China's Grand Strategy For Global Data Dominance

>> Glenn Tiffert: I want to thank you today for raving the traffic. And I know you could have been at the state dinner, but you chose us instead, and we're grateful for it. I'm Glenn Tiffert. I'm a research fellow at Hoover iInstitution. I co-chair our project on China's global sharp power, which is kind of the Hoover Institutions hub for work on China.

We have three main lines of effort. One of those is tracking China's progress in critical technologies of which sort of data kind of falls into that bucket. The next is protecting our research enterprise by working on research, security and integrity. That's the work our universities, our national labs, our startup ecosystems do in critical technologies, again, ensuring that we can stay open and collaborative, but do it safely and wisely.

And then the third line of effort has to do with malign foreign influence not only within the United States, but also among us allies, partners, and parts of the world that we have strong interests in. And so it became clear to us not long ago that data was an important issue that was worth looking into, ZTE, Huawei, Alibaba, BGI, TuSimple, TikTok.

Over the last several years, a parade of PRC Firns has burst into our consciousness belatedly as embodiments of the risk that engaging with firms in authoritarian countries, particularly leninist, highly disciplined authoritarian countries that have ambitions and aspirations to comprehensive national power pose. And our tendency has been to take each one in turn separately, without following them back to the logic or connected tissue that underlines, that binds them together.

A year ago, in partnership with the Asia Society, and today we're joined by Orville Schell, director of the Center on US-China Relations at the Asia Society. In partnership with the Asia Society, we approach Matt Johnson to pull on those threads and follow where they lead. So today he'll share with you his extraordinary findings and engage with an equally extraordinary panel of experts to reflect on his report and their sense of the subject.

Just to give you a preview of what we have coming up shortly. Beyond that, we have a report on semiconductors coming out in about a month from the Uber institution called the Silicon triangle that looks at the Taiwan China US relationship in this highly strategic area, and that will be working on a report on the regulation of private enterprise and the PRC, which is an increasingly important topic.

But forward to Matt. Matt is a visiting fellow at the Hoover Institution and research director at Garneau Global. His expertise covers China's contemporary elite politics, strategic thinking, and political control over the financial sector and private economy. He was previously a lecturer in the history and politics of modern China at the University of Oxford in the UK and a researcher with the China's war with Japan program.

His academic publications have focused on propaganda, chinese communist party ideology, cultural security, state society relations, and the Cold War, but now he's in industry. We're joined by Kredit McGregor, who's a staff writer for the Wire China. Based in Washington, he was previously a staff writer at Fortune magazine in Hong Kong, writing features on business, tech and things related to China.

Before that, he had stints as a journalist and editor in Jordan, Lebanon and North Dakota, exotically. He's a Minnesota native that grew up in Beijing and earned his bachelor's from Wesleyan University. Next to Grady is Susan Aronson, who teaches and writes about data AI, digital trade, human rights, and data governance.

She directs the digital trade and data governance hub at GW, which maps the governance of public, private, and proprietary data for 68 countries and the EU at the national and international levels. And she's written five books on trade and one on global corporate social responsibility. And of course, I've already mentioned Orville Schelle, who's a longtime writer and scholar who's focused on modern China and Chinese issues for quite some time.

The former dean at the graduate School of Journalism at UC Berkeley, he's currently vice president of the Asia Society in New York. And he's also Arthur Ross director of the Center of US-China Relations. Matt will present the findings of his report. We'll have a discussion from the panelists, and then we'll close out with Q and A from the audience.

So, Matt, over to you. Thank you.

>> Matthew Johnson: Thanks, Glenn. Thanks to Hoover, and thanks to the Aegis Society for supporting this research. Thanks to all of you coming today. Thanks to my co-panelists for having read the report and been thoughtful in their responses to it. Really pleased to be able to share it more widely, this great group.

The main finding is that the United States and China are engaged in a global competition or control of the distribution and storage of the world's data, whether acknowledged or not. So I'm primarily a China scholar by background. My perspective on this comes from having read fairly deeply in the speeches and other writings of Xi Jinping, in the policies, laws, and economic development frameworks that have been issued by China's party state, and by fairly granular research on the behavior of chinese companies, both in China and abroad, in this case, with respect to data.

And what I did in the report was tried to put all of these perspectives together in a fairly forensic and connected way. I think in the context of this competition, one of the best guides is to understand what the strategic thinking and the strategic behavior looks like from the perspective of, to be open, the competitor.

And so I think that as the report kind of begins, it is a competition, because China's leader, Xi Jinping, treats the control of data as a kind of key, almost like a master key, to cementing China's position globally in the economy and to becoming a more powerful strategic actor on the world stage.

