The Winter Olympics were merely a snapshot of the dilemma that U.S. companies are facing in China. One very good look at the problem was buried on page B3 on a Saturday of a holiday weekend in the New York Times by Ana Swanson. It deserves wider reading so here’s the link.
As I wrote in A Grand Strategy: Countering China, Taming Technology and Restoring the Media, American CEOs have been guided by the philosophy of globalization. For generations, they have believed that their main goal (and some would say “only” goal) has been to maximize shareholder returns. It did not matter where they operated, where they developed or sold technology, which nationality of person they hired, etc. In the case of China, it worked for many years as America, as a whole, believed that China was morphing into something resembling a market economy with a wider degree of political pluralism. No one in their right mind thought the Communist Party would disappear, but it might relax its grip.
Xi Jinping has changed the entire calculation. Now that China has power, it is exerting it globally in ways that undermine the world order established by the United States and allies post-World War II. Hong Kong has been wiped out. Xi has created a digital dictatorship that is crushing all forms of dissent and forcing Uighurs and Tibetans to assimilate into the ethnic Han majority. He’s taking China in precisely the opposite direction we hoped the country would go.
American companies suddenly are in a tough spot. Intel, Qualcomm and Nvidia are designing or selling semiconductors that end up in military hardware or space craft and satellites; in facial recognition technology systems; in cameras that are equipped with backdoor surveillance capabilities, and on down the list. (One other major provider of advanced semiconductors, ironically, is Taiwan Semiconductor Manufacturing Corporation. That company is literally selling chips into the People’s Liberation Army which is sending warplanes into its air defense zone and aiming missiles at it. But I digress.)
Microsoft, Apple and Amazon Web Services have opened up their systems in China to Chinese authorities with still unknown consequences. Google and Facebook and Twitter are making billions of dollars from ads paid for by the Chinese government to “tell the Chinese story well.”
It goes on and on. U.S. companies are buying cotton and solar panels made with forced labor in Xinjiang Province. Tesla, in a remarkable display of utter tone-deafness, opened a showroom in Xinjiang.
Jim McGregor, whom I have met and who is regarded as one of the leading experts on this subject, told the Times that his company is telling American companies “try to comply with everybody (in both the U.S. and China), but don’t make a lot of noise about it–because if you’re noisy about complying in one country, the other country will come after you.”
That’s the ultimate statement of a globalized, stateless view. But American companies are, by definition, American. I believe we have to start a process of explaining that to American CEOs. They need to reduce the technological help they give to China and turn instead to helping America develop technologies. They cannot merely allow the Ministry of State Security to operate in their IT systems because the Chinese don’t make too many problems. They have to work with the U.S. government to safeguard all American computer systems and our version of the Internet, which have been completely penetrated by the Chinese and Russians.
It has reached the point that for our democracy to survive, and for our national security to be safeguarded, we need to create greater cohesion among our institutions and our private sector interests. We are getting picked apart and we are cooperating with that effort.
