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LinkedIn out of China | GZERO World
LinkedIn right to shut down in China, says journalist Nick Thompson
The Atlantic CEO Nick Thompson believes in tech firms doing business in China because connecting with people there is a huge social good for the world. But in demanding LinkedIn de-platform certain people, he says, the Chinese government crossed a line, and "you can't justify that."
Watch Ian Bremmer's interview with Nicholas Thompson in an upcoming episode of GZERO World, airing on US public television.
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The US and EU further talks on technology governance
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Hello, and welcome to the new Cyber In 60 Seconds. My name is Marietje Schaake, and you're finding me at the Democracy Forum in Athens. So, from my hotel room, I'm looking back at the Trade and Technology Council that took place in Pittsburgh this week.
For those who missed it, this gathering brought together high-level officials from the Biden administration and the European Commission. It was a long-anticipated meeting that was supposed to reach conclusions about a shared governance agenda for tech-related issues like AI, data, semiconductors, and foreign direct investments. But the Trade and Technology Council was also expected and hoped to mark a new start after very difficult years across the Atlantic. I think we all remember the years when President Trump was still in the White House. And thankfully, the August fallout and French anger did not end up pouring cold water over the events. Although, the general sentiment in Europe that the honeymoon weeks are over is widely shared.
The conclusions of the Trade and Technology Council actually read more like an agreement on the agenda for the next couple of years, rather than tangible actions and conclusions. Tony Gardner, the former US Ambassador to the EU actually remarked that reading them, he figured the fact that the meeting took place at all was a result to mark. But with low expectations, the only way seems up, and there is work being planned in no less than 10 working groups, focusing on green tech standards and SMEs.
And developments that I'm going to watch are trade rules such as sharing information on dual-use export controls, but also FDI screening. The coordination on semiconductors, despite respective programs to develop domestic industries. Data governance, including access for academics. But without the privacy, because that issue is negotiated separately. And then of course, the question of aligning and governing AI in line with democratic values and respect for human rights. Between now and the next meeting, it will be interesting to watch how the tensions between the EU, the US, and China may unfold and whether the EU and the US will converge as part of a larger democratic alliance, but also which domestic legislative initiatives may go on and unfold that could actually impact the agenda of the next Trade and Technology Council in a year.
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China's tech crackdown leads to huge losses; Citizen app controversy
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
How will China's tech crackdown affect the rest of the world?
Well, investors in the US, but also globally were not amused with Beijing's policy decisions coming right after DiDi's IPO and leading to huge losses. Overseas listings are now directly targeted in moves that are being defended as being based on national security, kind of sounds familiar, but the value of Chinese tech stock all over the world is dropping. But still, many continue to view the relationship between Chinese-based companies and the state as symbiotic. So if nothing else, recent moves certainly show that Chinese decision-makers want to keep their grip on anything that happens in the country, very firm.
What is the controversy behind the real-time crime app "Citizen"?
While the company is acting in line with its previous name "Vigilante", because it's profiting from vigilantism by offering private security services and exploiting people's fear, encouraging them to be monitored 24/7 in the name of their own safety. That means that the app can listen in on audio for the sound of screams for example. They essentially want to go around public services like the police or first aid providers. The company misidentified a suspect of a crime and put a $30,000 reward on their head. It's quite a far-reaching service and we'll have to see how much longer people will tolerate it.
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Cuba internet censorship amid protests; pressure grows against Huawei
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Cuba has curbed access to messaging apps amid protests. How controlled and censored is Cuba's internet?
Well, any debate and criticism is tightly controlled in Cuba, including through information, monitoring and monopoly. But activists such as blogger Yoani Sánchez have always been brave in defying repression and making sure that messages of Cubans reached others online across the world. Now mobile internet has become accessible to Cubans since about two years, but accessing it remains incredibly expensive. But the fact that the regime in Cuba once again seeks to censor people through shutting down internet services actually shows it is its Achilles' heel. As Yoani has said, the Castros have lost the internet.
On a different note, the FCC is finalizing a program to replace Huawei equipment in the United States. Will Europe soon make a similar move?
Well, I wouldn't wait for it, although pressure is growing against Huawei in Europe too. Sweden has taken a tough line along with Eastern European countries, while a country like Spain has sought a much more gradual approach. And one of the main challenges for Europeans is to ensure a united position at the intersection of its single market and 27 nationally decided national security thresholds. It is a question also impacting universities as they continue to accept research grants from companies like Huawei.
Will China's tech sector be held back?
Ian Bremmer's Quick Take:
Hi everybody, Ian Bremmer here, and a happy post-4th of July. Spending a couple of days in Nantucket, back to New York in relatively short order. But a Quick Take to kick off your shortened week.
And I thought I would talk a little bit about what's happening between the Chinese and the Americans on tech. In particular, I think it's quite important that the Chinese government and their regulatory authority on cyberspace, the Cyberspace Administration of China, the CAC, has been focusing a cybersecurity probe on Chinese companies that have recently listed in the United States. It started last Friday with Didi, which is the leader for Chinese ride hailing. So it's basically like Uber or Lyft in China, $4 billion IPO in New York just a couple of days before the Chinese government announced that they were going to engage in serious scrutiny and regulation of the company. Their stock value went down like 20% almost immediately on the back of that.
