 2019, Reichenbach appeared at a Sino-German economic cooperation event coorganised by ZDH and Fujian state and united front organs in his dual ZDH-smart city association capacity.

The identification of a fourth leader of the smart city association further illustrates its overlap with the ZDH office. An account of a 2019 meeting with Shanghai government officials on the the association’s Chinese-language website names Fang Zhaoxia 方朝霞 as an association representative attending together with Reichenbach. A more recent source calls her the association’s secretary general. Chinese media reports show that Fang previously worked for ZDH as early as 2007 and as late as 2018, in the latter case identified as a project director under Reichenbach. In 2012, Fang represented the office at a Shanghai event organised by the Bremen economic development agency. That position matches that claimed — since 2003 — by one April Fang’s LinkedIn profile.

Fang’s continued work for the smart city association shows that, whatever her official job title might have been, she played a central role in Reichenbach’s endeavours. Three weeks before the arrest of the association’s leadership, Fang — as its secretary-general — represented it at a Nanjing meeting with the Jiangsu Energy Storage Association, also attended by Wang Hequn 王合群, a MIIT Talent Exchange Centre specialist with a Shanghai investment fund position.

Fang’s role at ZDH becomes clearer still once one considers Reichenbach’s PRC company, Outong Investment Consulting. PRC media appearances identify Fang as general manager of Outong in 2009, and Reichenbach as its chair in 2010 — in which capacity he attended a 2022 event organised by the Chinese Association for Artificial Intelligence. In 2010, Outong’s contact person as given in a listing of participants in an ACFIC-coorganised business forum gave Fang Zhaoxia as Outong’s contact person, with a contact email address identical to one given on the ZDH China website.

Having identified Fang and Outong, the link between Innovative Dragon and the ZDH China office is then straightforwardly established by comparing contact information.

Innovative Dragon was incorporated in 2012 in the UK. Ina Fischer was its sole director and shareholder, with her husband in a technical role and Reichenbach in charge of investor relations. Innovative Dragon’s website (taken offline after the arrest) lists, in addition to its London registration address and its Düsseldorf location, a Shanghai office whose exact address is not given. The approximate location alluded to on the page does not match the photograph captioned “the building where the office is located”. Instead, the photograph shows the building where the ZDH Shanghai office was located until 2012, according to one of the (also defunct) ZDH China websites. Two office numbers apart is Outong’s registration address. (Besides being physically close, the offices are proximate in that both have been used by the same PRC air-compressor businesses — with possible temporal overlap with Reichenbach or ZDH’s presence.)

The seemingly erroneous approximate address on the Innovative Dragon website might, too, fold back into ZDH’s Shanghai presence: the university science and technology park the site refers to is where ZDH’s contact address was in a document on the website of a PRC organisation Reichenbach and Fang were associated with since the early 2000s.

Regardless of how its location fluctuated, the ZDH office’s contact phone number between 2008 and 2020 was the one given in 2010 for Outong, with Fang as contact person.

In short, Reichenbach’s endeavours with his fellow detainees — Innovative Dragon and the smart city association — as well as his consultancy Outong all ultimately share personnel and contact data with his work as a German business association’s representative in Shanghai.

4. The CCP’s cultivation of business associations and its systemic links to political influence and technology transfer

As shown above, a German business association’s China engagement coincided, for much of its existence, with the business endeavours of Reichenbach and his associates.

The alleged culmination of those decades of engagement — MSS-commissioned technology transfer — points to the overlap between two classes of CCP influence operations: the activities — often illegal — of intelligence services like the MSS, and the more overt cultivation of business groups carried out through the party’s united front and economic systems. We recapitulate relevant features of the work of each system below, based on previous literature.

4.1. The CCP united front system and chambers of commerce

The primary ZDH partnerships that Reichenbach and Fang helped mediate were with the array of business associations — with the ACFIC at its apex — controlled by the CCP United Front Work Department (UFWD). These PRC bodies and their more loosely tethered counterparts abroad — CCP-coopted business-themed diaspora organisations — are by now familiar features of external influence work.

