Category Archives: U.S.–China Week

Google’s reported ambitions in China (2018.08.06)

Welcome to Transpacifica Issue 9. This issue focuses on Google’s reported ambitions to reenter the search market, open a news app, and partner with Tencent for cloud services in China. There’s been a lot of great reporting, and though little has been confirmed, there’s enough to conclude that the macro story of serious ambitions is valid, even if the details continue to develop. Below I consider the possibilities and some of their implications.

Speaking of cloud services, new from DigiChina last week was our translation of the Ministry of Industry and Information Technology think tank CAICT’s 2018 white paper on big data security. Check it out.

After this edition I will be on vacation and moving, so the next edition will come to you in September.  –Graham

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, ideal for sharing on social media; and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

The (reported) facts on Google’s plans, and some uncertainties

  • Search. The Intercept on August 1 reported that Google was planning to offer a mobile phone search app in China that would comply with censorship requirements, citing leaked documents. The report included details such as the project code name (Dragonfly), word that the app had been demonstrated for Chinese officials, a timeline for possible launch if approved (six to nine months), and news that CEO Sundar Pichai met with Politburo Standing Committee Member Wang Huning in December.

    Some uncertainties:

    • Pichai’s reported meeting with Wang is framed as “a private meeting,” which could refer to a Google-Wang bilateral or a broader but still private meeting in which Wang could have met with various executives alongside the World Internet Conference in Wuzhen. (Wang delivered a keynote during the opening ceremony on the morning of Dec. 3, and Pichai appeared on a panel in the main auditorium that afternoon. Cyberspace Administration of China Minister Xu Lin was of course also at that conference.)
    • The Intercept report said based on internal documents that Google’s censorship would be accomplished by “automatically identify[ing] and filter[ing] websites blocked by the Great Firewall” and by “‘blacklist[ing] sensitive queries’ so that ‘no results will be shown.'” It’s not clear how Google precisely would determine which queries are “sensitive” and would be blacklisted.
  • News. The Information reported the same day that Google was developing a news app for the China market that would also comply with censorship requirements. “The news app Google is working on resembles popular Chinese news apps such as Bytedance’s Toutiao and uses artificial intelligence to provide personally tailored content, rather than relying on human editors,” according to their sources.

    Some uncertainties:

    • How would Google’s app customize news feeds? Assuming they start from a censored universe of preexisting content, the company may not need to proactively censor. Still, the usual way to serve customized feeds is to collect user behavior data and search for patterns that predict what a person wants to see. So if such user browsing data is collected, what if authorities want to access it? The company could be put in a position to comply or risk its business operations in several areas, and browsing data can be very revealing. Such data is likely already available to Chinese authorities from other apps and from Internet service providers and mobile companies, but Google would be in a position where it would be hard not to participate in Chinese government surveillance efforts. Would authorities go easy on Google? Hard to imagine they would.
    • It’s possible the app could adopt methods that allow AI-driven services to function with less centralized data collection. Such methods designed to achieve functionality with greater data protection and privacy protection are in development, including under the banner of “federated learning,” but they would deny the company the use of large datasets collected on users.
  • Cloud. Bloomberg reported Aug. 5 that Google was “in talks with Tencent Holdings Ltd., Inspur Group, and other Chinese companies to offer its cloud services” in China, with candidates for partnership narrowed in March to three firms.

    Some uncertainties:

    • The Bloomberg story mentions Google Cloud services to buy computational power and also the “G Suite” unit of Google Cloud that provides Gmail, Docs, Drive, etc., services on one’s own domain.
    • Offering cloud computation services would be one thing. Google markets custom hardware and companion software for AI applications including through its Tensorflow products, and based on recent patterns with Amazon and others, it would need a local partner to host such services in China.
    • Offering Gmail, Drive, Docs, etc., would be a huge can of worms in terms of the company’s handling of personal information, both under Chinese regulations on personal data protection and handling of “personal information and important data” related to “critical information infrastructure” under the Cybersecurity Law and related documents. It would also engage dilemmas such as those faced by Yahoo, which famously came under criticism after a dissident and a journalist were both imprisoned after the company provided their data to Chinese authorities. How would Google respond to similar requests? Or would Google avoid providing these services in China to avoid the problem?
  • More brains on the case:

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

A year in China’s digital policy world (2018.07.23)

Welcome to Transpacifica Issue 8. I was part of two new joint pieces at New America’s DigiChina since last edition: An updated translation of China’s Cybersecurity Law, and a very wonky but wide-ranging assessment of progress in implementing the regime surrounding that law.

Regular readers will know that one of my professional roles is as coordinating editor of DigiChina. We started the project a year ago this month, and our latest DigiChina Digest newsletter (sign up for monthly updates here) recounted the posts so far. This edition of Transpacifica is devoted to spreading the word about this still-relevant body of work.

