In August, Washington banned China’s Huawei. Two weeks ago, a host of other Internet of Things and Artificial Intelligence companies joined it on the blacklist. Now, Chinese transportation companies are under the gun. Washington talks about risks of espionage, unfair subsidies, poor quality standards, and safety concerns. All are legitimate qualms. All overlook the real threat.
Beijing deploys its – ostensibly — private companies for more than just commercial benefit. It sees their products as more than just industrial exports. For Beijing, this is a grand, information-based strategy. Its companies are planting the US with data-collecting sensors. Under our noses, across every domain, Beijing chases a new form of state power unlike anything that the world has ever seen. The Chinese Communist Party (CCP) wants global information control. It wants to use that information control to set international rules. Xi Jinping calls this the Network Great Power Strategy. It constitutes a bid to govern global movement – of resources, people, data, ideas. Beijing doesn’t want to rise in the world. It wants to reshape it. The US system is ill-equipped to notice, even less so to respond.
Beijing began preparing for the next great power contest before the end of the Cold War. “In the future,” Mao promised, “China will use force.” From the outset, the CCP diagnosed that this would be a new kind of contest and a new kind force. Beijing sought to combine technological advances with modern international systems to blur state borders. Information technology was creating a shared system of global networks. If the Cold War had been an era of separation, then this new era would be defined by integration.
The US and the West called it globalization. We interpreted it as the foundation for the liberal world order: a system of relatively free commercial, financial, and informational exchange that fosters international integration and interdependence. As prevailing wisdom has it, interdependence makes large-scale war or competition outmoded. And integration has made the nation-state increasingly irrelevant.
Indeed, Beijing reasoned, if modern networks and standards transcend national borders, then the nation-state that controls those networks and standards would be in a position to exert unmatched influence. Said nation-state could set the rules governing global activity. It could control and collect from the world system without being controlled or collected from in return.
In essence, if China could control the networks and standards of the global economy, then it could weaponize cooperation in its favor.
This is geopolitics free of geography and extending well beyond politics. It is a new-type power projection that outpaces traditional military force. It operates without expensive infrastructures, and at a profit. Additionally – here’s the terrifying part – this network power can be enduring, monopolistic, and absolute.
China Opened Up
For the past fifty years, China has pursued as much through a deliberate, phased strategy. First, in the late 1970s, it opened up to the international system to draw in investment, technology, and resources. “‘ Opening up’ mainly focused on ‘bringing in:’ Introducing foreign advanced technology and equipment, foreign capital, foreign intelligence; on absorbing all foreign advanced things…Otherwise, how to advance?”
China promised its market in exchange. It never quite delivered. American Motors happily joined Beijing Automotive Works to launch Beijing Jeep Corporation in 1983. The US company readied to capture the Chinese market. They never came close. Instead, national champion, state-owned BAIC Group learned to make car parts, and Beijing retained its domestic market. The world was open, but China was closed. Beijing created a unidirectional flow of resources.
With those resources, Beijing built up its strength. By the late 1980s, the CCP had progressed to the “Go Out” policy. Supported by government backing and guidance, Chinese companies deployed globally to “obtain domestically scarce resources in the international market and to foster comparative advantage.” Now China was not just siphoning resources from the open world system. It was building positions of leverage within it.
That meant leverage in supply chains: Having acquired valuable Intellectual property from investments in Taiwan’s semiconductor manufacturing and subsidized production at home, Beijing undercut competitors to become a monopolistic, global node. It did the same thing with commercial drones, televisions, rare earth elements, and parts for advanced manufacturing.
Beijing sought leverage over less tangible global networks, too: It invested in Kazakh oil. It invested in Hollywood to affect the US media narrative, global ports to control maritime trade, the United Nations to shape multinational discourse, and Goldman Sachs to influence Wall Street. The international system from which Beijing siphoned resources thus began to rely on it. China was integrated into the world. However, the world was not integrated into China; Beijing had built one-sided dependence.
Made In China 2025
In 2015 – confident that its foothold was secure – Beijing publicly acknowledged the nature of the Go Out strategy with Made in China 2025. By then, the CCP was more than a decade into the next phase of its offensive.
When Beijing entered the WTO in 2001, the Ministry of Science and Technology had launched the China Standard Strategy: China would “complete its historical mission to seize the commanding heights of international standards.” It was time to start not just manipulating (or ducking) the rules, but also shaping them.
Where standards are imposed by regulatory bodies the CCP games the process. China deploys more representatives to 3GPP – the body that sets telecoms standards, including 5G – than any other global player. It compels all Chinese companies and individuals to vote the party line. Today, 3GPP approves nothing that the CCP opposes.
Where standards are more organic, Beijing wields size and centralization to defeat the fragmented competitors who don’t even know they’re competing. Beijing controls a trillions-of-dollars economy and 1.3 billion people. It decides whether they communicate on WeChat or Facebook, pay with AliPay or Venmo, rely on Beidou or GPS. Any CCP platform or standard will be, off the bat, the biggest. In the network battle, the biggest network beats the best network.
The Great Network Power
Now, Beijing positions to become a Network Great Power. It targets not just existing networks, but also the foundations of future ones. That means 5G, next-generation Internet, and fintech. It also targets evolving international law, electric vehicle regulations, and social media. Beijing is crafting a new system of ideological norms to replace the vacuum of a faltering American myth.
While the US faces down big tech at home, it misses a larger deal, a bigger, badder tech building a global monopoly abroad. This one has an explicit, authoritarian, coercive agenda. America must wake up to the fact that we are not only up against Facebook, Apple, Netflix, and Google, we’re up against the Chinese Communist Party.
Addressing the True Threat?
There’s an obvious first step: We stop letting Chinese companies manipulate our system; we stop making unforced errors.
Next, we must move to reclaim our coopted systems, protect critical supply chains, infrastructures, and research ecosystems. The West can begin by ejecting Beijing from the WTO. The WTO and bodies like it must actually enforce the rules they promote. We must be willing to call out coopted actors.
Finally, we must start competing for new networks. Stop fighting big tech and start fighting for our tech – not just for the best innovation, but also for the standards that come from applying that innovation.
The US created today’s system of global exchange. Now, Beijing is manipulating it to subvert American security, prosperity, and values. For the time being, the US is still the incumbent power. We have the most influential private sector in the world and the most extensive set of political alliances. But the clock is ticking, and there’s still hope even if there isn’t much time.