Gerry Groot — a leading authority on CCP united front work — notes that, complementing the work of the ACFIC, “the UFWD has also allowed a proliferation of small industry-specific organizations, with two goals in mind: to account for rapidly emerging interest groups, and integrate them into both the general political and surveillance system”. Such organisations reward members with business advantages, privileging those that are instrumental to the CCP’s goals. Among these bodies, less overtly political chambers of commerce “provide a useful face for dealings with foreigners”. Strong links to PRC united front bodies were combined with an apolitical profile outside China in the case of Chau Chak-Wing (周泽荣), a UFWD-linked billionaire alleged to have been involved in political interference activities in Australia as well as one of a string of bribery cases at the UN. The UN cases also involved CEFC, a defunct PRC energy company that acted as a front for a PLA intelligence organ.

At least one ACFIC figure features in known illegal political influence work. In 2018, Zhang Yikun 张乙坤, a New Zealand businessman whose past affiliations included high-level appointments at the ACFIC and its Hainan province counterpart, made illegal donations to the country’s largest party, in connection with which the party’s leaders appeared to be facilitating Zhang’s associates MP candidacies.

More generally, ACFIC exchanges are documented in pro-CCP politics in Europe. The Swiss Trade Association (STA) — once headed by the late CCP-friendly politician Bruno Zuppiger, who notably “found the truth about the so-called ‘Tibetan issue’” during a propaganda tour of the region — has held exchanges with the AFCIC, which an association figure called “possibly a door-opener to the Middle Kingdom” (Weber, pp. 49, 53).

The Swiss case illustrates how partnerships with the ACFIC-led system in China can exist in tandem with the activities of foreign-based organisations, including in the science and technology sector. This latter aspect also adds a further parallel to the alleged dénouement of Reichenbach’s engager career: technology transfer to the PRC as a central aspect of the CCP united front system’s activity. In a 2020 study, Joske identified 171 overseas “talent-recruitment stations” set up by PRC united front agencies, with roles also including collecting data on foreign scientists and their research.

A participant in the STA’s exchanges with the ACFIC has been Yang Yuming 杨玉明, whose prominent role facilitating Switzerland’s engagement with the CCP has included what PRC media sources call a “secretary-general” role at the Parliamentary Group Switzerland-China. Yang — once a business partner of Zuppiger’s, as well as of the parliamentary group’s first president — has also held a senior post at the Federation of Overseas Chinese Association in Switzerland (FOCAS), a CCP-aligned umbrella body for Swiss diaspora organisations (Weber, pp. 17ff., 50f.). A FOCAS member group, the Chinese Association of Science and Technology Switzerland (CASTS), receives funding from the education office of the local PRC embassy, according to its charter. Some of CASTS’s leaders have been involved in overt technology transfer activities, such as the China-Switzerland International Technology Transfer Centre and an “innovation and entrepreneurship base” in Switzerland (pp. 20f., 23f.).

The connection between united front work and technology transfer also manifests itself in the Czech Republic. The united front-linked businessman Wang Wanming 汪万明 has led local business-themed groups, among which the New Silk Road Chamber of Commerce has been most visible as a facilitator of PRC exchanges with Czech businesses and universities. The University of West Bohemia’s New Technologies Research Centre has made Wang an “international trade expert”.

Engagement with the UFWD-led business associations is thus not uncommonly linked to political influence or technology transfer. These links are not specific to the Reichenbach allegations.

4.2. CCPIT and chambers of commerce

Outside the united front system, CCPIT is a key PRC agency targeting foreign business groups. As seen above, CCPIT’s activities occasionally intersected with Reichenbach’s united front-focused liaising at ZDH.

As the Martin Schulz-attended event coorganised by DCW above shows, CCPIT is a frequent interlocutor of foreign politics and business. Its role in influence activities abroad is a focus of recent work published at Sinopsis.