Yes, it’s shameless self-promotion, but it’s not just that: DigiChina has published joint work by 12 contributors from as many organizations. I’m grateful to everyone who has devoted their time to this work, and there’s a lot more on the docket. –Graham

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, ideal for sharing on social media; and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

A year of translating and analyzing a digital China

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

After U.S. Kicked Away the Ladder, China Found Another Summit to Climb (2018.07.09)

Welcome to Transpacifica Issue 7. One big thought this week, as it appears more and more reasonable to say the United States has started a “trade war” with China with no end in site and no clear ends to the means. Relatedly, check out ChinaFile’s Conversation, including myself and a great group of careful thinkers about how U.S.–China technological competition should shape up.  –Graham Webster

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, ideal for sharing on social media; and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

After U.S. Kicked Away the Ladder, China Found Another Summit to Climb

When historians chronicle the Trump administration’s decision to launch tariffs against China and the world, they will debate relatively coherent narratives about how today’s reality came about. They’re unlikely to capture fully the degree to which chaos and conflicting policy and economic drives led to the present. Though the chaos is relatively easy to describe (Trump’s election was unexpected, and his economic advisers are quite visibly divided), the conflicting drives are just coming into focus. They are as much ideational as factional, they often play out within a single mind or boardroom, and I can identify at least three:

First, the drive to kick away the ladder. “It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him,” a German economist wrote in the late 19th century (quoted by Ha-Joon Chang, in the 21st century, critiquing hegemonic development economics). Some U.S. policy efforts have, intentionally or not, worked to deny China the flexibility of tools for development that the United States enjoyed, instead advocating a global market system with rules against various kinds of industrial policy. Whether or not you subscribe to Chang’s critique of free trade ideology, it is clear that the U.S. government has at times kicked away the ladder, arguing that other more beneficial ways exist to climb and are better for all.

Second, there is a more pragmatic drive, recognizing that the rules are not omnipotent but finding that profit is to be made in navigating around or complying with some of the practices the ladder-kickers decry. This drive, embodied in countless companies who chased Chinese customers and whose deals represented mutual interests in stable bilateral ties, long helped constitute the old U.S.–China relations cliche of a “ballast” in the relationship. The same businesspeople who constituted this ballast also, at times, advocated ladder-kicking for competitive advantage; if China would follow the rules, they could profit more. But one could muddle through nonetheless.

A third drive, long relatively dormant, grew out of a double standard—that the rules seemed to apply to U.S. economic actors but not to their Chinese competitors. For business, this was sometimes an acceptable frustration so long as profits were still available. For workers who lost out to globalization and automation, the double standard was an outrage—even if the rules had no chance of restoring their losses. And for those who see economic advancement as an input into an eventual military clash, losing ground to China in aggregate (even if, per capita, the United States still enjoyed its “summit of greatness”) was unacceptable and demanded action.

It is the third drive—the double standard—that most animated the Trump administration’s actions, and it would have played a role in a Clinton administration as well. Still, the first and second drives have not disappeared, and the conflicts among them now cause trouble. Counteracting a double standard in how the rules apply naturally called for old tools such as industrial policy or protectionist measures—but since the United States largely kicked away that ladder in favor of free trade, these tools conflict with powerful rules and norms. Improvising a new ladder to address the double standard also upsets the the still-existing mutual interests in stable bilateral ties, adding market uncertainty and promising certain Chinese retaliation.

The ladder metaphor is ultimately both helpful and misleading, in that it highlights a troubled assumption held by many at various times—that the United States occupied a “summit of greatness” that China sought to climb. While we all occupy the same earth and the same global economy, the reality all along has been that China and its people have walked a separate path, one with a different ladder, different pitfalls (missing rungs?), and a different vision of the unseen summit. At a time when the U.S. government scrambles to reassemble a ladder below, U.S. thinkers across the political spectrum seem to have lost the habit of gazing upward and into the distance in search of a higher summit.

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

Trading tariff threats; Will Mattis find linkage in Beijing? (2018.06.25)

Welcome to Transpacifica Issue 6. This issue focuses on U.S.-China exchanges of threats and statements on trade and investment restrictions.

