The Debate

Tech Firms Are Boosting China’s Cyber Power

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The Debate

Tech Firms Are Boosting China’s Cyber Power

Cooperation with the CCP, often mandatory, carries risks as well as benefits.

Tech Firms Are Boosting China’s Cyber Power

This photo-shopped image of Chinese president Xi Jinping holding a yellow umbrella is among several images thoroughly censored on Tencent’s WeChat application via blacklist and artificial intelligence, according to a recent study by the Toronto-based Citizen Lab.

Last fall, the Chinese Communist Party (CCP) declared its goal of turning China into a “cyber superpower,” with improved capabilities and influence in areas ranging from domestic censorship to global internet governance. The regime has made important progress since then, often with the help of Chinese and foreign corporations. But these gains come with a cost, not only to human rights and internet freedom, but also to the cooperating technology firms’ profits and reputations.

Cutting-Edge Censorship and Surveillance

Some aspects of the government’s innovation drive have clear public benefits. In August, for example, state-owned China Unicom successfully launched and tested its first high-speed 5G mobile network in Beijing, which it plans to roll out across the city by next summer.

But other advances are more problematic. An August 14 report by the Toronto-based Citizen Lab revealed two forms of image censorship being deployed by the mobile application WeChat: One tool filters images containing sensitive text, and the other snags those that are visually similar to images already on a blacklist. Social media users have long posted images to circumvent censorship of simple text, and these new capabilities could close that loophole.

Tencent, WeChat’s parent company, has taken a number of other steps since May to meet the government’s censorship demands. It has barred users from linking to external videos in chat groups, deleted large numbers of audio and video clips (including those deemed to “distort history”), and banned users from making changes to their profile pictures or user names — a common form of commentary — during the June summit of the Shanghai Cooperation Organization, the regional security bloc led by China.

In the realm of surveillance, the western region of Xinjiang has become a laboratory for testing big data, facial recognition, and smartphone scanner technologies that can eventually be deployed across China and beyond. Several firms have emerged at the cutting edge of this effort, including CloudWalk, Hikvision, Dahua, SenseTime, and Yitu. Although the work entails complicity in the oppression of Xinjiang’s Uyghur Muslim population, it could give the companies a competitive edge on the international market, partly because access to large amounts of data can help train artificial intelligence algorithms. For example, data and images of ethnic Chinese, Turkic Uyghurs, and — under a new deal with Zimbabwe’s government — sub-Saharan Africans could collectively enable developers to correct common race-related errors in facial recognition software and gain market share in other parts of the world. Chinese firms are already expected to control 44 percent of the global market for such technology by 2023.

Toeing the Line

Chinese firms seek to expand in a wide range of other areas. A report published by Hong Kong-based Abacus in July shows how Baidu, Alibaba, and Tencent have been investing in or acquiring dozens of companies within China and abroad, from e-commerce and ride-sharing apps to blockchain developers and makers of self-driving cars. These tech giants are private enterprises, and they may have their own reasons for making such investments, but they also remain beholden to the government and its strategic goals. As the report notes: “Success or failure in China’s internet landscape is contingent upon government authority.”

Evidence of this reality has been abundant in recent months. In May, after a brief suspension by regulators, Toutiao overhauled the content and messaging of its popular personalized news app, altering its mission statement to include spreading “correct public opinion orientation.” Also that month, industry leaders joined in the creation of a new China Federation of Internet Societies (CFIS), directed by the Cyberspace Administration of China (CAC). Individuals like Tencent chairman Pony Ma, Alibaba founder Jack Ma, and Baidu chairman Robin Li were appointed as vice presidents. One of CFIS’ inaugural commitments was to “conscientiously study and implement the spirit of Xi Jinping’s Strategic Thought on Building a Cyber Superpower.”

Foreign Tech Firms

Chinese tech firms are not the only ones eager to please the leadership in Beijing. The government is adept at using the lure of its enormous domestic market — now consisting of over 800 million internet users — to extract concessions from foreign firms, including assistance with its censorship and surveillance system. The recent controversy surrounding Google’s plans to develop a censored search engine for the Chinese market is only the latest among many examples of such cooperation.

But in a newer and more disturbing development, the Chinese government has used market leverage — and in some cases arbitrary blocking and other regulatory actions — to spur censorship of information available to people outside China. In a spate of incidents over the spring and summer, hotel, airline, and automobile companies changed their presentation of content on topics like Tibet or Taiwan to fit Beijing’s political positions. A piece of code in Apple’s iPhone operating system that was meant to prevent Chinese users from displaying the Taiwan flag emoji recently caused phones with China location settings to crash, even if the device was being used in San Francisco. Apple is now weighing the inclusion of China’s Beidou navigation system on the next generation of iPhones; one can already imagine how its maps will handle Beijing’s territorial claims.

The Costs of Compliance

As Chinese and foreign companies take more steps to appease the regime, the human toll will continue to mount. Censorship and surveillance on sensitive topics like Taiwan, Tibet, Xinjiang, Falun Gong, and the 1989 Tiananmen massacre either whitewash or exacerbate large-scale human rights violations — including mass detentions, torture, and extrajudicial killings. Beyond that, annual Freedom House analysis of leaked censorship directives has repeatedly shown that a broad range of breaking news topics are targeted for control, including vital information on public health and safety.

But ironically, the complicit companies themselves are also important victims of the government’s repressive measures, enduring a number direct and indirect costs as a result of state abuses.

First, the arbitrary nature of Chinese regulatory decisions can wreak havoc on the best-laid business plans and nascent successes. In July, it seemed briefly that Facebook had gained government approval to open a subsidiary and innovation hub in Zhejiang Province, no doubt after long and arduous negotiations. But within hours, the registration announcement disappeared and was censored in Chinese media, apparently because the CAC vetoed the local government’s decision.

Second, the Chinese government’s ever-increasing censorship and surveillance demands reduce profit margins. Actions like moving data service centers from overseas to China and partnering with local companies — as required under the new Cybersecurity Law and implemented by companies like Apple and Evernote — are not inexpensive endeavors. Neither is rapid expansion of censorship staff, as Toutiao announced following its suspension in April; the company increased the number of editorial monitors from 6,000 to 10,000 and established a special committee to manage a politicized content overhaul.

Third, while close government ties are a necessity in China, they provoke scrutiny, distrust, and skepticism abroad. More foreign governments and civil society groups now object when Chinese firms seek to build critical infrastructure or provide important technology and services. Last month, Australia blocked Huawei and ZTE from building the country’s 5G network, citing security risks. A U.S. defense spending bill signed into law on August 13 banned federal agencies from purchasing equipment made by Hikvision, Dahua, Huawei, or ZTE. And on September 18, broadcasters in Ghana raised concerns about the government’s talks with a Chinese company on a contract to build the country’s digital television infrastructure. Meanwhile, Google’s reputation has taken a hit from the revelations about its Chinese search engine project, with some top employees resigning in protest.

Both Chinese and foreign firms are caught between a rock and a hard place. As they compete for profits and market share, they must navigate between the legal regimes and political demands emanating from Beijing on the one hand and democratic societies on the other. The Chinese Communist Party has laid out its own plans and ambitions, and it shows every sign of implementing them to the fullest. The question is whether the United States, other democracies, tech entrepreneurs, and investors will assert their own principles — including freedom of expression, free enterprise, and the rule of law — with equal determination. If they do not, technology companies will lead the world down a path charted by Beijing, and the freedom of all people will suffer for it.

Sarah Cook is a senior research analyst for East Asia at Freedom House and director of its China Media Bulletin.