A Risk-Averse Principal-Agent Framework

As China’s investments under the Belt and Road Initiative proliferate, securing its extraterritorial interests has assumed urgency. With a military footprint abroad lagging behind its economic clout, Beijing has advocated for state-owned enterprises to entrust protective responsibilities to Chinese private security companies (PSCs). Leveraging quantitative scrutiny of datasets from the China Security Association, this study elucidates the advancement of Chinese PSCs in proliferation velocity, spatial distribution, and service diversification, wherein they assume supplementary roles in protecting the commercial assets and personnel of state-owned conglomerates. Yet, as China lacks legislative frameworks to oversee their operations, state-owned enterprises evince circumspection in devolving security mandates, while PSCs, encumbered by inadequate incentives and labyrinthine risks, engender suboptimal principal-agent paradigm, accentuating lacunae in the efficacious protection of China’s extraterritorial interests

Economic Security · Government (linguistics) · Key (lock) · Private sector · Private security · Defense, Military, and Policy Studies · Maritime Security and History · Military and Defense Studies