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Beijing playing by different rules
By John Bolton
Saturday, Jul 10, 2010, Page 8
Google¡¦s unfolding confrontation with China may be nearing
critical mass. Its efforts to stand its ground involve high stakes for both
foreign businesses and governments facing Beijing¡¦s ire. China¡¦s leaders will
inevitably draw important conclusions about whether they have essentially
unfettered sway over outsiders, as over their own subjects.
In an accommodating gesture to Beijing last week, Google users in China must now
¡§click¡¨ on a link to be redirected to Google¡¦s Hong Kong facilities, which are
not subject to Chinese censorship.
Since Google first threatened to exit the China search market unless censorship
obligations were lifted and then explicitly repudiated censorship in March,
searches that originated in China had been automatically routed to Google Hong
Kong.
Google¡¦s license to operate in China expired on June 30, with Beijing
considering its application for renewal. Google¡¦s recent concession might be
enough for China to extend the license, thus allowing both sides to avoid an
all-or-nothing outcome.
Just as Henry IV casually embraced Catholicism to become France¡¦s King, noting
that ¡§Paris is well worth a Mass,¡¨ Google perhaps concluded, in Internet terms,
that ¡§China is well worth a click.¡¨
Despite the conciliatory move, China responded by partially blocking some of
Google¡¦s search functions. Moreover, Beijing sycophants quickly rejected the
one-click model.
¡§Google needs China more than China needs Google,¡¨ as one Chinese professor at
Oxford put it, toeing the Chinese line.
In contrast, the New York Times, editorially siding with free expression if not
necessarily with US business, rightly observed, ¡§a censored Google is worse than
no Google at all.¡¨
Censorship alone, however, is not the issue, but rather the broader problem of
unfettered, apparently limitless Chinese regulatory and trade restraints, and
the heretofore largely supine reaction of foreign firms and governments.
Although not directly related to Google¡¦s struggle, other businesses are now
publicly expressing their own discontent. Shortly after Google¡¦s refusal to
censor searches, GoDaddy.com rejected new regulations requiring disclosure of
personal data from prospective Internet domain holders.
As the largest global registrar of Internet domain names, GoDaddy¡¦s decision not
to register new Chinese Web sites, although purportedly unrelated to Google, was
nonetheless another significant outburst of ¡§just saying no¡¨ to Beijing¡¦s
control efforts.
Last week, General Electric chief executive Jeffrey Immelt said he felt Chinese
¡§hostility¡¨ toward foreign investors, and said: ¡§I really worry about China ...
I am not sure that in the end they want any of us to win or any of us to be
successful.¡¨
Immelt¡¦s assessment was something of a reversal from his boastful assessment
last year: ¡§I don¡¦t think anybody has played China better than GE has.¡¨
Immelt¡¦s comments echoed Joerg Wuttke, former head of the EU Chamber of Commerce
in China, who said in April: ¡§Many foreign businesses in the country feel as
though they have run up against an unexpected and impregnable blockade.¡¨
Moreover, the EU chamber¡¦s just-released business confidence survey reflects
earlier complaints by the US chambers in Beijing and Hong Kong that foreign
firms trying to do business in China face increased discrimination in favor of
Chinese-owned firms.
Ominously, on Monday, a US citizen was sentenced to eight years in prison for
dealing in ¡§state secrets¡¨ relating to China¡¦s oil industry, despite protests
from US President Barack Obama to Chinese President Hu Jintao (JÀAÀÜ).
Considering these puzzle pieces together, a clearer perception emerges about
China¡¦s objectives, which are both political and economic.
On Internet issues, for example, Beijing¡¦s censorship and identity requirements
could force foreign firms out of China, thus affording a WTO-proof protectionist
strategy benefiting indigenous companies, under political camouflage that much
of the non-Western world will simply shrug off.
Beyond the Internet, non-tariff Chinese protectionism comes in many forms:
Reverse engineering technology and then duplicating it without licensing;
ignoring copyright and trademark protections; discriminatory transportation,
storage and marketing regulations; harsh criminal punishments and other
techniques in a lengthy list which China seems to be mastering.
Most individual companies, even mighty global icons or foreign business
associations have until now deemed it impossibly risky or economically
unacceptable to engage in a head-to-head struggle with Beijing. However, the
issue today is whether this recalcitrance is changing, and whether China¡¦s
apparent implacability is real or rests on the shared perception that foreign
business can be easily intimidated.
That is why Google¡¦s initially routine regulatory dispute has potentially
profound implications. The ramifications extend to whether capitalists in China,
particularly foreigners, will perennially be mere supplicants in China.
Governments in policy disputes with Beijing should also wonder if that is
forever their fate or whether a little spine now might pay off later. As British
former prime minister Margaret Thatcher might say to Washington once again, now
is not the time to go all wobbly.
John Bolton, a former US ambassador to the UN, is a senior
fellow at the American Enterprise Institute.
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