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Technology: a double-edged sword for US-China ties

Zulfikar Abbany
September 23, 2015

The US has sent mixed messages to China. While the tech firms want in, the government is talking sanctions. But with President Xi Jinping visiting, they may have to accept collaboration as a conduit to peace.

Image: picture-alliance/AP Photo/T.S. Warren

Confusion. That's a key word when it comes to US-China relations on cyber issues.

"There is too much confusion over different aspects of the cybersphere - too much confusion in the media and frankly, I think, occasionally in the minds of the policy makers," says Kenneth Lieberthal, a senior fellow at the Brookings Institution's John L. Thornton China Center.

But it stands to reason: seeing Chinese president Xi Jinping (pictured above) hobnob with American tech luminaries in Seattle while at the same time the White House considers sanctions on China for "government-enabled cyber theft of proprietary information" is indeed confusing.

You may in fact wonder, as I have, whether the US government is out of step with the American tech industry.

Kenneth Lieberthal says an emphatic "no."

"Do the tech companies want the US government to push back on Chinese demands for source code and that kind of thing? Of course they do. They're not out of step on that," says Lieberthal. "But the companies themselves will make their own decisions as to what they participate in in China and what the conditions are."

Those conditions are often difficult. Lieberthal says there is "no doubt" the Chinese government wants to make the conditions for US internet companies operating in China "onerous."

"The flipside," he says, is that "China is a huge commercial opportunity."

E-commerce boom

China has the largest e-commerce market in the world, says Charles Ng, an associate director-general who oversees innovation technology at InvestHK. The country boasts "over 550 million buyers and users," he says.

Small wonder, then, that China should want to flaunt its market.

Jack Ma, founder of Alibaba
Jack Ma, founder of Alibaba, at the company's IPO at the New York Stock Exchange in 2014Image: picture alliance/AP Photo/M. Lennihan

It organized a top-level technology forum with Microsoft in Seattle for President Xi's visit. Chinese tech executives, such as Robin Li of Baidu and Jack Ma of Alibaba, were to attend - as were representatives from Facebook, IBM, Google, Uber, and Apple's CEO Tim Cook.

In an email, Google said it would not comment on the event.

But the Computer and Communications Industry Association, whose members include Google - and other American tech giants, such as Microsoft and Facebook - says these meetings tend to stick to business, leaving politics to the politicians.

"Companies want to make sure they're able to do business in China and so [on] Chinese policy, in areas such as surveillance or indigenous innovation, they may be more cautious about saying things," says James Waterworth, vice president for CCIA Europe. "Whereas the US government is representing all of American industry and not just a few technology companies."

Vague on action

The problem is the US government has been either tight-lipped or vague about what it intends to do with regard to industrial espionage and the theft of trade secrets, even though this is seen as the government's main concern with China.

White House spokesman Josh Earnest has said US president Barack Obama has been "intentionally non-specific."

Is he hedging his bets as much as the tech industry?

At a Business Roundtable, Obama said his administration was preparing to put "significant strains on a bilateral relationship" but hoped it could avoid such action.

Significant strains, however, are already on show, and the case of Professor Xi Xiaoxing is a prime example.

The failed case of Xi Xiaoxing

Professor Xi, chairman of the physics department at Philadelphia's Temple University, was arrested in May for allegedly sharing the secret design of a device known as a pocket heater with Chinese scientists.

Xi, an expert in superconductor research, says he was merely collaborating with colleagues in China - as so many others do. But he was demoted from his position, pending federal charges.

Then, earlier this month, the US justice department was forced to drop all charges when it was revealed its evidence was flawed.

Professor Xiaoxing Xi
Professor Xi Xiaoxing speaking at a press conference on September 15, 2015Image: Getty Images/AFP/S. Loeb

Xi can perhaps breathe a sigh of relief, but his reputation is shot - and his colleagues fear for future scientific exchange.

"You know, things like this happen in both countries," Xi told us by phone. "In the short-term, it does have a negative impact on scientists - not just Chinese, but also scientists in the US. I have heard from many colleagues that they are all scared, because what I have done is no more than normal academic collaboration."

And Professor Xi says failed attempts to protect intellectual property, such as in his case, chip away at what trust there is.

"It is the duty of each country to prevent [intellectual property theft], but this requires care on the part of the governments. If you charge innocent people without due diligence, it hurts this effort. It only encourages distrust," says Xi.

Collaborate for world peace?

If it encourages distrust, it must also add to the sense of confusion over what the politicians say they want and what the science and technology industries want.

For Kenneth Lieberthal, issues such as cybersecurity have moved to the center of the relationship between the US and China. "They're a source of great tension in the relationship," he says, "and I don't think that's going to go away."

Infografik Cybersecurity Incidents Reported by US Federal Agencies in Fiscal Years Englisch

Surely, then, it must be very damaging.

"No," says Professor Paul Cheung, an e-commerce and Internet expert at Hong Kong University. "The damage is not so great. I don't believe the business world will be too affected by comments from [either side], which are of a political nature."

Don't forget, says Cheung, the US is coming up to an election year, "so whatever happens, it will be politicized, it's unavoidable, and I'm not sure whether the Chinese government understands this. But if you believe technology is one of the things that brings the world together, then collaboration is inevitable."

Despite his personal experience, Xi also believes in the power of collaboration.

"These collaborations are good for the US, good for science and for the advancement of knowledge," says Xi. "Personally, I think the future of the world rests on the mutual understanding of different people."

This, says Xi, is a "teachable moment."