Google Looking Around for a Longer Spoon
There’s a wisecrack attributed to Lenin to the effect that the capitalists would sell them the rope with which they would hang them and I honestly can’t say that I have a great deal of sympathy for Western companies that find themselves on the short end of the stick when dealing with the Chinese authorities. They’re notoriously unimpressed by the intellectual property rights of others, why should you expect them to respect yours? There’s another saying: he who sups with the devil must use a long spoon.
That’s what it took for Google to re-think its relationship with the Chinese government:
The press is abuzz this morning over the news that Google (GOOG) could pull out of China over a hacking attempt. The Wall Street Journal explains that the large-scale cyber attack “has been under way for weeks.” The paper continues, “Google said it suffered a ‘highly sophisticated and targeted attack on our corporate infrastructure originating from China’ in mid-December, which it said resulted in ‘the theft of intellectual property.’ The company said it found evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human-rights activists.” The attack may be the last straw for Google in China, since the search engine has begrudgingly put up with Chinese censorship policies for a while. The Times notes, “Since arriving here in 2006 under an arrangement with the government that purged its Chinese search results of banned topics, Google has come under fire for abetting a system that increasingly restricts what citizens can read online.”
Refusing to abet the Chinese authorities in their efforts to restrict what the Chinese people know and can believe would have been an act of virtue for Google; moving to protect its intellectual property (its primary asset) or improve its image is merely good business.
In looking at the commentary on China from professional journalists lately I think its worthwhile to contrast two approaches: that of James Fallows with that of Tom Friedman. James Fallows, whom I consider a reasonably informed source on the subject of China, has this to say about China:
I have long argued that China’s relations with the U.S. are overall positive for both sides (here and here); that the Chinese government is doing more than outsiders think to deal with vexing problems like the environment (here); and more generally that China is a still-poor, highly-diverse and individualistic country whose development need not “threaten” anyone else and should be encouraged. I still believe all of that.
a view which I endorse. I think his position would be more balanced if he took note of the fact that strident Chinese saber-rattling in our direction on the part of China’s military higher-ups is epidemic. If American generals said things as intemperate about China in public as Chinese generals routinely say about us, our European allies would be in a panic.
Mr. Fallows goes on to say this about the Google affair:
But there are also reasons to think that a difficult and unpleasant stage of China-U.S. and China-world relations lies ahead. This is so on the economic front, as warned about here nearly a year ago with later evidence here. It may prove to be so on the environmental front — that is what the argument over China’s role in Copenhagen is about. It is increasingly so on the political-liberties front, as witness Vaclav Havel’s denunciation of the recent 11-year prison sentence for the man who is in many ways his Chinese counterpart, Liu Xiaobo. And if a major U.S. company — indeed, Google has been ranked the #1 brand in the world — has concluded that, in effect, it must break diplomatic relations with China because its policies are too repressive and intrusive to make peace with, that is a significant judgment.
Contrast that view with the unbecoming fanboy attitude affected by Tom Friedman:
All the long-term investments that China has made over the last two decades are just blossoming and could really propel the Chinese economy into the 21st-century knowledge age, starting with its massive investment in infrastructure. Ten years ago, China had a lot bridges and roads to nowhere. Well, many of them are now connected. It is also on a crash program of building subways in major cities and high-speed trains to interconnect them. China also now has 400 million Internet users, and 200 million of them have broadband. Check into a motel in any major city and you’ll have broadband access. America has about 80 million broadband users.
Now take all this infrastructure and mix it together with 27 million students in technical colleges and universities — the most in the world. With just the normal distribution of brains, that’s going to bring a lot of brainpower to the market, or, as Bill Gates once said to me: “In China, when you’re one-in-a-million, there are 1,300 other people just like you.”
I see that in his praise for China he has ignored the, literally, hundreds of schools that collapsed in last year’s earthquake killing the schoolchildren, the Chinese authorities’ imprisonment and execution of dissidents and minorities, China’s failure to live up to the obligations it undertook when it joined the WTO by which membership it continues to benefit, and China’s notoriously opaque and corrupt financial system.
If China is to be part of the modern world and continue to grow and prosper, there will be great and grave changes ahead for the country. It can’t maintain its “beggar they neighbor” economic policies which, while irritating or even painful for us, are disastrous for other developing countries notably Mexico and the struggling countries of Africa.
It needs to start cultivating its own internal markets to a significantly greater degree and allow foreign competitors to share equitably in those markets.
And it can’t hope to control the thoughts of the Chinese people even in an attempt to maintain harmony by which is generally meant the power of the Chinese authorities.
I wonder if there’s a third factor, as well. Google has been losing market share to Baidu (a home-grown search engine that completely bends over for Chinese censorship), and with the change that will ultimately result in non-Latin text for web addresses, combined with the major electronic espionage that the Chinese just committed, my guess is they decided this was the best time to force a stand.
Friedman’s almost got a supply-side view of economic growth, even though he’d probably deny it. Just throw money at the problem and infrastructure (especially airports- Friedman is always over-impressed by cool airports), train tons of graduates, add a little FDI, and voila!
One can only hope, of course, is that China eventually becomes an innovation- inducer as opposed to an innovation-consumer, since while that would not stop their electronic and industrial espionage, it would at least give them an incentive to support rules that protect their stuff.
I remember reading accounts of how Chinese imports affected Mexican business. On one hand, they were getting hammered by US stuff – at the other end, cheap Chinese imports (helped by China’s persistent currency manipulation) wiped out many businesses producing manufactured goods, and turned many others into middlemen.
From the BBC article:
Geez, God forbid someone respond to a cyberattack without negotiating first.
Everything in China is about saving face. It’s never about doing the right thing in the first place.
Friedman is often hyperbolic, but what does a list of things he doesn’t say in his article have to do with its validity? He never claims China is first-world, merely that we are fools if we don’t recognize its advancements and deal with them. He then points out things that illustrate his observations.
If China follows the Soviet pattern, there will come a time when they have to create a mechanism to really hold authorities accountable or crush everything back 20 years. I don’t think even Friedman would attempt to predict which way it will go.