Table of Contents
- 1 TECHNOLOGY AND THE ECONOMY
About the Authors
- 1.1.1 Ryan Hass
- 1.1.2 Patricia M. Kim
- 1.1.3 Emilie Kimball
- 1.1.4 Jessica Brandt
- 1.1.5 David Dollar
- 1.1.6 Cameron F. Kerry
- 1.1.7 Aaron Klein
- 1.1.8 Joshua P. Meltzer
- 1.1.9 Chris Meserole
- 1.1.10 Amy J. Nelson
- 1.1.11 Pavneet Singh
- 1.1.12 Melanie W. Sisson
- 1.1.13 Thomas Wright
- 1.1 About the Authors
The scale and speed of China’s technological advancements in recent years have raised concerns in Washington and elsewhere over the implications for the United States’ overall economic competitiveness and its national security, as well as the impact on liberal values and good governance globally. There also has been growing concern about the fragmentation of the global technology sector, including the rise of divergent standards and norms, as the Chinese technology market increasingly decouples from those of the United States and the West more broadly.
To evaluate the merits of these concerns and identify potential policy remedies to them, Ryan Hass, Patricia M. Kim, and Emilie Kimball, the co-leads of the Brookings Foreign Policy project “Global China: Assessing China’s Growing Role in the World,” convened 10 additional Brookings scholars – Jessica Brandt, David Dollar, Cameron F. Kerry, Aaron Klein, Joshua P. Meltzer, Chris Meserole, Amy J. Nelson, Pavneet Singh, Melanie W. Sisson, and Thomas Wright – for a written exchange on the role of technology in U.S.-China competition. These experts, drawn from a range of disciplines, were asked to offer their best judgments on the implications of China’s growing technological capabilities and steps the United States could take to strengthen its own technological competitiveness and protect its values. The following are a few key takeaways from their exchange:
- While the policy prescriptions varied by expert and subject matter, one consistent thread was that doing more of the same would not suffice for the United States to protect its interests and values. Sustaining the status quo is neither tenable nor attractive as a policy objective, and sweeping measures are necessary to ensure better outcomes in all aspects of U.S.-China competition in technology.
- An open and competitive economic system maximizes global innovation. There is an important and unresolved challenge in delineating where to draw boundaries around key technologies that must be protected for national security reasons. This is not a unidirectional exercise. Both the United States and China are taking measures to guard against leakage of sensitive technologies.
- One of America’s asymmetric advantages in technological competition is its ability to develop coalitional approaches for accelerating innovation.
- China’s technological investments are guided by strategic clarity on objectives, including strengthening social control, expanding international influence, and enhancing military capabilities. The United States does not currently maintain the same level of clarity on its own technological priorities. It should work with like-minded partners to examine how technology can be employed to uphold shared values and international rules and norms.
- The United States is living through a paradigm shift in how technology is financed and developed. The U.S. Department of Defense (DOD) no longer drives innovation priorities through focused research and development funding. Now, many of the breakthroughs are driven by the private sector and shaped by consumer preferences. The U.S. government needs to build partnerships with the private sector, academia, and non-governmental organizations to improve its ability to deliver technological solutions to key challenges. It should also work with international partners to coordinate on export control, standard-setting, and directing investments toward common strategic objectives.
- China is surging forward in its development and export of technologies that enable surveillance and repression. Unless the United States and its partners develop alternatives by aiding developing countries in building their digital infrastructure; participate more actively in standards-setting bodies; and lead by example to advance transparency and privacy norms, they could inherit a future where technology and norms around the world are oriented toward China’s preferences and practices.
- Open digital environments offer both strategic advantages and create vulnerabilities for the United States and its democratic partners, such as susceptibility to disinformation. In order to mitigate security risks without undermining their values, democratic governments should resist the temptation to respond to autocracies in kind, engage in careful risk assessments and balanced mitigation efforts, and support the free flow of information.
TECHNOLOGY AND THE ECONOMY
Technological innovation is spurred by open trade and investment policies. Open policies lead to large markets, competition among firms, and exchanges of products and people. In general, it is not the firms of only one leading country that create technologies and earn returns from innovation. There are a host of countries with successful, high-tech firms, typically in different niche areas. Also, much of the benefit of innovation ends up going to consumers, worldwide, through better products and lower prices. So to maximize global innovation we would want to have an open, competitive economic system.