So there are a couple of key statements that the report begins with, which I found quite striking in my own research. When Xi Jinping came into power in 2013, he basically said that whoever controlled data and big data was going to control, or at least be able to shape future course of development.

And then a year later, he talked about the importance of data as an economic commodity that China again had to acquire as much of in order to become a more powerful country. And in 2016, as his agenda deepened, he began to speak more clearly about the integration of digital technologies, both inside of China and then outside of China, as.

Kind of forming an interconnected whole. And as far as I can tell, I mean, it's in the report, as you know, speeches that he's given statements that the party has made about why big data is important for its economic development policies, for its strategic priorities. The goal really is to absorb at global scale as much of the world's data as possible, the same way that, for example, controlling oil as a strategic resource or access to oil is important for nation states.

Data is like the new oil, in Xi's view, and as a strategic priority for China, it sort of has that bedrock significance. So these would just be words, except China's system, as a Leninist system, is highly centralized. The orders from the top cascade down through the other parts of the system.

And this can also be observed. So as Xi has developed his thinking around big data, China, and in other words, specifically the party and its organs, and the state and its organs, began to develop new policies for big data use, for big data infrastructure, for cybersecurity and remote sensing, both inside of China and outside of China, and around encryption and data security.

Meaning, basically, that the party state's sort of rights to view data of PRC citizens and other entities have been formalized and increased. And that also goes for companies that are operating in China. And at the same time, the protections around data coming from China and its transferability overseas have also increased.

So from an economic perspective, this is almost like a posture. And again, from a national security perspective, the goal is to strengthen China and China's ability to see, control, use, etc, data, whether the military, the party state, other entities. That's the basic brain. And so the report goes into this in some detail, I would say.

One of the key findings from an institutional and organizational perspective, which was of great interest to me, that over time, Xi has built a kind of flywheel for a lot of this activity. Which is what is now the Party's central cybersecurity and informationization commission, which is the real power behind what most people know is the cyberspace administration of China.

And it's this body that has shaped a lot of the laws, a lot of the policies and frameworks around big data. And those policies and frameworks really emphasize, pretty much from the inception, the kind of combination of state and private or market and military actors and interests that are all involved in China's data policy.

So in other words, being able to acquire data commercially, say, and share it with the military is part of this data strategy and agenda. Cascading further down the state system, in 2015, 2016, and 2021, the Chinese state has issued a series of big data industry development plans. That focus on building infrastructure within China for the storage and processing of data, developing the software needed to read and make use of data.

And also to acquire data abroad through commercial channels in ways that sort of accelerate the acquisition of data by Chinese state and military, I think we have to say, entities. The report goes into case studies, I think, from a risk perspective and from a sort of highlighting Party ties to commercial actors' perspective.

There are several sectors that are note, one is pharmaceuticals and genomics. And so the report talks at some level of detail about companies like WuXi AppTec and AGI. And their ties both to Beijing and the sort of inroads that they've made into industries in the United States and elsewhere that would potentially put, say, personal medical and genetic data into this system that I've described.

In the social media space, there's obviously the pretty glaring example of TikTok. I was a co-author on a submission to the Australian parliament on TikTok and its ties to China's party state. That includes ByteDance, they're there, they're visible, they can be identified. And then in the drone sector as well, companies like DJI and Autel, which are widely used by, say, law enforcement agencies here within the US.

And used in ways that pose data risks because the technology itself, the software, the way that it's configured, its components, I would say, are not necessarily vetted and tested in the same way that the US government ended up testing components by Huawei and ZTE, which ultimately resulted in their expulsion from US telecom systems.

I think similar evidence exists in areas like crypto and financial technology, in areas like autonomous vehicles, particularly autonomous trucking. But the report doesn't go into those case studies at the same level of detail. In any event, the basic picture, which I think is important to keep in mind for those of you who have a comparative politics background, maybe, here.

But China's party state is still Leninist in terms of its organizational structure, which means that distinctions between public and private, between state and corporate, don't exist, in a sort of fundamental organizational sense don't exist. And I think that's important to keep in mind when talking about China. I'm not saying that China doesn't have, laws for corporations or laws that detail the rights and responsibilities of citizens.

But I'm saying that they either exist in tension with, or are superseded by other laws that demand specific kinds of behavior and compliance from individuals and organizations. I think also important to keep in mind is that China's Communist Party has a very particular history, which is that during its early decades, it was an underground organization.

That had to operate around lots and around the sort of legal political sphere that existed within China during the first half of the 20th century. So, in other words, from an organizational perspective, the party has always been very good. And Xi himself boasts about this, calls these features of the party its organizational advantages.

