US takes hard look at China's secrets By Benjamin A Shobert
WASHINGTON - During last week's hearings by the United States-China
Congressional Committee (USCC), the convergence between China's new state
secrets law, the Google controversy and the Rio Tinto case came into clear
China's 2010 amendments to its state secrets law appear to have been an attempt
to bring the country's framework of laws into the 21st century, addressing
concerns Beijing has about the role of the Internet in facilitating the spread
of information that could potentially lead to social and political unrest.
It remains to be seen whether these amendments will simply provide much-needed
clarification on the boundaries of what China considers "state secrets",
thereby simplifying how individuals and
corporations navigate the murky waters of China's many state-owned enterprises
Many policymakers fear these new amendments will provide new mechanisms for
Beijing to increase its heavy handed control of voices of dissent and may
additionally further muddy the water between where the private and public
sectors come together in China.
Mitchell Silk, partner and head of the US/China Group at Allen & Overy LLP,
suggested in testimony at the hearing that the 2010 amendments were a necessary
clarification, but cautioned that they still came up short of the ideal: "The
amendments do provide some welcome changes in classification ambiguities and
treatment of classified information, but they fail to resolve significant
lingering uncertainties existing under the state secrets law."
As with many experts who have reviewed the 2010 amendments, Silk's concern is
that the original laws themselves were not changed, specifically the portions
that define what constitutes classified information. As Silk stated, "The
revisions fail to reassure businesses and individuals that there will be a
greater level of predictability in the classification of information as secret.
Such lingering uncertainties may lead to either unexpected classification of
information as secret, or inefficient use and spread of information based on
fear that the information may be deemed classified."
The latter concerns formed one of the primary issues Gordon Chang, author of The
Coming Collapse of China, raised during the session. For Chang, while
the clarifications are possibly necessary and welcomed, it would be a mistake
to look past the intent behind Beijing's amendments. As Chang provided, "...
the new law is part of the party-state's broad-based effort to tighten control
Chang identified what he believes constitute the three primary reasons Beijing
advanced the state secrets amendments of 2010: first, it was a purely cosmetic
attempt on the part of Beijing to clarify the rules so that it could appear to
be taking the rule of law and the voice of the people more seriously.
Second, to make it clear to foreign businesses that market
intelligence-gathering activities inside of China, particularly those that
involve SOEs, will be held under extremely close scrutiny. And last, that these
amendments are part of China's very conscious decision to make sure its
domestic businesses, or what are sometimes called its "national champions",
have every advantage over foreign entrants as they compete domestically for
Chinese customers and internationally for natural resources.
As the Rio Tinto case illustrates, when necessary Beijing will move very
aggressively to prosecute those it believes have taken advantage of what
China's political leaders believe should be privileged information.
Chang, who for some time has been a lead advocate of the idea that China's
system of governance is fundamentally at odds both with what market reforms
will require, and perhaps most importantly, what the Chinese people want,
quickly brought concerns over China's model forward during last week's hearing.
Chang testified that he believes the 2010 amendments reflect a ruling party
that is moving to advance policies that, while on their surface may be
presented as attempts to clarify and modernize, are in fact the last gasps of a
political system unable to keep up with the dynamic changes within China.
Expanding on this, Chang stated, "If government departments refuse to release
materials - a safe bet in many instances - they could set the stage for
confrontations with a newly assertive citizenry ... Reform, simply stated,
creates the demand for more of it."
Much of Chang's analysis rests on the idea that China's system is simply
untenable, and that Beijing's political leadership both understands this and is
feckless to deal with it - points he made very clearly last week: "If there is
one trend China watchers have observed during the rule of the so-called Fourth
Generation leadership, it is the attempt of the Communist Party to increase
political and social controls in a rapidly modernizing society. The effort to
restrict information, embodied in the state secrets law, is indicative of this
But, to the extent the China model is being elevated by emerging economies
around the world, critics like Chang have a deeper concern, as Chang
illuminated, "China's authoritarianism is becoming a global model, and it is a
model in conflict with the values that Americans hold dear."
Amid the recent widening of the trade band of the Chinese yuan, some have
suggested that what Washington really wants and expects from Beijing is simply
an adjustment of its economic policies. And while that might be sufficient in
the short term, a much deeper review of the US-China relationship is taking
place within the halls of power in Washington, one that cuts to the quick of
the ideas that have brought the two countries together as partners.