Intellectual property rights (IPR) protection is one of the foundations of an open market economy. These rights ensure that innovators earn substantial returns on their ideas. IPR protection, however, is not designed to be perfect and permanent. That would create monopolies that limit the benefits of innovation. The system in the U.S. is designed to provide temporary monopoly. Furthermore, there is a lot of scope for legal copies of new technologies, which lead to rapid diffusion of the benefits of new ideas to consumers. Historically, less developed economies have had weaker IPR protection and have “borrowed” technologies from the frontier firms. All of the economies that have reached a high level of development so far have improved IPR protection along the way. A key question of debate is whether China is following this trajectory and whether there are specific reforms in China’s IPR system that would enhance the country’s innovation as well as global innovation.
Another consideration with China is that it is potentially a security threat to the United States. An open innovation system may inadvertently build up China’s capability in technologies that have military application. The practical question here is whether the U.S. can distinguish sensitive from less-sensitive technologies and wall off the sensitive areas, while otherwise maintaining an open innovation system. Large-scale decoupling of trade, investment, and research will lead to less innovation and slower growth of real living standards for Americans.
Payments is an example of a technology where Chinese firms innovated creating a new system using QR codes and smartphones powered by big tech companies instead of the Western system of plastic cards and magnetic stripe-reading machines running through big banks. Rather than exporting this new system in a way similar to what other technological leaders have done, China appears to be making a U-turn. China’s government has cracked down on big tech such as Alibaba (home of AliPay) and is instead promoting a new central bank digital currency to facilitate payments through commercial banks.
China’s U-turn is likely in America’s best interest. America’s global dominance of the payment system has been increasingly used to promote governmental interests through sanctions and other levers of foreign policy. If Chinese tech companies were to outcompete America’s payment system then America would lose this policy lever. Privacy and data concerns are also intertwined in control and operation of the retail payment system. However, if China’s digital yuan does take off as a global alternative this could result in a similar loss. In my opinion that is less likely for a host of reasons, not the least of which is that private tech firms tend to out-innovate central banks in designing new technology and it is far more obvious to consumers and foreign governments who is in ultimate control of data with a central bank digital currency as compared to a payment network run by non-governmental Chinese companies.
JOSHUA P. MELTZER:
What is meant by bifurcation or fragmentation of the global technology sector? From the perspective of the global internet and opportunities for data flows, there is no bifurcation of the internet protocols. However, it is true that citizens and businesses in China are seeing and engaging with different content, information, and businesses. From this perspective, there is already a bifurcation at the content level between China and the rest of the world (Russia, North Korea, Iran, and some others are also heading in this direction). The reality today is that much of the information, apps, and websites available outside of China are not available inside of China — including Google, Twitter, Facebook, features of Amazon Web Services, Western media including for instance the New York Times, the Wall Street Journal, and any information that the Chinese Communist Party (CCP) deems sensitive. This control over the internet — the so-called Great Firewall — is well-known and understood.
Another form of technology bifurcation is happening at the market or economic level as the Chinese technology market becomes increasingly separate from those of the U.S. and the West broadly. This is happening as a result of the increasing array of forces pushing towards some level of economic disengagement between the U.S. and China, with a focus on technology specifically. Economic bifurcation will also happen as China seeks to reduce its dependence on U.S. technology, and aims at much greater self-sufficiency in technology from semiconductors to artificial intelligence (AI). Finally, technology bifurcation could also happen at the rules and regulatory level. This is also underway as China’s recently passed data privacy law and data security law further limit cross-border data flows. This regulation-driven bifurcation is also likely as China pushes its own technology standards in standards bodies and along the Digital Silk Road, potentially reducing interoperability in technology between China — and countries oriented to the Chinese market — and the U.S. and the West broadly.
All of these outcomes are negative for the U.S. tech sector, and they are certainly also negative for the Chinese tech sector. For instance, many U.S. tech companies have been shut out of or have left the Chinese market. And we are now seeing the U.S. close its market to Chinese tech companies. A smaller global market for tech companies means less sales, less research and development (R&D), and less innovation.