Then you also saw broader announcements against a truck hailing app. This is called Full Truck Alliance as well as Kanzhun, which is a major online recruiter in China. And I think it's important because if you look at the Chinese tech sector, which is the most dynamic and innovative in the world aside from the United States, it has been driven significantly, I would say even mostly by the private sector.
And China is a communist country. They engage in state capitalism. So the state is the principal economic actor, but there is a vibrant private sector. And particularly when we talk about innovation and the ability to attract world-class talent that works really hard and could work anywhere, it's important to get that level of efficiency that it is private sector. Well, the Chinese government is increasingly uncomfortable with the independence of many of these firms. And the principal way, mechanism for many of these companies to become more independent was to list outside of China and increasingly outside of Hong Kong as well. And for many, that means IPO listings in the United States. Now to the extent that the Chinese government is now sending a message that there are going to be significant price to pay for Chinese tech companies that list outside of China, Mainland China or Hong Kong, that's going to put a very significant chilling effect on any Chinese tech companies that are thinking about so doing, which will mean much more alignment of those tech companies to the Chinese government model, becoming national champions more in line with, let's say Huawei, which is really state-directed, military integrated. And they try to make money, but first and foremost, it's really not about shareholders. It's really about what the Chinese government wants.
Now, in the United States, of course it is a vastly different landscape. You've got companies in the US that are more aligned with the government in the tech space. Anything from Oracle, to Microsoft, to Anduril, which is AI and drones together, for example, but then you have an awful lot of companies that are more traditional multinational corporations that are focusing purely on their shareholders. And Apple is not working closely with the government in any way, shape, or form. And you have a lot of individual CEOs, tech CEOs, that themselves increasingly feel like the most powerful individual actors in the United States and in the digital space increasingly on the planet, Mark Zuckerberg, Elon Musk. Now, we know that the Chinese government isn't allowing any Elon Musks to emerge in China. One did, Jack Ma, and the Chinese government basically defenestrated him, but they hadn't been taking that position towards the Chinese tech firms. And now increasingly they are.
I would say there are a couple of big questions that this puts into play. One is it makes it more likely that a broader technology split between the United States and China is coming. Fewer Chinese companies with access to American investment and shareholders, more Chinese tech companies aligned with the Chinese government, fewer American tech companies with access to the Chinese market. These are the two largest economies in the world. They're the two technology superpowers. I would argue more integration and interdependence is good. And it's good because you ultimately don't want to destroy things that you're interdependent with. So it means that there will be a greater sense of cooperation, even in the absence of trust. I think we're moving away from that.
But the other question, and it's a big question, is to what extent will a Chinese tech sector that is increasingly controlled by the government, not just in terms of red lines of what they can and can't do, not just state capitalism and industrial policy, but that the actors themselves increasingly can't really be full-fledged private sector actors. Does that mean that the tech sector in China will become dramatically less competitive and less efficient than it has been historically?
And I think there is a danger of that. Certainly, in the last 20 years, if you think about why technology companies do really well, yes, it's access to capital, yes, it's access to data, but it's also access to incredibly innovative human capital. The best data scientists, technologists, entrepreneurs in the world. And I think it is true that there are some areas of advanced technology where that's not important. And certainly, some of the advances in artificial intelligence have been more about lots and lots of data and deep learning on that data, even in our top rate than it is about the human capital. But in most sectors of the advanced economy, the big technological advances are not coming just from data and capital. You have to have the human element.
And as long as that continues to be the case, I think that the direction China's presently heading will support political stability in the short-term but will underminethe productivity and growth of the Chinese tech sector in the medium and long-term. And I think watching that dynamic is going to be critically important for both the United States, China, and the world.
So anyway, some challenging news, some chilling news for those of us that are hoping that the US-China relationship can become more stable over time and not more confrontational. That's certainly not the direction we are heading right now. And I would also just point out that those decisions made right on the back of the 100th Communist Party Congress, and Xi Jinping's big plenary to the extent that people were hoping that after that, you could start to see more engagement, you just needed to get Xi through this significant period where he needed to be more nationalist. I don't think that's true at all. I think structurally, the Chinese government has, is, and will be oriented in a much more national champion direction, in part because they think that that's the way they win, and they feel much more confident about their model. Whether that confidence is properly misplaced, that's a very open question.
So anyway, interesting stuff. Hope everyone's doing well. Talk to you all real soon.
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China's uncertain future & its new three-child policy
Ian Bremmer's Quick Take:
Hi everybody. Happy post long weekend. I want to do a quick take today on China, because you will have seen that the two-child policy has now gone the way of the one child policy. It is now a three-child policy. The one child policy, when they got rid of it, didn't really move people towards faster childbearing, as education rates improve, as well improves ... demographic explosion is reduced. And it's very hard to turn that around with a pro natality policy. Very few countries around the world have been able to accomplish that. And China is clearly not one of them.
