If scammers stole your data, the Chinese government may now have it.
The US-China Economic and Security Review Commission has identified a disturbing new pattern in China’s regional expansion: Beijing is exploiting Chinese criminal networks operating massive scam centers across Southeast Asia as a pretext to deploy its internal security forces and gather intelligence throughout the region. This strategy is called the inside-out approach.
The inside-out approach refers to how China builds influence and intelligence networks abroad by first embedding itself inside foreign criminal ecosystems and then pushing its reach outward into political, economic, and security spheres. Instead of starting with overt diplomatic or military tools, the CCP begins by cultivating relationships with Chinese triads, business fronts, brokers, and migrant networks already operating in a target country. These actors provide cover, logistics, and local access that Beijing cannot obtain through official channels.
Once embedded, China uses these transnational criminal organizations to gather intelligence, move money, map local power structures, and influence political actors, creating an informal but highly effective forward presence. This model is visible across Southeast Asia and Latin America, where Chinese criminal syndicates run casinos, online scam compounds, money-laundering hubs, and illicit finance networks.
Many of these groups maintain quiet links to Chinese police, intelligence officers, or United Front operatives. Their operations generate leverage over local elites and expand China’s regional situational awareness.
From there, the CCP layers in formal tools such as law-enforcement cooperation, security agreements, digital-surveillance exports, and Belt and Road (BRI) investments, converting an underworld foothold into a broader intelligence and influence network.
Chinese criminal networks operate industrial-scale scam centers across Southeast Asia that steal tens of billions of dollars every year, including more than $16 billion from Americans. These compounds function like modern slave camps. Criminal gangs lure workers with fake job offers, traffic them across borders, and imprison them inside fortified buildings where many are beaten, tortured, or forced to work under threat.
The UN estimates that more than 220,000 people have been held as forced laborers in scam centers in Cambodia and Burma. The centers rely on scams such as pig-butchering investment fraud, romance schemes, and phone calls impersonating banks or government officials.
Burma, Cambodia, and Laos are the epicenter of the industry, producing an estimated $43.8 billion in 2023 alone. Scam centers run on a steady supply of trafficked labor and easy access to electricity, telecom networks, and border crossings with Thailand. Despite limited crackdowns, the structures continue to expand because the profits are enormous and the criminal networks are deeply embedded with local power brokers.
For Beijing, these criminal ecosystems create the conditions for China’s inside-out approach, serving as both a justification and a vehicle for inserting Chinese police and intelligence personnel into neighboring countries.
Chinese criminal networks behind the scam centers have built ties, both overt and deniable, to the Chinese government through patriotic rhetoric, alignment with the Belt and Road Initiative, and the promotion of pro-Beijing propaganda overseas. As a result, Chinese crime syndicates have expanded across Southeast Asia with at least implicit backing from elements of the Chinese government.
A clear example is the case of She Zhijiang and his Yatai New City project in Shwe Kokko on the Thai-Burma border. She, a convicted criminal involved in illegal gambling operations in the Philippines and Cambodia, launched a multibillion-dollar project in 2017 that he promoted as part of China’s Belt and Road Initiative. Despite her criminal background and early reports that the development was designed to host illicit activity, Chinese officials embraced it.
The Chinese government’s Xinhua news agency called Yatai New City a model for economic and cultural cooperation between China and Burma, and the Global Times, another Communist Party mouthpiece, praised it as an example of private entrepreneurs contributing to BRI. Senior Chinese Embassy officials attended the signing ceremony, which took place under a banner identifying the project as part of BRI, and multiple Chinese state-owned enterprises signed contracts to help build it.
By 2021, Shwe Kokko had become the largest hub for Chinese online scam syndicates in Southeast Asia, widely described as a city built on scams. Once the development became synonymous with transnational crime, Beijing retroactively denied that Yatai New City had any connection to BRI, and in 2022, China issued an international warrant for She Zhijiang’s arrest.
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Reports from Philippine authorities indicate that several scam centers in the country have been linked to Chinese espionage activity. Police have raided POGO facilities near Clark Air Base and Basa Air Force Base, two sites that are central to U.S.-Philippines security cooperation. Senator Risa Hontiveros said there is persuasive intelligence showing that these compounds were used for surveillance and hacking. Raids uncovered sophisticated listening equipment and evidence of Chinese state-sponsored hackers operating inside scam centers.
Beijing has used the growth of Chinese-run scam centers in Southeast Asia to pressure regional governments into accepting a larger Chinese security role. China has signed agreements with Laos, Cambodia, and the Lancang-Mekong group to expand joint operations, intelligence sharing, and law-enforcement cooperation, framing these moves as necessary to combat transnational crime. These arrangements allow Chinese police and security personnel to operate more freely across borders, giving Beijing deeper access to regional security services and information networks.
Thailand shows how this strategy works in practice. After a Chinese citizen was abducted in Thailand and trafficked into a Burmese scam center, Chinese tourist arrivals fell sharply, creating economic pressure. Thailand’s prime minister then met with Xi Jinping and pledged to strengthen law-enforcement cooperation.
Thai authorities soon permitted Chinese officials and security forces to take part in cross-border operations, leading to mass repatriations of Chinese nationals. Thai academics and opposition politicians later warned that allowing Chinese security forces to operate inside Thailand violated national sovereignty and gave Beijing unprecedented influence over Thai internal security.
According to Chinese government documents, when Chinese security forces participate in raids on scam centers in Southeast Asia, they often confiscate large quantities of devices used by scammers. In 2023, Chinese officials joined raids in Laos and seized at least 640 computers and phones. In August 2024, China’s Ministry of Public Security announced that Chinese forces had taken part in a raid on scam centers in Burma and removed a large quantity of devices, all of which were taken back to China.
These devices likely contain valuable intelligence on Chinese criminal networks as well as sensitive financial and personal information belonging to victims, including Americans. China has been unwilling to share information recovered from these devices with partner governments.
The raids have not disrupted the scam industry. After compounds along the China–Burma border were shut down, many operators simply moved to the Thai-Burma border and resumed operations. Even when Thailand attempted to cut internet access to known scam centers across the river, some compounds switched to satellite internet and continued working.
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