The U.S. should seek to reduce risk of bifurcation where possible, consistent with economic and national security needs. The economic costs of bifurcation should also be managed by focusing on championing markets — including India — that are increasingly open, integrated, dynamic, and rules-based. Success here can help offset the economic and broader social/political costs of bifurcation with China, support U.S. innovation and growth, and strengthen the United States and its allies in their competition with China.
There are a number of common threads in the three comments in this section. First, a certain amount of technology bifurcation is already occurring because of actions from both the Chinese government and the U.S. government. Second, there will be some cost in terms of global innovation from this bifurcation and diminished interaction internationally among firms, universities, researchers, and students. Third, from a national security point of view, bifurcation in sensitive areas is in the U.S. national interest. Fourth, trying to ring-fence sensitive areas while otherwise welcoming an open innovation system is very hard in practice. There is a good chance that we will err on the side of caution and close off opportunities that would have led to greater innovation. Because China’s economy is more closed than ours in terms of investment, trade, and data exchange, it will be tempting to “reciprocate” China’s industrial policy. In my view this would be a mistake because openness has served the U.S. economy well, especially the movement of people and information.
As the U.S. and its partners seek to counter China’s rise by investing in new coalitions and reinvigorating old ones, Beijing may seek to explore similar approaches of its own — but find its options lacking. The most natural move would be for China to draw closer to Russia, but there are limits to how closely Moscow and Beijing will be able to work together, particularly if that work involves sensitive military technologies. The Xi Jinping regime may also be inclined to draw on its partners in the Belt and Road Initiative (BRI), but the BRI hasn’t led to the kind of broad strategic realignment its authors may have intended, and nor is it clear which BRI countries would have both the incentive and knowledge base to meaningfully advance Beijing’s tech ambitions.
Instead, China will likely seek to counter the coalitional approach of the U.S. and its partners by testing U.S. resolve on Taiwan. Most of the commentary on Taiwan will focus on its importance to Xi’s vision of national rejuvenation, particularly now that Xi has brought Tibet and Hong Kong much closer into Beijing’s orbit. But what will get far less attention is that Taiwan represents the greatest point of strategic vulnerability for the U.S. and its partners in terms of tech competition. The concentration of semiconductor manufacturing capacity in Taiwan — in terms of both the expertise and equipment housed on the island — may afford Taipei a “Silicon shield” for now, but the fact that its Taiwan Semiconductor Manufacturing Company (TSMC) fabrication plants are so central to the world’s digital economy also represents a point of leverage for Beijing. The specter of their capture or destruction, and the profound effect that either scenario would have on global trade, is something any U.S. or coalitional approach to tech competition has to take into account.
The obvious counter to Beijing’s saber-rattling over Taiwan, of course, is to increase semiconductor manufacturing capacity outside the region, far beyond the range of Chinese munitions. Fortunately, the U.S. has already started to make moves in that direction, with TSMC and Samsung recently announcing major new fabrication plants in Arizona and Texas, respectively. Yet ideally greater semiconductor capacity and expertise would not just come to the U.S., but to its allies and partners too.
MELANIE W. SISSON:
China and the United States are not in competition over or for technology. Rather, technology infuses the competition between the United States and China. Unless governments make considerable isolationist and protectionist changes to their economic policies, the operation of the global economy will ensure that technology innovations don’t stay local but rather travel, and quite quickly. What will matter for geopolitical competition over the next 10 to 50 years, therefore, is not where technology innovation happens, but rather how it is used and for what purposes.
Compared to the U.S. and its allies, China has considerable clarity on each of those points. Beijing has identified and deployed applications of emerging technologies that are useful to its efforts to control citizens and to strengthen the CCP; it has expanded its regional and global influence by embedding digital infrastructure and connectivity agreements in its Belt and Road Initiative; and it has focused on aligning the acquisition and integration of technology into new information-driven military concepts and doctrines. It is far from apparent that any strategy that the United States pursues for purposes of fostering technology innovation, whether independently or in coalition, provides reason for China to adjust course in any of these areas.
The United States and like-minded partners need to match China’s strategic clarity. More precisely, they need to articulate how and for what purposes they will seek to use emerging technologies — and then put their efforts and money where their mouths are. They’ll need to begin by identifying the rules of today’s international order that cannot be compromised, and then assessing how emerging technologies can be applied to strengthen and to enforce them.
