American technology companies operating in China had a secret weakness, one that is not so concealed anymore. Not after an apparently bad miscalculation in which Intel gave the Chinese government an incredible security advantage that the tech giant withheld from the U.S. government. Oops.
What happened? It appears Santa Clara, Calif.-based Intel recently tipped off the Chinese government about flawed computer chips’ security vulnerabilities well before letting American government and industry officials know. Whether Intel did this consciously or accidentally, the move is deeply concerning because it could have handed China a digital key to unlocking secrets and proprietary data around the world. National security may have been compromised and House Energy and Commerce Chairman Greg Walden has already called the episode "troublesome."
Even worse, Intel is not alone.
American firms with deep economic interests in China are often complying with Beijing’s tough autocratic demands, such as Cisco’s assisting China’s domestic spying efforts or Facebook’s willingness to censor information. Beijing is fighting every second to gain strategic military and economic advantages that traditionally belong to America first, and it appears U.S. companies are playing the role of accomplice, willingly or not.
U.S. companies, including a hotelier, an airline and a tech firm, have in the past year been forced to apologize for and accommodate China’s growing legal, political, and economic demands. When China asks these American companies to jump, they often ask, “How high?”
The pressure on American firms in China is great and the temptations to please Beijing are many. As a result, American companies are now cowed by and forced to kowtow to China.
Whether Delta Air Lines, Marriott International or Apple Computer, U.S.-flagged or based companies are going out of their way to roll over on corporate values, American democratic norms, and national interests. Their behavior is not only solidifying China’s anti-democratic one-party rule, supporting a Sino-centric world view, and underscoring Chinese sovereign claims, it is sometimes creating unfair competitive global advantage in Beijing’s favor.
Communist party rule remains unchallenged in China, in part, because of strict information control. The people in the People’s Republic are given a fair amount of freedom of movement, but limited freedom of religion, expression, or thought. In China, the party and the state are effectively one and they work in tandem to continually refine their tools of oppression and control.
Technology has been a control-freak state’s boon, giving officials pervasive abilities to follow and manage communications and dissent. One recently developed technology, for example, gives the Chinese state new and improved abilities to do real time facial recognition and identify every person on any street. Perhaps that touted freedom of movement isn’t so free after all.
Aiding and abetting the Chinese state are American companies that work hard for minority rights, equality, and freedoms back in the USA, but which lose their political fortitude in the face of potential profits in the world’s second-largest economy. Apple Computer, which manufactures iPhones in China and looks at the 1.4 billion Chinese population as a target-rich consumer market, is only one of many American companies willing to bend to the will of Chinese authority (Disclosure: My first book was on Apple Computer, where I later consulted).
In Apple’s case, the company restricted the availability of VPN apps that would allow Chinese citizens to get around some national internet controls. China required that only “approved” VPN apps be available on the Apple’s App Store. Apple complied.
Understandably paranoid Chinese tech users also fear the upcoming forced move of Apple’s iCloud data to Chinese control. It’s a fair assumption that China’s authorities will do their best to crack into that data in the same way they daily seek to enter American corporate and military servers. One example? It’s believed China stole 21.5 million government employee files (including my own personal data) from the U.S. government’s Office of Personnel Management. It’s not a stretch to count on the Chinese government to seed its new iCloud so it eventually rains private and mostly secure data on them.
The PRC does not recognize Tibet or Taiwan as sovereign nations. Full stop. Delta and Marriott are not Chinese companies, Delta is based in Atlanta, Marriott is just outside Washington, DC in Bethesda, Maryland. But when both companies made the inadvertent “mistake” of listing Taiwan and Tibet as independent countries, the Chinese consequences came quickly.
Marriott’s online sales were shut down by Chinese authorities. Beijing demanded an apology from Delta, proffered by the company without hesitation and posted on its Chinese website. Marriott said it was sorry, too.
And it’s not just American companies. Western allies’ corporations also jump as high as Beijing commands. Demand for compliance grows with China’s economic and political gains and increasingly assertive posture. China previously used a international “hide and bide” strategy — hiding its intentions and biding its time.
Well, time’s up.
China’s restrained and subtle former “going out” strategy favors new cracking down tactics — and President Trump continues to call it out. In his first State of the Union address on Tuesday evening, he referred to China as a “rival,” with the newest National Security Strategy identifying China as America’s greatest geostrategic competitor. As a result, Beijing is the last place you want Intel inside.
In cyberspace, nanoseconds are a hacking lifetime. Intel likely gave China a huge head start in cracking codes to creep into Western computers. Unless, of course, it didn’t. There is always the possibility that American companies coordinate with U.S. intelligence services, allowing the NSA and Cyber Command to test and observe Chinese actions and methods after being given seemingly privileged information. It’s happened before.
Patriotic acts are often hidden and, if so in the Intel case, this could be a case of dual cores operating as double-agents in cyberspace. Time for a reboot?
Markos Kounalakis, Ph.D. is a senior fellow at Central European University and visiting fellow at the Hoover Institution. Contact him at markos@stanford.edu or on Twitter @KounalakisM.