Profit, Privacy, Power: China's Digital Rise and a US-EU Response

“For China, informatization is a once-in-a-thousand-year opportunity. It’s now or never to reinvent themselves as a nation.”

In an event co-hosted on December 4th, 2019 by the Project on Europe and the Transatlantic Relationship (PETR) and the Asia Center, Cathryn Clüver Ashbrook, Executive Director of the Future of Diplomacy Project and the Project on Europe and the Transatlantic Relationship, moderated a panel discussion on China’s technological rise and its impact on the US-EU relationship. The panel featured Joel Brenner, Senior Research Fellow at the Center for International Studies; Danil Kerimi, Head of Technology Industries Sector, Digital Economy and Global Technology Policy, the World Economic Forum; Meicen Sun, PhD Candidate in the Department of Political Sciences at MIT; and Daniel Weitzner, Founding Director of the Internet Policy Research Initiative. 

China’s wireless hegemony, especially Huawei’s dominance and the development of next generation communication rates (5G and 6G) were a key focal point of the discussion. Sun underscored the cultural and historical underpinnings of China’s strong desire to control the technology landscape, while other panelists underlined how technology and different legal frameworks in China, the US, and the EU were shaping the relationship between the three powers and impacting particularly the ties between transatlantic allies on this issue.

This discussion was the second in the multi-part event series “China’s Rise and the Future of the Transatlantic Relationship” on the relations between China, the EU, and the US in the context of the emergence of China as a great power co-hosted by the Project on Europe and the Transatlantic Relationship at the Kennedy School and the Asia Center at Harvard University.

Joel Brenner opened the panel with figures that captured China’s incredible digital rise. Chinese governmental spending on R&D is 8 times larger than that of the US, which has — at least in part — allowed Huawei to spend more on R&D than any other single company. However, Huawei has spent a smaller fraction on R&D than its next two competitors, Ericsson and Nokia. This, combined with the fact that the US has no comparative player, paints a clear picture of western failure, Brenner said. “The EU and the US are unwilling to do the kinds of things that the US did consistently in the 1950s,” he noted.  

Western failure is also demonstrated in the US and EU regulatory systems. Europe has a comprehensive but rigid view with respect to the law and technology, while the American legal framework is looser and less structured. “Europe has essentially claimed the responsibility to regulate Artificial Intelligence globally through the GDPR,” noted Daniel Weitzner, “and it seems like there should be a clean alignment between the US and Europe to regulate China, but it’s not that clean. Every company is focused on how it can win and not how it can be in the winning category. My guess is the industry will not figure it out and that governments will have to step in.” 

How Chinese technology is regulated domestically and on the international market will determine the degree and speed at which it achieves technological supremacy. For the domestic market, as Meicen Sun underlined, “privacy is a secondary concern for China.” Indeed, China has “one of the most sophisticated systems for controlling the internet, which allows them to horde data very easily.” 

As Danil Kerimi pointed out, “China is a land of contradiction and creativity.” For example: “China has 2/3 of global drone economy, but it has one of the most well-regulated air-space policies in the world. How can an industry be so successful and so restricted? In terms of policy, China is more creative than we thought.” 

China’s overwhelming financial investment in its digital rise is also linked to the nation’s competitiveness, paranoia, and “inferiority complex,” speakers noted. Danil Kerimi said, “Chinese technologists say they are behind. China has looked at other countries and pipelines to acquire data and information.” Meicen Sun added, “there is genuine sense of urgency on the part of China. The U.S. has doubled down on China in terms of both hardware supply through sanctions and talent flow through immigration restrictions. Maintaining its control over data flow therefore becomes even more critical as a countermeasures for China” to protect its plans for technological supremacy.  “This is the moment that they must seize. For China, informatization is a once-in-a-thousand-year opportunity, and their sentiment is really distinct: it’s now or never to reinvent themselves as a nation.”