I like the idea of working backwards from existing international order with respect to technology — far too many tech debates miss the forest for the trees, and lose sight of broader strategic goals. How would you see that approach playing out for the United States and its allies?
Consider the international prohibition against territorial aggression. It might be bolstered by technologies that enhance intelligence, surveillance, and reconnaissance to deter surprise attack and faits accompli. Global human rights might be advanced by applying technologies to monitor the seas for human trafficking, and ecological conservation and economic security might be enhanced by technologies that aid in tracking and combating illegal fishing. And reducing the transnational risks and costs of ransoming, theft, and infrastructure intrusions achieved through cyberspace will require investment in the very tools and technologies that create those same risks and costs.
In short, when it comes to technology the United States is facing the most difficult of tasks in all of international politics: prioritization and coordination. The competition properly engaged isn’t about spurring technology innovation for its own sake, it’s about creating a virtuous cycle: implementing policies that use, and therefore incentivize the development of, technologies to further international security and generate widespread prosperity without demanding a loss of sovereign self-determination and individual agency in return.
AMY J. NELSON:
What does it mean for the U.S. and China to be in technology competition? Clearly the two countries are competing — not for access to new technology, but for primacy or the ability to “get there first.” Achieving technological superiority enables the offsetting capabilities each side seeks in the military sphere.
“Minilaterals” like the Quadrilateral Security Dialogue (Quad) between the U.S., Australia, India, and Japan pose a threat to China insofar as technology-innovation cooperation is indicative of intentions surrounding military cooperation and stands to increase the pace at which the U.S. may innovate. However, much of what Quad countries, for example, stand to gain from technology cooperation is largely economic. China may continue to look for any number of opportunities to undermine minilateral or bilateral relationships, particularly where cooperation on the innovation and production of dual-use technologies is concerned, certainly if Quad-level cooperation appears defense-oriented. For this reason, the U.S. should anticipate, prepare, and clearly message its intentions about cooperation directly to its allies (and indirectly to China).
An important point to remember is that national models of innovation, the way in which technology is procured by a state, can be a powerful indicator of the potential for long-term cooperation. For example, the U.S. model for innovation is characterized by the quest for superiority through the monopolization of military innovation. It follows that the U.S. approach to the export or sale of sensitive military and dual-use items is implicitly based on the assumption that the United States has a monopoly on technology innovation (which yields superiority) and “helps” allies by exporting (selling) them sensitive items. India, however, has increasingly sought to co-develop or co-produce military technologies in lieu of purchasing them outright, and has been simultaneously looking to shore up/expand/solidify its defense industrial base for some time now. Successful long-term technology cooperation between the U.S. and India must, therefore, somehow accommodate both states’ objectives in this realm.
Furthermore, though China served as the four Quad countries’ unifying concern, their public statements support the notion that each country views the purpose of the partnership differently and seeks diverging benefits. Though scholars have argued that “each of the Quad nations has comparative advantages in developing cutting edge technologies,” national models tend to reveal the full scope of compatibilities and conflicts that may facilitate or hinder progress in the long run. As technology policy and foreign policy continue to meld, an understanding of the Quad countries’ preexisting partnerships and national models will go far for the U.S. in anticipating and preparing for future cooperation and inevitable obstacles.
Amy makes a great point about tech primacy. Of course, a core assumption about the importance of technological superiority is that the country with the better technology will also be the country with the better military. Yet whether that is true will hinge on each country’s ability to operationalize new technologies effectively. What do we know about how tech competition is informing U.S. and Chinese operational concepts?
In the military domain China has been implementing an information-based strategy that will enable it to conduct what is now being called “intelligentized warfare.” In short, China has designed its military strategy to use information technologies both to enable its own military operations and, importantly, to disable those of its adversaries. China therefore has invested heavily in the C4ISR (Command, Control, Communications, Computers (C4) Intelligence, Surveillance, and Reconnaissance) networks that ingest, process, and deliver large volumes of data for use in wartime operations and decisionmaking, and has grown the industrial sectors that develop them.
The United States of course also is integrating emerging technologies into its operational concepts, especially for use in lethal attacks on opposing forces, but has struggled to develop an effective strategy for doing so. The Department of Defense continues to operate primarily on legacy information technology architecture that isn’t suited to modern advanced computing, and it faces considerable challenges in accessing the sources of technological innovation in the commercial marketplace. The overall impression — albeit perhaps a bit exaggerated in both directions — is that while China is busily implementing a technology-driven defense strategy, the United States is struggling to implement defense-strategy-driven technologies.
