It was only about five years ago that the Global Forum, sponsored by Fortune magazine, opened in Beijing on May 16, 2005. It was an incredible display of how supposedly hard-headed American capitalists could be carried away by the wondrous spectacle of China. They embraced a Communist tyranny with a level of naïve optimism at which future historians will look back in astonishment. But rather than wait for another horrific “lesson of history,” actions need to be taken now to prevent a dark future.
The Global Forum was “limited to chairmen, CEOs, and presidents of major multinational corporations”, though Chinese government officials (including President Hu Jintao) were more than welcome. The description of the event stated, “As the world's economic center of gravity shifts to Asia, the dynamics of the global economy are changing dramatically. Already a dominant force in trade, China will overtake the US to become the world's largest economy by mid-century The focus of the 2005 Forum will be how multinationals can tap into the enormous potential of China.” Among the featured speakers were presidents and CEOs from General Motors, Motorola, Walmart, IBM, and Goldman-Sachs.
Multinational is the term used by business executives who think they have transcended the bounds of national loyalty. They are “men without a country” and proud of it. It has long been a tenet of liberalism that patriotism is a vice that limits individual freedom – in this case, the freedom to amass personal fortunes in a foreign land.
Business leaders thought they could profit by helping China rise to great power status. The U.S.-China trade deficit has sent over $1.7 trillion to Beijing over the last decade. Such a massive transfer of wealth between nations means nothing to corporation who only worry about their bottom lines. They justified actions that were harmful to their own country’s security by telling themselves (and the American people) that a more prosperous, successful China would become more liberal and less dangerous. Beijing would become a “responsible stakeholder” rather than a peer competitor. Commerce would make China more like America.
These self-serving pronouncements have not come true. No one familiar with Chinese history or the nature of the Beijing regime could have ever thought they would, but many in government and academics as well as business hoped against hope that they would. It is time to put such fantasies aside and recognize China as it is. National security experts have been warning of Beijing’s growing ambitions, supported by trade, investment and technology from the West. Their warnings have been drowned out by the business lobbyists, but now there are doubts emerging in corporate boardrooms about Beijing which could prove a real political game changer.
According to a report in The Financial Times, Beijing is urging American business groups with ties to China to lobby for its cause in Washington as tensions over a host of international issues heat up. The story quotes Yao Jian, a spokesman at the Chinese commerce ministry, as saying some companies had already been lobbying against restrictions on exports to America. “We hope that U.S. companies in China will express their demands and point of views in the U.S., in order to promote the development of global trade and jointly oppose trade protectionism,” he said.
The Wall Street Journal, however, reported, “A growing number of U.S. companies feel unwelcome in China, according to a new survey by the American Chamber of Commerce in China, as measures aimed at squeezing foreign technology companies out of the vast government-procurement market start to bite.” Beijing has absorbed enough technology from the West to believe it can now foster “indigenous innovation.” Beijing has no intention of letting the China market be dominated, or even significantly penetrated, by foreign interests. It has used the lure of a vast new market to seduce American companies into entering joint ventures with Chinese partners and even establishing research and development centers in China. The theft of intellectual property has been called epidemic, but a great deal of knowledge has been freely given to Beijing as the price of entry into what was supposed to be a great new profit center. But China is now fielding its own “national champions” and using its own vast profits from trade to buy out overseas rivals.
Google is not being driven from China over censorship. The Internet search engine has long been cooperating with the Beijing regime as per national law. The crisis resulted from a cyber attack on Google’s servers by “patriot hackers” believed to be operating from Shanghai Jiao Tong University and a vocational school. Personal information on Chinese dissidents was thought to be the objective, but some of Google’s software technology may also have been stolen. This is why Google turned to the U.S. National Security Agency for help in defending its network from foreign attack.
The Chinese authorities have denied the attack took place, but they are not unhappy to see Google pull out. Beijing has its own national champion search engine, Baidu, which has 64 percent of the China market compared to 31 percent for Google. If the American firm closes down, the Chinese firm will become a monopoly. Not only will this be another victory for China over the U.S. in commerce, but it will assure Beijing’s control of Internet access and information flows.
A January 22nd commentary in Global Times, an official publication of the ruling Chinese Communist Party, argued,
The US campaign for uncensored and free flow of information on an unrestricted Internet is a disguised attempt to impose its values on other cultures in the name of democracy.
Countries disadvantaged by the unequal and undemocratic information flow have to protect their national interest, and take steps toward this. This is essential for their political stability as well as normal conduct of economic and social life.
Two months after it appeared, this commentary is still listed as one of the most popular articles with readers at the Chinese media outlet. A March 22nd Global Timeseditorialclaims,
After two months' thorough public discussion over the dispute, nothing is more evident than its consequence: While the company's exit may be permanent due to its damaged reputation among Chinese users, China's Internet progress will not cease in Google's absence.
Some domestic companies such as Baidu and Sogou have ridden the tide of the time, and taken the lead in developing input and search technologies more suited to the habits of Chinese Web users. Though Google's global dominance in search technology remains unshakeable, its technologies in these other areas hardly rival its major Chinese competitors….
The power of an independent nation hinges on its technological innovation. This is especially the case with an emerging economy like China.
Cyber technology, hailed by some Western politicians as a "huge strategic asset," is among the few core technologies whose edges must be sharpened domestically to maintain social stability and safeguard the national interests.
China does not want to be like America, it wants to replace America. As Gideon Rachman wrote in his weekly Financial Times column, “Welcoming the rise of a giant Asian economy that is also turning into a liberal democracy is one thing. Sponsoring the rise of a Leninist one-party state, that is America’s only plausible geopolitical rival, is a different proposition.” It is time Wall Street and K Street understood the real world, and turned towards helping America rather than China as global politics enter a new phase of intense international competition. The Supreme Court recently ruled that corporations are citizens. It is time they started acting the part.
FamilySecurityMatters.org Contributing Editor William R. Hawkins is a consultant specializing in international economic and national security issues. He is a former economics professor and Republican Congressional staff member.
William R. Hawkins is a consultant specializing in international economic and national security issues. He is a former economics professor and Republican Congressional staff member.
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