Fact or Fiction?

China’s President Xi Jinping makes his keynote address at the International Import Expo in Shanghai. Photo: AFP / Hector Retamal

Are Xi’s Shanghai claims “fact or fiction?”

President Xi Jinping appeared to issue a statement of intent in Shanghai when he talked about “globalization,” “breaking down walls” and further “opening up” China’s colossal economy.

Delivering a keynote address at the International Import Expo, he reiterated his pledge to boost “international cooperation” and “remove barriers” to “innovation.”

Yet how did his comments compare to the “realities of doing business” in the world’s second-largest economy?

Here, are the crucial moments from his 30-minute speech.

“We need to tear down walls, not to erect walls.” Xi’s sentiments are admirable, but do they reflect what is happening in China?

Perhaps, the largest wall in the world surrounds the nation’s “online” community, which is fed a steady diet of “state-run news links and heavy censorship.”

The “Great Firewall” has also shut down foreign websites, such as Google unless you use a VPN, or a virtual private network.

In a report entitled Freedom on the Net 2018: The Rise of Digital Authoritarianism, author Adrian Shahbaz said: “China was once again the worst abuser of internet freedom in 2018, and over the past year, its government hosted media officials from dozens of countries for two- and three-week seminars on its system of censorship and surveillance.”

“China will throw open its arms, and provide more market, investment and growth opportunities for countries in the world.” Buzz phrases come and go in the Chinese lexicon.

But “opening up” is rooted in the country’s economic success story. Xi’s remarks should not be dismissed lightly. In 2020, the financial sector will “open” even further to foreign competition with Beijing scrapping overseas ownership limits on firms dealing in “securities, funds, futures and life insurance.” But other key sectors remain strictly out of bounds.

A report released in June by the McKinsey Global Institute, entitled China and the world, said: “China’s services sectors are still subject to a range of restrictions, including limits on the participation of foreign players and other operational barriers. According to the OECD’s FDI restrictiveness index, Chinese services are 4.8 times more restricted than the OECD average.”

“We need to stand firm against protectionism and unilateralism.” Again, Xi’s words ring hollow when it comes to what the European Union calls a “level playing field.”

Overseas companies can end up being entangled in “red tape” and squeezed out by sprawling state-owned enterprises that receive preferential treatment. “Protectionism” by any other name?

Joerg Wuttke, the president of the EU Chamber of Commerce in Beijing, wrote in an annual study entitled European Business in China – Position Paper: “Rather than cutting China’s SOEs down to a manageable size, determining the industries that would be most appropriate for them to be operated in and privatizing the rest, the goal has been to make them ‘stronger, better and bigger’.”

“We need to strengthen the protection of intellectual property rights.” Factually correct.

Back in April, the Standing Committee of the National People’s Congress rolled out major amendments to “IP protection” as part of the new Foreign Investment Law. Beijing will bring in the legislation on January 1, 2020.

According to media reports, a draft document was released to negotiators in October when talks between the United States and China resumed in Washington to resolve the trade war. Yet would this law have been on the table without pressure from the White House?

Ning Jizhe, a member of China’s delegation at the discussions, told a media briefing in Beijing: “It is an open document and both sides exchanged open documents. We were negotiating on an equal base. The reaction from the US was very good.”

“We are in a scientific and technological revolution.” Xi has championed the “Made in China 2025” program through innovation, innovation and innovation. He repeated the mantra in Shanghai when he urged other nations “to independently carry out technology exchanges and cooperation so that the source of innovation can fully flow.”

This has become a “stumbling block” with the US and other allies, resulting in the “Huawei” ban. There have also been allegations of “forced technology transfer” as the price of gaining a foothold in the Chinese economy.

Cecilia Malmström, the European Trade Commissioner, told Der Spiegel earlier this year: “We see many things in the same way as the US does. We are defending ourselves against state-subsidized companies buying up our most creative companies, we are fighting against intellectual property theft and for greater transparency. We are working closely with the US and Japan on this, for example when it comes to better monitoring Chinese investments in our countries.”

“We will honor our commitments. And we will deliver on what we have promised.” Now, that sounds familiar.

Before last year’s Expo, the US and EU business lobbies in China, along with the French and German ambassadors to Beijing, called on Xi’s administration to use the event to announce concrete changes after complaining of “promise fatigue.”

The original phrase was coined in 2017 by the EU Chamber of Commerce in China when referring to regulatory barriers. “European businesses are suffering from accumulated ‘promise fatigue,’ having witnessed a litany of assurances over recent years that never quite materialized,” it announced.

More than two years later, French President Emmanuel Macron raised the issue again this week when he said: “Much has been done in recent years … important tariff reductions have been granted. But they must be speeded up and made more transparent. We need greater openness from China … to its domestic market.” 

Good luck with that.

China’s Open Society

The world’s second-largest economy “was once again the worst abuser of internet freedom in 2018.”