As the U.S. considers other partners in the technology competition with China, we shouldn’t restrict the conversation simply to our international partners alone.
We are living through a paradigm shift in how technology is financed, developed, and deployed. Where once defense-related R&D accounted for 36% of global research and development dollars, today that number is 3.1%. In the previous era, the DOD combined its vast technical resources and purchasing power to shape technical specifications and standards for resulting technologies, which resulted in breakthrough technologies like night vision and stealth aircraft. Today, however, the center of gravity is now in the private sector. Commercial enterprises account for a majority of technology R&D, such that consumers, through their purchasing preferences, now guide how technology should evolve.
The shift from public to private-sector investment has far-reaching consequences for U.S. national security and economic competitiveness. I won’t wade into the “industrial policy” debate here, but at a minimum, the U.S. government will need to develop a more coherent approach to working with new partners in the private sector, academia, and non-government organizations to improve its comprehension of technology market trends. Being able to ingest information — such as what is being developed, who is developing it, what the supply chain looks like, how the product or service is financed, and how it is being used in the civilian and military domains — and then make informed decisions on that information has both practical and security importance.
In order to be a productive partner, the government will need to exercise regulatory and policy tools that govern high technology development and trade, such as the Committee on Foreign Investment in the United States (CFIUS) and export controls, with far more precision and intentionality than before. It will have to be more creative with non-traditional national security policy tools such as tax, trade, and environmental policy — as those are key enablers to the innovation ecosystem. And in those technology domains where supply chains are less resilient or non-existent, the government will need to develop prudent strategies to provide non-dilutive capital or purchasing commitments to lever-up private sector activities in areas such as microelectronics, as Chris mentions above.
Of course, all of this activity is extensible to our international partners. Synchronizing investment screens and export controls will be less of a stretch. But developing coordinated R&D and commercial investment activities, procurement activities, and developing defensible trade policies in dual-use technology sectors will involve more friction given long-standing World Trade Organization (WTO) commitments, a high degree of existing technology integration with China, and a general unfamiliarity in government circles for these types of interventions. Before focusing on AUKUS (the new U.S.-U.K.-Australia security pact) or the Quad, the U.S. has to identify the right partners domestically and build the right structures for engagement. Simultaneously, as Melanie points out, we need to set the right strategic objectives. Building out international groupings from that foundation will prove to be more efficient and productive.
Great conversation so far. One of the key questions for U.S. policy is how Washington should seek to organize democracies to cooperate on technology. Some have argued that the Biden administration should create an alliance of techno-democracies. I have been working on a paper with our colleague Tanvi Madan that argues that this approach might be problematic for a number of reasons. It could mean that the alliance could only move at the pace of its slowest member. Democracies have different priorities with respect to technology. For instance, when it comes to export controls, some members of a D-10 or T-12 may have very little interest in certain technologies and may be wary of aggravating China in a way that could jeopardize other interests of theirs. Or cooperation could stall because some members link progress on one technology problem set with movement on another.
An alternative approach, which the Biden administration appears to be pursuing, is to create overlapping coalitions of like-minded governments — working bilaterally with the European Union, the Quad, AUKUS, and individual countries. This allows the United States to carefully tailor the agenda to reflect the priorities of the other party. For instance, the EU has a particular interest in data localization and privacy issues as well as regulating big tech. These individual dialogues are not about China per se — instead, they are about increasing international cooperation with like-minded partners on the rules of the road for new technologies.
Beijing is likely to continue to use its enormous economic power to build asymmetrical ties to companies and countries that serve its interests but it will struggle to provide an alternative to the U.S. model of international cooperation on technology. It would have more levers it could pull to slow down a formal alliance but it will find it difficult to undermine a more diffused approach.
The conventional fear with Chinese technology exports is that Beijing isn’t just going to send its technology abroad, but its governance model too. To some extent that fear is misplaced: As our colleague Sheena Chestnut Greitens has shown, there’s little evidence that China sells its surveillance stack primarily to socialist or communist regimes.
