By Bradley A. Thayer & Lianchao Han
The trade negotiations with China provide an opportunity to advance human rights in China. A key strategy to do so is to free the Chinese internet market. Unfortunately, the current trade negotiations with China are missing this critical component. We argue that this must change. U.S. internet companies must have equal access to China that they are now denied. This is only fair based on the principle of reciprocity. Additionally, it will provide the United States with invaluable political and economic opportunities. There are three reasons why this is so.
First, the internet has changed not only how people buy things and entertain themselves, but also how they obtain information and communicate with each other. The free flow of information can promote China’s democratic transition. The Chinese Communist Party (CCP) is well aware of this threat to its power, as Xi Jinping’s expressed in his January 2019 speech to the Politburo’s 12th Study Group meeting. Xi argued, “Without cybersecurity, there is no national security. If we cannot overcome the internet barrier, we won’t be able to hold power for a long period of time. The internet is a double-edged sword: a photograph and a video can become viral and spread explosively through all media outlets in a few hours.” Moreover, he recognized that “It has a great impact on public opinion. If correctly used, this power of influence can benefit the country and the people; otherwise, it will bring unimaginable harm.” Xi wants the CCP to have absolute control over the internet to win this invisible war on “the battlefield without guns.” The U.S. should not let him get away with it.
The Chinese regime fully comprehends the double-edged sword of the internet. China wants the internet to promote economic growth. China’s digital economy has experienced massive growth over the last decade under the regime’s protectionist policy. According to a McKinsey report, ten years ago China accounted for less than one percent of the global e-commerce market; today its share is 42%. In comparison, the United States’ share of the market is 24%, down from 35% in 2005. Furthermore, the Party leadership views suppression of internet freedom as the key to its perpetual totalitarian rule over China and its people, so it uses its vast state apparatus to censor, block, and restrict the ability of Chinese citizens to get or share information and opinions. According to internet NGO GreatFire, China currently has blocked over 10,000 domain names and 80,000 URLs under the country’s internet censorship policy, which prevents users from accessing proscribed websites from within the country. China’s vast censorship apparatus is also using a new technique for rooting out banned contents, phrases and words. At the same time, its immense and potent propaganda machine uses fake news and spreads lies to incite ultra-nationalism and hatred towards the U.S.
China is not content with controlling information within its own borders. Under China’s policy of “cyber sovereignty,” China has used technology to censor content on non-Chinese websites, including many attacks on American websites for content it dislikes. China also exports its digital totalitarianism, destroying democracy and the free world as we know it.
Second, while asserting tight control over the internet’s ideological and political sphere, the Chinese regime has used the pretense of national security to protect its internet market and block companies such as American competitors. It sets insurmountable barriers for the American internet companies to enter the Chinese market as equals, thus creating a de facto ban on American companies such as Google, Facebook, YouTube, Chinese Wikipedia, Mobile Wikipedia, Pinterest, Dropbox, Reddit, Bloomberg, New York Times, Wall Street Journal, Reuters, Twitter, Bing, Instagram, Vimeo, Blogspot, Flickr, Tumblr, and many others. Some American internet companies have gained limited access to the Chinese market, but only after they submit to demands such as back doors on their technology to permit access by the Chinese government. As a result, China’s denial of its internet market costs trillions of dollars to the American advertisers, bankers, manufacturers, farmers and service providers. For example, the Chinese mobile payment market has grown many folds to today’s $30 trillion in the past decade and is projected to grow to $97 trillion in 2023 according to Frost & Sullivan, but none of the American companies benefit from this growth, and Tencent and Alibaba have monopolized the market.
Third, while China hinders access by U.S. firms to their market, Chinese internet companies have been taking extraordinary advantage of the free U.S. market. The Chinese internet company giants such as Alibaba, Tencent, Baidu, JD.com, all came to the U.S. and were given full and unrestricted access to the American markets, including capital markets. In 2018, thirty-three Chinese companies went public in the U.S. and in 2018 raised over $9 billion, most of the companies are internet tech companies. China refuses to grant the U.S. any true reciprocity in the internet arena. This unfair and detrimental trade practice should be a priority in the current trade negotiations with China.
Ensuring internet freedom and the free flow of information must be a core component of U.S. foreign policy and trade policy concerning China. Washington must use the leverage it possesses to foster a genuine opening of the Chinese internet market. If there is a free internet market in China, it will become an open political space that inevitably will undermine Xi’s rule. The Communist Party leadership understands this, and it is time the U.S. did as well.
This article first appeared in RealClearDefense on May 04, 2019