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10/12/2019 | Analysis - China’s Protectionism Online Is Driving Its Own Decoupling With the U.S.

Howard W. French

Alibaba, WeChat and other Chinese tech companies show that Beijing has been pursuing a decoupling of its own, or at least a strategy of asymmetrical market access, for decades now.


In 2003, just as I was arriving in China as a correspondent for The New York Times, tectonic changes were coming to the worlds of internet commerce, search and social media. But their rumblings were so deep beneath the surface that few could have predicted their long-term consequences.

That year, Alibaba, a four-year-old web company that had started out of an apartment in Hangzhou, fended off an ambitious push by eBay into China’s e-commerce market by eliminating merchant fees for Taobao, Alibaba’s own e-commerce platform, even as it was losing money. The move helped put Alibaba on the road to becoming the world’s biggest seller of goods online and its founder, Jack Ma, one of the world’s richest men. It was part of a series of measures, both public and private, that were meant to create “national champions” for the internet in China, meaning companies that would compete vigorously for business globally, while getting help from Beijing in keeping foreign companies out of their home market.

Fast forward to 2011, by which time I was living in New York, and more big news about the internet in China suddenly arrived, this time like a thunderclap. Numerous friends in China as well as Chinese nationals living abroad wrote to urge me to sign on to something called WeChat, which had overnight become the must-have cellphone app for staying in touch, and very soon thereafter, an almost unimaginable array of other services.

There has been much talk in recent months about a decoupling of the world’s two largest economies, driven by the United States under President Donald Trump. But the stories of Alibaba, WeChat and other Chinese tech companies show that Beijing has been pursuing a decoupling of its own, or at least a strategy of asymmetrical market access, for decades now.

Consider China’s “Great Firewall.” Earlier this year, the Spectator Index published a partial list of companies blocked on the Chinese internet. It included Google search and Gmail, Yahoo, Facebook, YouTube, Wikipedia, Twitter, Netflix, Instagram, WhatsApp and Dropbox, as well as the websites of the BBC, The New York Times, Nikkei, LeMonde, Der Spiegel and The Economist, among others.

While Alibaba and Tencent, the parent company of WeChat, have been extraordinary success stories, not all of China’s would-be national champions have enjoyed comparable triumphs. For example, Baidu, the search engine that has dominated the Chinese internet since Google abandoned China largely over censorship issues in 2010, has garnered little success competing in international markets. Indeed, many in China loathe it, particularly young people, who often turn to virtual private networks, or VPNs, and other technical hoops to evade domestic internet controls so they can use Google and some of the other popular Western tech giants that are blocked.

What Baidu’s example means is that there is potentially a steep price to be paid for accepting the bargain offered by Beijing to Chinese companies operating in what it considers a strategic sector. Life inside of a walled garden may be cushy at first, but it is ultimately quite limiting, even if you get to cater to the world’s largest population.

Herein lies a lesson about how the United States and other advanced economies should deal with China. One approach, already seen in the sanctions-happy policies of the Trump administration, is largely punitive and leaves little scope for what I’ll call “virtuous reciprocity.” A better approach would actively push for opportunities of positive-sum engagement about the shape of the internet, and beyond even that, the future of the world economy more generally.

Of course, it would have been better had Washington and other governments tried this approach back at the start of this century, when they had much more leverage in their discussions with Beijing. But appeals to principles that offer prospects for true win-win outcomes never lose all of their potency. Nor does the stifling prospect of ever-more confinement to the walled garden that is China’s internet.

How would this kind of engagement work? Today, Washington sanctions Huawei, China’s telecom giant, because it considers the hardware it builds—which is vital to the fifth-generation cellular networks, known as 5G, that will soon to be arriving in markets everywhere—to be a national security risk. The U.S. is contemplating similar measures against TikTok, a Chinese social media app whose business has recently exploded in the West. Rather than punitively closing off markets, an approach based on virtuous reciprocity would instead reserve that as a final step if common standards for all couldn’t be reached. For example, Washington and Beijing could agree to security reviews for 5G hardware like Huawei’s in exchange for open markets where companies from whatever quarter would be allowed to market their equipment without restriction. If that meant that China’s national champion wins this round, so be it, despite all the talk about how high the stakes are for dominance of 5G around the world. Sound common principles for market access that are enforceable would be worth it.

For social media and the internet more broadly, the ship left port a long time ago, so retroactive corrections are required in order to arrive at a reciprocity that is meaningfully virtuous. Since the major players of the internet outside China, like Google and Facebook, are not allowed to operate in the country, Chinese companies like WeChat and TikTok should not be allowed to operate in the U.S. or other Western markets, until this asymmetry is seriously addressed.

One of the obstacles to this virtuous reciprocity is that Beijing, of course, shies from openly articulating one of the key aspects of its internet protectionism, which is not commercial at all but rather based on a desire to sustain a regime of strict censorship. As recent news stories have troublingly demonstrated, this censorship extends to Chinese social media apps like WeChat and TikTok, which have been found censoring discussions outside of China, for example about developments in Hong Kong, or the forced internment of more than a million Uighur Muslims in Xinjiang.

For the Chinese state, censorship is a matter of national security. It is high time, though, that the West treat it this way as well. China corralling and indoctrinating its population online, insulating it almost entirely from varied sources of outside information, amounts to a strategy of weaponizing nationalism that threatens other countries.

In light of all this, it seems clear that China may never be compelled to fully open its internet to information and tech companies from other countries. But that doesn’t mean that the U.S., Japan, South Korea and Europe shouldn’t insist upon it, while holding out the prospect of positive outcomes with incentives for Beijing. With its extraordinary functionality, WeChat, in particular, seems like it could rival any mobile app in a world where the internet wasn’t so Balkanized.

In the meantime, though, there’s only the walled garden, where more Chinese citizens will become aware that their use of the internet—at the center of so much of life today—is crippled not by others, but by their own government. 

***Howard W. French is a career foreign correspondent and global affairs writer, and the author of four books, including most recently “Everything Under the Heavens: How the Past Helps Shape China’s Push for Global Power.” You can follow him on Twitter @hofrench. His WPR column appears every other Wednesday.

World Politics Review (Argentina)


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