Trump’s March 2nd message was not only unexpected, but it generated a reactionary response from the Chinese authorities. At first sight, the reaction seems an appropriate measure, in light of Trump’s actions as President. When a nation targets an individual or entire political party for protest, it should certainly take safety precautions in the face of existing security threats. After all, even the most dangerous leaders are aware of their uncertain future in a totalitarian state.
Nonetheless, policymakers need to understand why U.S. companies are concerned. Here, the list of reasons is lengthy, including:
Niche competitors are pushing Chinese rivals out of key markets
Several billion people in China are cutting edge tech investors
Risks of cyberwar are on the rise, as are potentially politically problematic entities
The potential for political retaliation towards U.S. companies is high. The largest recipients of investment from China include SanDisk, Sohu, Qualcomm, Paypal, FaceID, NetEase, Monster Energy, etc. It’s a mix of upstarts and long established American enterprises.
It’s no coincidence that, in January of this year, Chinese authorities worked to undermine Huawei’s global expansion plans. The Chinese government perceives the tech company as a threat to its own strategic interests. Taiwan, which is said to be a model for Shenzhen, is China’s only officially self-governing island, and Beijing’s biggest leverage to U.S. strategic positioning of the island. China has threatened to “drag Taiwan back to the motherland” and acquire similar-sized territories in the South China Sea.
Of course, the Chinese government doesn’t subscribe to a model of political monolith with a moral compass, and so its unpredictability makes cybersecurity a huge issue. The Chinese government often deploys (sometimes legally) violence against pro-democracy protesters, dissidents, and activists. Even in the midst of these situations, China’s legitimate security concerns cannot be ignored. When the stakes are so high, the line between legitimate protests and security threats is so blurry. However, the Chinese government’s campaign to cripple Western tech firms is about more than threats of political retaliation.
Beijing’s desire to “open up the domestic tech market to foreign companies” and help “localize business models and intellectual property” aligns with Trump’s campaign to “lower the taxes of big multinational companies” and to “harmonize our country’s intellectual property regulations so as to ease market access”. In the eyes of the U.S. administration, Chinese companies and individuals are national security threats, because they are using vulnerable Chinese business environments and tools to extend global technological influence and harm the United States.
As companies continue to innovate and market the same technologies, corporations are becoming increasingly connected to one another. All tech markets are connected, but there are differences in national security, technology readiness, and legal framework among industries. Unfortunately, the recent US-China Global Spying Compromise does little to help U.S. firms on this front.
In the current U.S.-China context, when information technology is viewed as a threat rather than a force for good, governments across the globe risk losing control of sensitive and highly protected intellectual property. As a result, governments and national security organizations must do more to guard against breaches. Therefore, it’s an important opportunity for leaders to recognize that protecting technological assets from theft is a national security priority. Otherwise, it won’t be long before China and other authoritarian nations follow the Chinese Government’s lead and use security threats against U.S. enterprise and consumers alike.