Yet Beijing doesn’t need to bundle Huawei routers with Xi Jinping Thought to undermine liberal values. The real fear is that autocrats, as well as democratically-elected populist leaders, will increasingly build out the next generation of telecommunications infrastructure on Chinese hardware. The more they do so, the more U.S. and European leaders will lose a point of leverage — it’s much easier to insist on governing telecommunications and surveillance technology in line with democratic values when you are the supplier of that technology.
Put differently, the big problem with Chinese technology exports is the downward pressure it places on democratic principles like transparency and accountability, particularly when it comes to the governance of surveillance technologies like facial recognition. If democracies fail to provide compelling alternatives, we’re going to find ourselves in a race to the moral bottom.
Chris is quite right that which governments states buy their technology from matters. Purchasing technology from countries committed to open societies and human rights is an opportunity to encourage the adoption of liberal principles. As Chris also notes, China does not currently seem to use technology exports and financing explicitly as a means of also exporting socialism, communism, or authoritarianism more generally. It is possible, however, that the effect will be a spread of illiberalism all the same.
In addition to concerns about how already-illiberal regimes might use Chinese technologies, there is a risk of catastrophic success in all recipient states. It is possible that near-term material effects — felt in economic growth, rising quality of life, and popular satisfaction — will make deals with China appealing for various governments to get into and very hard for them to get out of. Over time these political and economic dynamics might enhance China’s influence — in bilateral relationships and in overall global market share — and could habituate societies into technical standards that run counter to liberalism, such as built-in restrictions on transnational flows of information and the denial of privacy protections. The longer these conditions persist, the more entrenched and normalized they become, and the more readily they can be used by regimes interested in exercising social and political control.
The problem, however, isn’t just what China is doing — it’s also what liberal states aren’t doing. Neither the United States nor any other country or coalition has yet offered a model for aiding developing nations to gain access to basic, much less transformative, technologies on a scale that is competitive with what China has done since 2015 with its Digital Silk Road. The EU’s newly-announced pledge to increase funding for digital connectivity in the developing world with the Global Gateway strategy suggests that Europe now recognizes the need to demonstrate a commitment to global technology infrastructure and to compete with China to set the rules of that digital road, but more can be done. For example, the United States could increase and better coordinate its financial and technical assistance to middle-income and developing countries that are investing in digital infrastructure, and participate more actively in international standards-setting bodies.
China’s technology exports and financing are returning benefits in areas with previously unmet needs, in real time. So long as this model continues to do so in the absence of a compelling alternative from the United States and its partners, the hollower, if not more hypocritical, their criticisms of China’s practices will seem.
Overall, the concern about the diffusion of (potentially dual-use) technologies speaks to the pressing need to shore up or otherwise strengthen the global governance architecture — the system of regimes that provides guidance on and regulation for dual-use technologies (the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers Group, and the Wassenaar Arrangement), and the norms against proliferation they support. In recent years, China has increased its engagement with multilateral dialogues for these regimes, in part due to sustained international pressure, but is not a member of any of the regimes. China does maintain export controls it claims are consistent with regime guidance.
However, as newer technologies continue to evade controls that haven’t yet been sufficiently modernized to regulate them, global governance architecture continues to weaken. My view is that a multi-pronged approach that seeks to shore up existing regimes through more rapid control list modernization, which requires a greater degree of resources and international cooperation on horizon scanning and technology assessments than currently in place, combined with sustained pressure on China to continue to participate in the international order as a precondition to further shoring up its superpower status, could go a long way towards aligning regimes with values.
CAMERON F. KERRY:
Freedom House in 2018 documented Chinese sales of intelligent surveillance systems to some 18 countries. In response, democratic countries can offer a coherent and consistent counterexample to China’s techno-authoritarianism and the U.S. should strengthen its leadership and diplomacy on norms of surveillance. Following the Edward Snowden leaks, the U.S. made a huge cultural change in transparency about its foreign intelligence surveillance and in extending rule-of-law and privacy protections for “U.S. persons” to people around the world — initiating a new international norm in a world in which surveillance of non-nationals has been fair game. We should reinforce this leadership by codifying these changes into law, and enlist allies to join in the Organisation for Economic Co-operation and Development (OECD) discussions about norms for lawful government access and access to foreign as well as domestic data. China’s privacy law for the commercial sector went into effect in November 2021; meanwhile, the U.S. still lacks a comprehensive privacy law to address what Shoshana Zuboff terms “surveillance capitalism.” This glaring gap is an invitation for “what-aboutism” from China. The U.S. needs to join every other liberal democracy in adopting a basic privacy law.