But what is interesting, first of all, the fact that Xi Jinping recognizes that his policy isn't working. And so, he's moving forward with something new. I mean, frequently in authoritarian regimes, leaders don't get good information from the people around them. And so, they don't tend to admit mistakes or pivot to policies. And then when they have problems and we have seen that in the case of China, there is a lot of overreach. We've seen that. For example, with the shutdown recently, the trade war with Australia, it didn't work really well. And very quietly, the Chinese started buying a lot of essential Australian inputs. Again, we're seeing that now on the three-child policy, but there is I think in the west, this increasing presumption. Well, we know that China is on path to being the world's largest economy, that projection is by 2028 now.
It's probably going to be kicked out 2030 because the US economy is going to grow a lot faster this year than people had previously expected. The rebound is pretty sharp on the back of last year being, of course, a major contraction while China was growing. One of the only countries, the only G20 country that was growing in 2020. Vietnam was the next largest economy. I think they're number 35 or something like that. So can show just how extraordinary China efforts to lock down the coronavirus once they admitted to it actually were. But I feel a little cautious around projections of what China is going to be doing in the next 10 years. And I'd be cautious, not because I'm much more pessimistic than everyone else is, rather I think I'm much more uncertain than the economists are. I mean, on the downside, as you see demographics in China are getting problematic quickly, they are getting much older as a middle-income country.
That means you're not going to have as much consumption. It means you're not going to have as much labor and it makes it harder to stimulate growth. And ultimately, that means the size of the economy is going to be more constrained by these demographic facts. Also, the fact that China has to invest and stimulate to a greater and greater degree for lower and lower returns. And the reason for that is massive debt, particularly massive corporate debt, that they're unwilling to address. Addressing it immediately could create a financial crisis, addressing it over a longer period of time is going to limit your levels of growth. And so as a consequence, I mean every other middle income economy out there has had to deal with the so-called middle income trap. China's is of a much greater scale. And unless the rules don't apply to them, then at some point in the next 10 years, they are likely to underperform significantly.
And that should give us some different views of what their trajectory in power is going to look like compared to that of the United States. Okay. So that's on the negative side, but on the positive side, 10 years ago, there was no one out there that thought that China could be at parity in technology with the United States in 2020, 2021. And yet in many key areas of cutting-edge technology, that is exactly where they are today. In digital currency, they're ahead. In 5G technology, they're ahead. In voice recognition, in facial recognition, they're ahead. And in some other areas, they're behind. Semiconductors, they're probably behind by about five years right now. General research in artificial intelligence and towards neuro-mapping, they're behind. Biotech, it's close. Depends on what you're looking at.
But the point is that literally in 10 years, not just because of ripping off intellectual property though that's certainly happened, not just because of leveraging access to the Chinese market to get technology transfers, though they've done that too, but also because they have, by far, the world's largest set of data that they use in a consolidated way to engage in deep learning that helps to power new artificial intelligence breakthroughs and that plus an enormous amount of money being spent on research and scientists has given the Chinese an extraordinary acceleration in their technological capabilities to the extent that within 10 years, China has gone from being no better. In fact, worse than a lot of second tier technology countries in the world, say Japan or South Korea or Germany or Canada, to suddenly being competitive with the United States, the world's technology superpower. And if we got that wrong over the last 10 years, might we be getting it wrong in the next 10 years?
In other words, are the Chinese going to suddenly stop? Are they going to reach parity and that's it, or are they going to be able to actually continue to accelerate? And in 10 years' time, might the Chinese be the dominant technology power compared to the United States on cyber, on AI, in digital currency, in key apps and in key areas where companies really matter in exploiting not only how we consume, but also our national security, the ability to defend a countries wellbeing, it's economic wellbeing, its health, it's critical infrastructure. Right now, the US and China both have massive offensive capabilities that can do massive damage to each other, have very limited defensive capabilities. There's a level of mutually assured destruction between the US and China and the US and Russia on cyber. In 10 years' time, I feel quite comfortable saying the Americans are going to continue to be able to get beyond the Russians on this issue, but the Chinese, I'm not clear on that.
What about the future of 5G? Where will they be? Even on semiconductors? Can they catch up if they invest massive amounts of money for X? What they were spending in 2019 and spent in 2020, they're intending to do a similar kind of increase in 2021. Where does that get them? Even if we shut them down from Taiwanese semiconductors, even if we shut them down, if we say, no, not just Huawei, but other key technology champions of China, aren't going to be able to get them to put export controls on. That's an enormous question. We don't know. So the takeaway here is that there is much more uncertainty around China's trajectory than people generally presume.
I would like to see that kind of discussion more infused in the foreign policy establishment in the United States and American critical allies. It is not right now, perhaps it will be over time. Maybe this quick take makes a small bit of difference. Anyway, I hope everyone is well. Avoid fewer people. We're having a good time here and it is almost summer. Be good. Talk to you soon. Wear white pants if you feel like it. We're past Memorial Day.