Although the Trump-Kim meeting in Singapore was one of the most important events in U.S.–China relations in recent years, I’m going to leave it aside because I have little to add, for instance, to comments by my Yale colleague Mira Rapp-Hooper or by Jeff Bader of Brookings. When it comes to the Korean Peninsula, we’ll have to wait and see. When it comes to trade and investment, however, events are developing rapidly, and if we wait a while, we’ll probably see a very different landscape…

Meanwhile, in news from the New America DigiChina project, Jeff Ding, Paul Triolo, and Samm Sacks last week published a great assessment of Chinese efforts to shape global artificial intelligence standards. And we were proud to announce a new partnership between DigiChina and the Ethics and Governance of AI Initiative based at the MIT Media Lab and Harvard’s Berkman Klein Center.  –Graham Webster

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, ideal for sharing on social media; and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

U.S. Names Tariff Targets on $50B of Imports; China Matches; U.S. Threatens $200B; China Goes Tit-for-Tat

The U.S. Trade Representative on June 15 announced targets for 25 percent tariffs “on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s ‘Made in China 2025’ industrial policy.” The $50 billion is split between a first set, worth about $34 billion and effective July 6, and a second set, subject to public notice and comment, accounting for $16 billion. The team at WilmerHale has a good light-weight explainerof the action and what comes next, including the Ministry of Commerce’s prompt response, immediately matching the $34 billion for July 6.

After President Donald Trump days later threatened 10 percent tariffs on a further $200 billion in Chinese imports to the United States, a Ministry of Commerce statement said China would employ both “quantitative” and “qualitative” measures in retaliation for any further U.S. tariff lists, Reuters reported.

Some thinkers and officials in China now worry that their government and economy will not be able to withstand a U.S. onslaught, or that recent bold moves by the Chinese government have been premature, Bloomberg reported. Nonetheless the combination of the ZTE experience and erratic U.S. leadership will make it very difficult to argue in Beijing that government efforts to stand up more independent Chinese technological capabilities should yield. If the U.S. wrenches some concessions from China under tit-for-tat conditions, far from a foregone conclusion, don’t expect them to ease the growing friction centered on “industrially significant technologies.”

U.S. Considers Norm-Busting Effort to Stem Chinese Investment. Are Chinese Students and Scholars Next?

Reports have emerged over the weekend that the U.S. administration is considering designating sectors, or potentially even specific companies, as off-limits for investment by Chinese entities. Some reports said the Treasury Department will propose Friday to administer such restrictions through the Committee on Foreign Investment in the United States (CFIUS) and draw authority from the International Emergency Economic Powers Act (IEEPA). WSJ reported that Treasury “is crafting rules that would block firms with at least 25% Chinese ownership from buying companies involved in what the White House calls ‘industrially significant technology,'” and that U.S. industry would have an opportunity to comment on the proposal. (“The administration is saying, ‘if we declare everything a national security issue we can do whatever we want,’” AEI’s Derek Scissors told WSJ. “It’s a misuse of executive power.” Doing so also disarms U.S. trade lawyers who might otherwise go after weak national security justifications by others.) Administration sources disputed the WSJ reports in inconsistent ways, so we’ll see.

The reported restrictions on investment match one major thrust of a new White House report on “China’s Economic Aggression” from the office associated with the radical adviser Peter Navarro, specifically under the subheading of “technology-seeking, state-financed foreign direct investment.” Another emphasis in the report, under the subheading of “information harvesting” raises alarm both about researchers gaining knowledge from regular scientific exchange and research, and also about “Chinese nationals in the U.S. as non-traditional information collectors.” This section doubles down on FBI Director Christopher Wray’s rhetoric about “a whole-of-society threat on their end.”

It’s going to be crucial that universities, companies, and research institutions resist efforts to institutionalize these narratives. This administration does not deserve the benefit of the doubt when it encourages suspicion based on ethnicity, including with language that recalls racist tropes of the “yellow peril” era and presumes, until proven innocent, that people perceived as members of an ethnic grouping are in league with a foreign government. Let’s say we set aside the fact that this line of rhetoric and proposed policy violates fundamental U.S. ideals. If the Chinese government is as crafty as Navarro, Wray, or Sen. Marco Rubio say, would it be so hard for them to pay off someone of another ethnicity?

Keep watching…

Defense Secretary Jim Mattis is traveling to Beijing this week, with denuclearization of the Korean peninsula, the South China Sea, and military-to-military ties on the agenda, according to AP. Perhaps they will discuss possibly China-linked laser incidents experienced by U.S. military pilots in recent months. Mattis has remained relatively clear of the hottest U.S.–China and domestic U.S. controversies, and thus he may be more able to undertake diplomacy on security issues than other U.S. emissaries. As the trade and investment environment gets uglier, let’s watch to see whether officials in Beijing visibly link economic issues and security cooperation. So far, there is an outward appearance of relative compartmentalization, despite Pentagon and military-industrial complex dimensions in rising tech tensions.

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.

Tick-tock to tariff targets; ZTE reprieve; Beijing gathering (2018.06.11)

Welcome to Transpacifica Issue 5, and greetings from Beijing.