The U.S. has also extended arms control measures to surveillance technologies, both in restricting exports of intrusive U.S. surveillance and technology and recently placing NSO, the Israeli maker of the Pegasus software used to tap iPhones, on the “entities list” with other vendors of surveillance technology to authoritarian governments. This is another area where the U.S. can work in the alliances that Amy names and in other forums to exert upward pressure.
I think the point Chris makes — that there is relatively little correlation between the state of democracy in a country and the likelihood that it will adopt Chinese surveillance technology — is exactly what has me so concerned. And to Melanie’s point, I don’t believe that China seeks a world converted to authoritarianism, as much as one that is safe for its worldview.
Even as they confer tremendous strategic advantages in the long run, open digital environments create vulnerabilities for the United States and its democratic partners in the short term. The Chinese government can inject itself into, and try to shape, domestic political discourse — at low cost, and with plausible deniability. It can use its cyber capabilities to surveil journalists and activists abroad in order to repress criticisms of China’s rights record while stealing intellectual property that gives China a boost in the technology competition. Beijing tightly controls its own information environment, which affords it a degree of immunity to information manipulation. And because authoritarian systems impose virtually no normative constraints on government deception, it can pursue these activities with relative impunity.
Democratic governments would do well to remember that Beijing deploys these asymmetric tactics as part of a deliberate strategy to exploit the openness of democratic systems. Responding in kind would enable Beijing to dictate the terms of the competition and almost certainly ensure that the contest plays out on terrain where the United States and its democratic partners are at a disadvantage. In order to mitigate security risks without undermining their values, democratic governments should leverage advantages of their own to push back in places most conducive to its success.
With respect to the information competition, this could entail taking the “persistent engagement” approach that the United States Cyber Command has adopted and carrying it into the information domain. That could mean deploying concerted campaigns, grounded in truthful messaging, to expose corruption and repression. It could also entail upholding freedom of information worldwide — not just because it is consistent with democratic principles, but because it puts Beijing in a defensive position, given its fragility to open information.
With respect to the technology competition, a strategy for success should include protecting critical technologies by strengthening CFIUS, combating intellectual property theft by imposing costs on companies and individuals committing economic espionage, and working with partners to implement export controls on technologies for surveillance, facial recognition, and genetic analysis.
We already have a bifurcated internet. China’s Great Firewall and internal controls on internet use and technology have forked what was a global internet, as Josh Meltzer and David Dollar describe. Going forward, upholding freedom of information means ensuring that this forking does not end in broader fragmentation.
That will require strengthening America’s digital policymaking and diplomacy broadly. This has begun through increased G-7 focus on digital issues, the EU-U.S. Trade and Technology Council, and UK-U.S. science and technology collaboration under the new Atlantic Charter issued in June 2021, and other forums. It needs to expand across a network of like-minded networks. The “overlapping coalitions” Tom Wright describes should be distributed and redundant, like the digital networks of the internet. The challenges of China, flows of trade and information, disinformation and other malicious content, supply chain integrity and security, and other digital issues transcend national boundaries and require coordinated international responses.
On the national security front, the U.S. should be very precise in targeting threats. Advanced microchips are strategically important, but not every chip or device has strategic value amounting to “emerging and foundational technologies.” Nor is every research collaboration an invitation to espionage, much less every researcher with a Chinese surname a spy. These and other situations will require careful and balanced assessments based on concrete risk. The message should be that the U.S. is concerned with specific policies and behavior of the Chinese government, not with China per se.
Such assessments will have to be made with eyes wide open. A little over 10 years ago, I exercised the power of the Commerce secretary to block Huawei and ZTE from participating in interoperability testing for U.S. public safety communications networks. That decision rested largely on the basis that these companies were likely to respond to tasking from the Chinese government or CCP. That likelihood is many times greater now given the direction China has taken since. Businesses, universities, and other non-governmental institutions have difficult moral, political, and business risk assessments to make about doing business with China. But these should be distinct from the strategic balance the government needs to strike.