In Italy, CCPIT has enjoyed decades of cooperation with the central government and leading business associations, as well as less high-profile actors helping coopt local governments into alignment with CCP goals.

In Poland, CCPIT has succeeded in establishing relationships with national and local government agencies, as well as the country’s largest business association.

CCPIT’s main Belgian partner, the Belgium-China Chamber of Commerce, is a central node in an influence network targeting Brussels politics, think tanks and academia. On the PRC side, this network involves, besides CCPIT, agencies in the CCP united front, foreign affairs and intelligence systems.

CCPIT is among the partners of a China-EU friendship cluster of associations led by the former European Parliament assistant Gai Lin 盖琳 — a cluster that has seemingly survived the demise of its most visible manifestation, a grouping of MEPs.

5. Conclusion: The continuum between soft and hard influence operations

Like the Guo Jian case, the alleged culmination of Reichenbach’s career paints the CCP security apparatus as working alongside other influence organs — the ones targets welcome as “benign” interlocutors. In this set-up, the targets — in their eagerness to engage with their vision of “China” — volunteer a cover for CCP agencies to wrap influence operations in.

It may be tempting to dismiss the significance of the alleged operations as targeting fringe elements who are motivated by extremist ideology or pathological greed. It is true that at least the former is associated with one of the cases. However, undue stress on these fringe characteristics risks obscuring the essential ones, which are shared with the mainstream of target country élites. The CCP-linked networks allegedly exploited in these cases are generic features of the West’s engagement with the contemporary PRC.

The Guo Jian case most starkly points to the conceptual dangers of focusing on fringe features. Guo’s associate, AfD MEP Krah, preaches to TikTok users — as the grandson of a Nazi — that “our ancestors were not criminals”. But Krah’s discourse on China engagement is largely mainstream in its emphasis on (real or imagined) trade and investment benefits. The ILD — which Guo helped the AfD liaise with — is a long-term partner of the Friedrich-Ebert-Stiftung, affiliated with the current chancellor’s party and currently led by the party’s former leader Martin Schulz.

Likewise, an uncontrollable appetite for financial gain may have motivated the other suspects’ alleged decision to engage in illegal technology transfer. But Reichenbach’s cooperation with his fellow suspects overlaps in multiple ways with his career helping facilitate German business’s embrace of the United Front. In this sense, the Reichenbach case unfolded within the mainstream of Germany’s China engagement. The careers of such facilitators are a product of the decades of investment — financial and otherwise — through which a business and business-adjacent establishment (the Bertelsmann and Volkswagen Stiftungen, to name just two that aided or promoted Reichenbach’s work) has helped build an ideological consensus around CCP-friendly policies.

It is not suggested here that partnerships with PRC united front agencies — such as the ACFIC — or their cooptees abroad must always lead to espionage, technology transfer or other unwelcome activity. However, the background of the Guo and Reichenbach cases illustrates the organic connection between seemingly diverse aspects of CCP influence operations — aspects that the operations’ targets may rate from benign to less desirable. It is not up to a target — say, the ACFIC or ILD’s German partners — to pick a strain of influence operations they like to receive. CCP influence work is done on the CCP’s terms.

Reichenbach and his associates’ progression through United Front engagement towards — if the claims are true — intelligence collaboration was only — if at all — pathological in that it might have veered into the illegal. But even its alleged culmination in technology transfer naturally aligns with a key, overt objective of CCP united front work. Rather than an opportunistic recruitment of a foreigner active in China, the claims in the case paradigmatically illustrate the use of networks built to exploit the German business world’s appetite for PRC engagement. Taken together, this week’s espionage allegations would add — if accurate — to the emerging picture in research on CCP external work: organs like the ILD, united front bodies and CCPIT conduct influence operations in tandem with, rather than as opportunistic cover for, the party’s intelligence agencies.