China Power

PCs and Shark Attacks

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China Power

PCs and Shark Attacks

What connects shark attacks, Western tech firms and the Chinese government?

One of the problems when looking at ties between countries is separating genuine shifts from media hype. I’m reminded of the obsession with shark attacks that the US media was gripped with in the summer of 2001, before bigger issues took hold. As it happened, at the time many of these reports of attacks were coming out, the figures indicated that there had actually been less attacks than normal. But the media had the bit between its teeth, and attacks were the story of the summer.

The same patterns can be seen in international relations, including US-China ties. Have relations really deteriorated as is so widely reported, and is the US really pushing back hard now after a softly-softly start? Or is much of it just a continuation of policy–the weapons sale to Taiwan was long-planned after all, US presidents meet the Dalai Lama and China always complains loudly and will often, temporarily, suspend military co-operation.

I get different opinions depending on who I speak to. But news of growing demands on technology firms doing business in China has had me wondering how much of a shift there might be here, too.

The FT reported earlier this week:

‘Technology companies are “feeling less welcome and finding it increasingly difficult to do business in China”, says John Neuffer, vice-president for global policy at the Information Technology Industry Council, a lobby group.

‘An evolving regulatory regime, targeting information technology-related products, is the chief cause of this sentiment.’

It goes on to detail more specifically the government’s expectations of foreign firms:

‘China also introduced its own standard for chips that secure critical data in computers, called the trusted computing module (TCM). This in effect locked the global standard, the trusted platform module, out of the market.

‘The public security ministry then announced plans for a multi-level protection system under which suppliers of all products linked to “critical infrastructure” would be required to disclose confidential product information. Above certain levels of security, products could be sourced from Chinese suppliers only.

‘Taken together, these measures amount to a disastrous scenario for a range of foreign companies, including software makers, semiconductor companies and producers of telecommunications gear, computers and smartcards.’

I asked Jason Dedrick, a professor at Syracuse University who specialises in industrial policy and the globalization of the computer industry, for his take on these reports. He told me:

‘This is nothing really new. The Chinese government has promulgated standards and regulations on high-tech products for quite a while…and has sometimes eased back in response to both domestic and international complaints.

‘Whether there’s a slow “screw tightening” is an interesting question, but it seems to me that these types of issues have always been present and the multinationals mostly try to work quietly to have their interests heard by policymakers.

‘We’ll see how Google’s very vocal approach works—I notice that they’ve become much quieter for the past month or so.’