Chinese Communist Party Increasingly Looking to Tighten Grip on Its Tech Industry, Experts Say

Chinese government appears to want bring its companies in line with its objectives.

Chinese Communist Party Increasingly Looking to Tighten Grip on Its Tech Industry, Experts Say
From left to right: TPI President Scott Wallsten, Eurasia Group's Xiaomeng Lu, Wiley Rein's David Gross, and New America's Samm Sacks.

ASPEN, Colorado, August 19, 2021—In the midst of escalating tensions between the United States and China, experts at the 2021 Aspen Conference suggested Tuesday that the Communist government is increasingly seeking to hold close its technology companies so they align with its long-term objectives.

President Joe Biden has focused parts of his tenure on combating national security and cyber threats, including signing executive orders banning investments in Chinese companies like telecommunications giant Huawei. In June, a Huawei representative said the executive order was a “policy misstep” that would result in the U.S. possibly losing a Chinese chip market of $400 billion a year, while the Chinese will grow more self-sufficient.

Similar sentiments were echoed Tuesday at the Aspen Conference, where experts discussed how the Chinese government is attempting to bring its domestic industries in-line with its own objectives.

Xiaomeng Lu, senior analyst with the geo-technology practice at Eurasia Group, said the long-term objective for the Chinese Communist Party is for the goals of both the party and Chinese tech companies to align.

This is an ongoing effort however, as for many years, China left its tech companies to their own devices—allowing them to compete and engage with American companies and practices as they saw fit.

Now, China is attempting to reel them in, as Lu observes: “They are trying to domesticate this wild animal,” he said. “Sometimes with a slap on the wrist, sometimes a punch to the face.”

She described some of the actions China has taken—both slaps and punches—to align Chinese tech companies with the values and goals of the CCP. She stated, however, that deconsolidation is not really on the table for China’s big tech.

“They do not want to break [these companies] up—they don’t want to kill their golden goose.”

‘Is the private sector enabling the party’s vision?’

Samm Sacks, a cyber policy fellow with New America, argued that most of China’s decisions regarding their tech industry can now be viewed through this lens: “Is the private sector enabling the party’s vision?” She stated that this is the primary consideration that the Chinese government is making when evaluating what kind of action to take in regulating the industry.

Both Sacks and Lu described a dynamic whereby the Chinese government wants to enjoy all the economic benefits of a burgeoning, profit-driven tech industry, while not being forced to contend with any of the drawbacks of engaging in an interconnected and free society.

David Gross of law firm Wiley Rein LLP and former U.S. Coordinator for International Communications and Information Policy at the U.S. State Department’s Bureau of Economic and Business Affairs, said it is possible for American-Chinese relations to emerge harmoniously, insofar that the tech industry is concerned.

“What is in the long-term interest of the CCP is not in the interest of the U.S.,” he said, but added that this does not preclude the possibility of mutually beneficial solutions, particularly in the short-term.

An increasingly domesticated Chinese tech industry

In April, Scott Malcomson, a former senior advisor to the U.S. State Department, said Chinese companies’ growing success at home has proven to be a boon for America because they are inclined to stay there.

He noted that the Chinese have adapted to a number of past executive orders and hostile attitudes toward it from the Trump administration by developing independence in a variety of fields on Chinese soil, including in satellites, undersea fiberoptics and e-commerce.

Joy Tran, a senior vice-president of public affairs at Huawei, has said that the Chinese market now makes up about 65 per cent of the company’s global revenue.

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