President Xi Jinping talked about “open societies” during his keynote address at the Conference on Dialogue of Asian Civilizations in Beijing.

Layered on a big “brushstroke” canvas of geopolitical colors, he painted China as a picture of “enlightenment” in a world where dark “shadows” are lengthening.

“Today’s China is not only China’s China. It is Asia’s China and the world’s China. China in the future will take on an even more open stance to embrace the world,” he told his audience of dignitaries.

But that “embrace,” it appears, does not include the world’s superhighways of “online” debate.

Even while Xi was speaking, media reports confirmed that the world’s second-largest economy has now added “Wikipedia” to the banned list of websites, scorched by China’s “Great Firewall.”

According to a statement issued to the BBC, the Wikimedia Foundation revealed: “In late April, the Wikimedia Foundation determined that Wikipedia was no longer accessible in China. After closely analyzing our internal traffic reports, we can confirm that Wikipedia is currently blocked across all language versions.” 

Ironically, Wikipedia had earlier “disclosed” that up to 10,000 domain names had been “culled” by Beijing as of September 2018, including major Western media sites and “online” behemoths such as Google.

In a report entitled Freedom on the Net 2018: “The Rise of Digital Authoritarianism” author Adrian Shahbaz said:

“China was once again the worst abuser of internet freedom in 2018, and over the past year, its government hosted media officials from dozens of countries for two- and three-week seminars on its sprawling system of censorship and surveillance.”

The research director for technology and democracy went on to illustrate the gaping holes in Xi’s “open society” approach in the annual online survey from “Freedom House”, an independent advocacy organization based in the United States.

Shahbaz pointed out that the Communist Party of China is not only turning cyberspace into a “dystopian” wasteland, but exporting its “sterile” model abroad.

“One key avenue for China’s multifaceted expansionism is the Belt and Road Initiative. The BRI includes a ‘digital Silk Road’ of Chinese-built fiber-optic networks that could expose internet traffic to greater monitoring by local and Chinese intelligence agencies, particularly given that China is determined to set the technical standards for how the next generation of traffic is coded and transmitted. To this end, China has organized forums where it can impart its norms to authoritarian-leaning governments, like the 2017 World Internet Conference in Wuzhen.”

On the home front, the controversial Cybersecurity Law has virtual jaws of reality steel.

At the heart of the legislation is a draconian clause, forcing domestic and overseas companies to keep their network date in China. For individual Netizens, it is the equivalent of “Big Brother” peeping over your keyboard.

“Internet controls within China reached new extremes in 2018 with the implementation of the sweeping Cybersecurity Law and upgrades to surveillance technology,” the Freedom on the Net 2018 report stated.

Shades of an Orwellian future have already clouded Xi’s vaunted vision with the language coming out of Beijing resembling the doublespeak nightmare of 1984.

In part, the trade war with the United States has exasperated the situation with internet freedom deteriorating as tensions between the two nations continue to rise.

“Absolute freedom leads to freedom for no one,” the state-run Global Times newspaper stated in a commentary. “Compared to US-style internet regulation which is full of problems, China’s approach showed its worthiness. Labeling China as an authoritarian country and calling countries that are learning from China authoritarian is dividing the internet into two completely different fronts, and splitting the internet in two,” it added.

“US media needs to know that if more countries start to follow Beijing’s footsteps in internet governance while pursuing democracy in social media, it means China must have done something right,” Global Times concluded.

Indeed, an online world fragmenting into two spheres of influence is gaining traction. One, of course, is destined to always have a “closed sign” hanging over what the CCP deems as undesirable portals.

Apart from controlling what the vast internet population can and cannot read without a “Virtual Private Network” (VPN) blocking Western search engines and social media sites has allowed China’s cyber giants to flourish.

The big four of Alibaba, Tencent, Baidu and JD.com have a virtual “monopoly.” Outsiders are not tolerated unless they are “home-grown.” Unfortunately, that is unlikely to change in the future.

Adam Segal, an expert in emerging technologies and national security at the Council on Foreign Relations, outlined the options in an essay entitled When China Rules the Web for Foreign Affairs:

“China’s continued rise as a cyber-superpower is not guaranteed. Top-down, state-led efforts at innovation in artificial intelligence, quantum computing, robotics, and other ambitious technologies may well fail. Chinese technology companies will face economic and political pressures as they globalize. 

Chinese citizens, although they appear to have little expectation of privacy from their government, may demand more from private firms. The United States may re-energize its own digital diplomacy, and the US economy may rediscover the dynamism that allowed it to create so much of the modern world’s technology. 

But given China’s size and technological sophistication, Beijing has a good chance of succeeding – thereby remaking cyberspace in its own image. If this happens, the internet will be less global and less open. A major part of it will run Chinese applications over Chinese-made hardware. And Beijing will reap the economic, diplomatic, national security and intelligence benefits that once flowed to Washington.”

Maybe, after all, this is Xi’s “open society,” ensconced in a Great Firewall “inferno” of public opinion?