While Chang's criticisms are perhaps nothing new, what is new are the growing
voices of discontent in the US Congress who take issue with China's political
system, and who believe that Americans are going to rue the day we chose to
look past Beijing's authoritarian impulses in the interests of economic
During last week's hearing, one such voice was that of Representative Chris
Smith (Republican, New Jersey), whose comments illustrate the growing concerns
of policymakers at what is happening in China: "US companies and US citizens
are involved in the Chinese government's human-rights violations, in denying
people their freedom of expression rights, and this can only degrade the
standards of American business ... it will eventually affect the kind of
country we live in. If we accept these business practices as 'normal', we'll
become desensitized, shrug our shoulders at violations of a basic right ...
that has always been a hallmark of who we are as a people."
Rebecca MacKinnon, a former CNN journalist in China and now a visiting fellow
at Princeton University, suggested last week that China is "pioneering what I
call 'networked authoritarianism'. Compared to classic 20th century
authoritarianism, this new form of Internet-age authoritarianism embraces the
reality that people cannot be prevented from accessing and creating a broad
range of Internet content. Networked authoritarianism accepts a lot more
give-and-take between government and citizens that a pre-Internet authoritarian
Among what MacKinnon's comments suggest is that the Internet may prove to be a
tool equally effective at stifling dissent as it is spreading it.
Addressing how governments like the one in Beijing are able to walk the fine
line between control and connectivity, MacKinnon stated, "The government
follows online chatter, and sometimes people are even able to use the Internet
to call attention to social problems or injustices, and even manage to have an
impact on government policies ... Meanwhile, the government exercises targeted
censorship, focusing on activities that pose the greatest threat to the
regime's power. It also devotes considerable resources to seeding and
manipulating the nation's online discourse about domestic and international
If this seems an untenable balance to strike then you are not alone, and you
might see the strength of analysts such as Chang who believe Beijing's policies
will prove to feed the very political fires they hope to control.
On this front, Beijing's problems are not purely domestic: the concern of many
who testified during the USCC hearing was that China's model of authoritarian
control coupled to free-market reforms is an ideological enemy of the American
political system, and of those values we claim to hold most dearly.
Consequently, many in congress are moving to put forward policies that will
give this concern bite by forcing US information technology (IT) companies to
comply with policies developed in Washington, designed to reflect American
One such example is the bill put forward by Representative Chris Smith that
would create an Office of Global Internet Freedom (GOFA) within the State
Department. Considering Secretary Hillary Clinton's recent speeches on the
importance of Internet freedoms in emerging countries, this is a bill that is
likely to receive serious consideration.
Merely establishing a new office within the State Department smacks to many of
a typical Washington half-measure and it may well be that Smith will be
successful only in having that accomplished. But, according to Smith, the
intent of the GOFA would be to mandate that "US IT companies would also have to
store personally identifying information outside of Internet-restricting
countries, so that the repressive governments wouldn't be able to get their
hands on it to track dissidents ... In short, GOFA would give the IT companies
the back-up of the US government. If the Chinese or Iranian government tells
them to filter a search term, they can point to the GOFA and say that US law
doesn't permit it."
Within Washington, as the GOFA bill moves forward, it will be interesting to
watch how the human-rights lobby matches up against the more powerful IT lobby,
one with the interests of protecting what Americans believe are basic freedoms
and the other seeking a compromise that will not shut off growing economies
within still-authoritarian political cultures.
MacKinnon's testimony may have sounded the perfect final note and balancing act
for now that American IT companies operating in China are facing, "I believe
the Chinese people would be worse off if all American companies and investors
were to abandon the Chinese Internet. Investors who remain silent, however,
should be clear about what kind of innovation they are financing. In addition
to whatever product or service they set out to invest in, they are also
supporting a disturbing new political innovation: networked authoritarianism."
The last year has not been kind to US-China relations, in no small part because
the economic dislocation Americans partially blame as part of the cause for our
current recession is understood to lie at the feet of the Chinese. This sort of
blame-game would be challenging enough for policymakers in normal times.
That this has coincided with the Google controversy, the Rio Tinto case and
additional pressure from Capitol Hill to renegotiate the terms of our economic
relationship, are all forcing politicians in Washington to begin asking whether
the Chinese model - its unique blend of authoritarianism and national
mercantilism - needs to be elevated as an ideological counterpoint and enemy of
the US model. If last week's hearing is any indication, such a shift in the
political optics of Washington is not out of the question.
Benjamin A Shobert is the managing director of Teleos Inc
(www.teleos-inc.com), a consulting firm dedicated to helping Asian businesses
bring innovative technologies into the North American market.