The US-China Economic and Security Review Commission has just released its 2017 “Report to Congress.” The Commission’s analysis reveals that Beijing’s meteoric economic rise in recent years is beginning to show some strain and increasing debt. Of particular concern to Americans is the vast deficit the U.S. has in its trade relations, some of which has been generated by China’s unfair trade practices. Perhaps the most worrisome aspect is Beijing’s continued massive growth in military power, and the aggressive nature of Chinese relations with nations within its region. We have excerpted the key findings of the Report, and present them in four parts without comment.
CHINA’S DOMESTIC INFORMATION CONTROLS, GLOBAL MEDIA INFLUENCE, AND CYBER DIPLOMACY
In 2017, the CCP tightened its control over media and online content. Authorities shut down independent media, penalized companies for disseminating news content without authorization, and eroded the privacy of Internet users in China by forcing them to connect their online profiles to their real names. As a result of a crackdown on “unauthorized” virtual private networks (VPNs), many popular VPN apps have been removed from online stores, and some VPN distributors based in China have been prosecuted and harassed by the state. VPNs have historically been one of the only reliable methods of circumventing China’s censorship of the Internet; this censorship functions as a “tax” by forcing users to spend more time and money to access blocked content. The Chinese government’s nascent “social credit” program, which relies on accumulated user data to build comprehensive profiles of Chinese citizens, is set to usher in a period of pervasive personal surveillance and social engineering. Multinational corporations with operations in China also have become unsettled by the tightening information controls, which many said negatively impact their business.
Amid the crackdown on independent media, and as journalists increasingly fear the repercussions of pursuing sensitive stories, investigative reporting in China has gradually diminished. Foreign journalists and their local assistants in China now face more restrictions and harassment than at any other time in recent history. The Chinese government also delays or denies visas from foreign journalists; in at least one case in 2016, Chinese authorities held up a visa for a foreign journalist until they were satisfied that another recent hire by the same press agency would not be covering human rights. Foreign correspondents also are increasingly being summoned by local authorities for informal interrogations.
Meanwhile, Beijing has rapidly expanded its overseas media influence by growing its overseas press corps and by exerting pressure on foreign publications both indirectly and directly. In April, the Chinese government also launched a major international media campaign to discredit a Chinese whistleblower living in the United States. In August, the Turkish foreign minister vowed to eliminate anti-China media reports in that country. Chinese authorities also (ultimately unsuccessfully) pressured Cambridge University Press to censor several of its academic publications. At the same time, China’s influence over Hollywood and the U.S. entertainment industry has grown.
The Chinese government has been promoting its views of “Internet sovereignty,” including in international fora, to legitimize its monitoring and control the Internet in China. This concept entails that a government has the right to monitor and control the networks in its territory and the content that Internet users there access and transmit. Beijing also advocates for a “multilateral” system of Internet governance in which national governments are the main actors. These views sharply contrast with longstanding U.S. support for the “multistakeholder” model, in which governmental, industry, academic, and other nonstate organizations have an equal role in the management of the Internet.
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CHINA’S HIGH TECH DEVELOPMENT
The Chinese government is implementing a comprehensive, long-term industrial strategy to ensure its global dominance in computing, robotics, artificial intelligence (AI), nanotechnology, and biotechnology. This strategy is laid out in the 13th Five-Year Plan, and the Made in China 2025 and Internet Plus initiatives and continues China’s state-directed approach over the last six decades to build internationally competitive domestic firms. Beijing’s ultimate goal is for domestic companies to replace foreign companies as designers and manufacturers of key technology and products first at home, then abroad. It utilizes state funding, regulations, China-specific standards, localization targets, government procurement, foreign investment restrictions, recruitment of foreign talent, close integration of civilian and military technology development, and, in some cases, industrial espionage.
China is also leveraging the openness of the United States and other market-based economies to gain access to advanced research and data, recruit a globally talented workforce, acquire and invest in leading edge firms, and freely sell their products and services abroad. The scale and volume of government resources directed toward these sectors undermines the ability of foreign firms to fairly compete in China’s market and creates distorted global and domestic market conditions and rampant overproduction and overcapacity. In addition, China’s high market access barriers for foreign firms, localization targets, and China specific standards further restrict foreign competition’s access to China’s rapidly growing market, a major loss of market and job opportunities.
The United States remains a global technological and innovation leader in many cutting-edge, dual-use technologies due to its world-renowned universities, innovation ecosystem, federal funding of basic research and development (R&D), and recruitment of the world’s brightest minds. But falling and inconsistent federal R&D spending, reduced openness to global talent, and lack of interagency coordination are undermining these drivers of U.S. innovation to China’s advantage. Loss of global leadership in these key high-value-added, dual-use sectors is detrimental to U.S. long-term economic growth, weakening U.S. firms’ competitive edge, and reducing the capabilities, capacity, and resilience of the U.S. defense industrial base.