Tomorrow in Beijing: Last issue I mentioned a potential get-together here for folks interested in China, technology policy, and U.S.–China relations. We’ll indeed have an informal happy hour Tuesday from 6–8 p.m. in the Sanlitun area. Please write me so I can gauge numbers, and I’ll send the location. Also in town from London will be Trey McArver, a distinguished fellow newsletterist behind China Politics Weekly and co-founder of Trivium China, which puts out an excellent daily update on Chinese politics and economy. Other great folks have also said they’ll stop by. Come say hello!

Recently, in Washington: On Friday I was honored to testify before the U.S.-China Economic and Security Review Commission. The full hearing was packed with great ideas, and my written testimony was significantly powered by our joint work at New America’s DigiChina project. Thanks to all involved, and your comments are very welcome.

Right now, below: This issue comments on two of the important stories of the last two weeks. It does not speculate, because I dare not speculate, on the ongoing events in Singapore, where U.S. President Donald Trump is to meet with North Korean leader Kim Jong-un Tuesday. But I’ll be watching…  –Graham Webster

As always: Please encourage friends and colleagues to subscribe to the Transpacifica newsletter; here is the web version of this message, ideal for sharing on social media; and you can follow me on Twitter at @gwbstr. Please send your comments, quibbles, and suggestions to [email protected].

No Deal After Ross Visits Beijing; Tariff Targets Due Friday

Last issue, I said Commerce Secretary Wilbur Ross’ trip to Beijing to talk trade with Chinese counterparts seemed “unlikely to result in a breakthrough.” I wasn’t exactly out on a limb there, but the trip appears to have produced no change at all.

NYT reported that Ross’ delegation did not include colleagues from the U.S. Trade Representative’s office, which is associated with the Trump administration’s statement (after Treasury Secretary Steven Mnuchin had said trade war was “on hold”) that it will identify by Friday, June 15, the list of Chinese imports to the United States that will be hit with tariffs. That statement said the level of tariffs would be announced “shortly thereafter.” A Chinese government statement said: “If the United States introduces trade measures, including an increase of tariffs, all the economic and trade outcomes negotiated by the two parties will not take effect.”

I can see no indication the Trump administration has made progress bridging internal divides, developing a strategy that ties tactics to goals, or convincing Chinese officials to make substantial changes as the result of tariff threats.

Commerce Stays ZTE Execution, but Lawmakers Seek to Reinstate

Ross tried to spin his department’s retreat from a corporate death sentence for the Chinese ICT company ZTE as the “largest penalty [Commerce’s Bureau of Industry and Security] has ever levied and requiring that ZTE adopt unprecedented compliance measures.” Of course, this “largest” penalty, including fines and a murky new oversight deal, would give the company the chance to survive instead of shutting down, as it provisionally has done, due to a loss of access to U.S. components.

Members of Congress from both parties set to work trying to kill the deal, though the fate of the various amendments is uncertain.

After the deal was announced, I listed five mistakes the U.S. government made regarding ZTE. In longer form than original tweet, they are:

  • Imposing a penalty—the likely destruction of a major company—disproportionate to the still-serious offense of sanctions violations and breaching a settlement agreement. (There are reasonable arguments that the denial order was appropriate, but it seems to me something like the eventual deal was probably more fitting to begin with—increasing U.S. leverage longer term, rather than pushing ZTE’s lines of business out of existence or into less-supervised firms.)
  • Trump saying on Twitter the reason he asked Commerce to change the penalty was due to speaking with Xi. (If you’re negotiating with Xi, maybe best not to let him drag a law enforcement matter into trade talks. Not to mention the remark about Chinese jobs.)
  • Blending law enforcement, national security & trade deals. (See my WaPo Monkey Cage post on this.)
  • Once ZTE’s fate was blended with trade talks, giving in with little in return. (Did the U.S. side get anything out of retreating from the harsh penalty on ZTE?)
  • Still no details on how ZTE presents a national security risk. (Many voices have conflated the sanctions enforcement matter with U.S. government claims that ZTE threatens U.S. national security. If it does, the U.S. government owes the public a better understanding of the risks.)

With Congressional resistance to the new deal, the ZTE story may not be over, but the message for Chinese officials seeking to develop a more independent tech sector is clear: Keep at it, and double down where the U.S. government might have the largest leverage.

Related: Our recent DigiChina post on how to translate the slogan 网络强国 (we favor “cyber superpower” and “cyber great power” for different reasons) gives background on the Chinese government emphasis on ICT independence over the last few years. It kicks off our series of “Lexicon” posts grappling with tough terms for translation.

About Transpacifica

The Transpacifica newsletter is produced by me, Graham Webster, a senior fellow with Yale Law School’s Paul Tsai China Center and fellow with New America, where I am coordinating editor of the DigiChina project, working from a home base in Oakland, California. The opinions expressed here are my own, and I reserve the right to change my mind. For three years and 131 issues after its founding in February 2015, this newsletter was known as U.S.-China Week. It now appears biweekly, delivered by free e-mail subscription.