China attempts to rewrite the rules of the digital world

China is set to become the world’s biggest economy by 2030, and this trend is one of the defining features of the first half of the 21st century. The miraculous rise of this country is fuelled by its export sector, colossal population, and digital technology. And Beijing is well aware that the last one of these growth factors holds the key to global dominance. So it’s no wonder that the Chinese government is investing heavily in its technology sector that includes nine of the world’s 20 biggest tech companies. But while the authorities are eager to economically benefit from technology and the internet, they’re much less inclined to embrace their other features such as free speech, intellectual property, and user privacy.

Take, for example, China’s social credit system that’s due to be operational by 2020. It tracks the behaviour of citizens in an Orwellian way and rewards or punishes them accordingly – buy too many cigarettes or video games and you might be forbidden to board a flight. On top of that, Big Brother-style facial recognition tech is booming unconstrained by privacy laws, while powerful governmental algorithms censor sensitive topics. Even foreign companies in China must obey the government’s stance on issues such as Taiwan or human rights. Meanwhile, Chinese hackers carry out massive cyber-attacks on other countries, stealing their military, political, and industrial secrets.

Such practices have alarmed the other developed countries as they show a disregard for privacy and demonstrate the lengths to which Beijing is willing to go in terms of using technology against its citizens and other countries. This type of approach, however, isn’t sustainable in the long term. As noted by the privacy expert Tiffany Li, “If China wishes to be taken seriously on the global stage, it too must align to some extent with the shared values and norms of the rest of the world.” This makes the creation of global standards on privacy and technology the best way forward, and the US and its allies should work with China on making sure that this happens. Otherwise, we might find ourselves entering a Chinese-dominated global economy with the internet divided like never before.

Beijing’s control extends beyond its borders

One of the Chinese government’s projects that stirred controversy and was described by the White House as “Orwellian nonsense” is the introduction of a social credit system. In essence, it’s a data-driven, AI-powered algorithm that tracks and ranks the online and real-world behaviour of 1.35 billion Chinese citizens and businesses – and rewards or punishes them accordingly. But the much bigger issue is that this system has the potential to expand beyond China’s borders.

A report by the Australian Strategic Policy Institute claims that “Social credit regulations are already being used to force businesses to … accommodate the political demands of the Chinese Communist Party.” For example, if foreign airlines that operate in China regard Taiwan as a country and not a Chinese region, they could be sanctioned and their social credit score reduced. And once this system is fully operational, “it would be a small step to include non-Chinese into that system, extending Xi’s tech-fuelled totalitarianism to the entire world,” warns Gordon Chang, a senior fellow at the Gatestone Institute.

Hacking – the German and Chinese way

But data collection and rating of citizen behaviour isn’t a Chinese invention – Beijing just took it to the extreme. Western credit rating agencies such as the German Schufa and its US counterpart FICO have been doing it for years. The only difference is that they never took it to the extent China did. But what some governments want instead is to gather even more data by legally hacking devices and planting malicious software. In the case of Germany, the State Trojan Law enables exactly that, although the Constitutional Court has the final say over the legality of such surveillance operations.

But unlike Germany, Chinese institutions and companies are less constrained by legal concerns when it comes to spying. Bloomberg reports that microchips added to motherboards made by Supermicro’s Chinese subcontractors gave government-linked spies a backdoor into computers and the opportunity to steal data. These computers were used by major US banks as well as corporations such as Amazon and Apple. And although these companies refuted the story, it serves to illustrate just how sensitive the technology supply chain really is to cyber-attacks.

Even Google changed its stance on censorship

Events like these illustrate China’s growing confidence in its plans to become a cyber-superpower. Led by president Xi Jinping, the country is determined to have “a greater voice in Internet governance … and lead the globe in advanced technologies,” argues Adam Segal, a tech and national security expert at the Council on Foreign Relations. China’s 700 million internet users and its success in AI and robotics give the country the power to achieve its plans. For example, the Chinese AI doctor Biomind beat human doctors in analysing brain images. Furthermore, the government expects the country to produce 400,000 industrial robots per year in 2030. Such an ambitious growth plan could bring Chinese companies additional revenue of $88 billion over the next decade.

The lure of the Chinese market is so strong that even Google initiated talks to re-enter it after this tech giant accepted Beijing’s conditions to block certain search results and queries. This gives us a glimpse of what Chinese-dominated internet might look like and makes regulation of the digital world a critically important task. As Segal says, the US and China should “work together on setting global standards for government purchases of technology, determining how companies should secure their supply chains against cyber-attacks”, while Li calls for the creation of global privacy norms.

Will our future be dominated by China?

China is estimated to surpass the US economy by 2030, marking a seismic shift in the global system. Beijing relies heavily on technology and the internet to make this prediction a reality, but its use of digital tools and disregard of free speech, intellectual property, and user privacy worry the US and its allies. The two blocks are increasingly divided on these issues, making the creation of global rules the best way forward. And while the future is most likely to be dominated by China, even its heavy-handed leaders will benefit from a rule-based digital world.

This article was originally published in 2018 on the Richard van Hooijdonk’s blog.