But the party has been very good at sort of connecting its different parts in ways that allow it to carefully and slowly and often in very opaque ways, achieve political objectives. And so when you put these two things together, the fact that we have corporations that are complex entities already, and then on top of that, they have internal structures, but party governance, and then finally they operate in jurisdictions outside of China which are not used to dealing with all of these features of organizations that I've just mentioned, that adds up to a fairly significant national security risk if the country that is directing the behavior of these organizations is also a country, in the case of the United States government is identified as the greatest strategic competitor out there.

And so that may be the broader finding of the report, is that data is one kind of case study. But really, what we're talking about applies in any sphere. And I'm a researcher, it's hard to convince people that the answer to everything is to do more research. But, you know, I think that that actually is, you know, one of the first recommendations that I would make is that, you know, transparency around all these issues be increased, you know, through more research and knowledge and information.

Now, there were other recommendations as well, which I will talk about very briefly. You know, I, I think there is legislative and executive momentum in some of the areas that I've mentioned. And so the recommendations of the report, basically, in a sense, call for strengthening that momentum in areas like listing naming.

In other words, chinese companies that fall foul of us data laws existed in stronger form, which they really don't, and making it more difficult for those companies to transact outside of China's borders, or at least within us borders. Being clear when data is being exposed and who it's being exposed to would, I think, be one way of beginning to address this broader set of risks and issues.

Using the model of the Commerce Department's ICTS process, which I think is integral to understanding why Huawei and CTE ultimately were deemed companies that could operate in the United States in a way that was compatible with national security interests, and broadening that process and its application to other sectors that are also like telecommunications is critical.

I think CFIUS and the review of foreign investment into the country is important. I think, based on conversations that I've had some of the criticisms of the CFIUS process are that it could be faster and it could be, I think, a little more deliberate about saying simply that this company does not seem likely to meet any, you know, sort of real national security thresholds.

And so therefore, the answer is no, not sort of writing a letter of reviewing. I'm not trying to stereotype or mischaracterize it. I'm simply saying that it may be that the scope and scale and pace, so to speak, of the problem is greater than our current review processes allow for.

And, you know, that also turns on something that I think, you know, people, colleagues, officials, others who are in that space would agree with, which is that more capacity is needed in order to understand more about companies that operate in the United States or that seem to invest into the United States.

So there were a few others, but we're at time, and I think that I want to hear thoughts as well. So thanks for.

>> Glenn Tiffert: For those of you who were not able to get a paper copy of the report, it's freely downloadable from Hoover's website, which is hoover.org CgsB for China's global shark power.

You can find all of our reports there, and maps is certainly one of them. And his next report will be as well. But now I'd like to turn the floor over to our panelists and start with Orville Shell for reflections.

>> Orville Schell: Well, congratulations. I have to say I'm glad you do your research, because for many of us, reading the writings of Xi Jinping for a new era with Chinese characteristics is a bit like eating toxic sludge.

But someone has to do it, because everything is spelled out there very clearly. And I think that what was so interesting for me about what you did in this exegesis on data is you suggested the grand scope of Xi Jinping's tensions to rejuvenate China. This is just one piece, but in this piece we see the whole.

We see the tenacity, we see thoroughness, discipline, we see the grand pretention, and it's quite impressive. And I think it bespeaks of China's sort of national impulse to this idea of wealth and power, rejuvenation, the China greening, etcetera, etcetera. And it is not to be trifled with. I've seen nothing like it even though I went to China when Mao Zedong was still alive and the cultural revolution was still going on.

This is an impressive effort, and it's an effort that we do need to come to terms with, to reckon with, to assess adequate properly and we need to engender our own proper responses to it. Xi Jinping said north, south, east, west, the party is central. And it is central not only in the life of China but China's life in the world.

And you documented that very well I think, too. And it's important for us to sort of recognize the scope of what it is that Xi Jinping would like to accomplish. Can you get it?

>> Grady McGregor: Yeah. And I want to echo Orville's remarks and just you so methodically laid out this case.

And I'm a business journalist, so it really stuck out to me was the degree to which corporate structures are so important to this argument. I think you said at one point it was maybe the most important building blocks of party data strategy are corporations. And I just think that has a lot of sort of troubling implications for any sort of business that's doing Chinese business or.

Working in the US and a US business working in China, you went through examples like BGI with drones as well. But it's come up in virtually every story that I've reported recently, whether that's cat vision to if Chinese firms are trying to tap into Texas, like electrical grid.

And so, reflecting on it, I'm just, are we headed towards a sort of data decoupling with those corporations? And we see that with something like Huawei, ByteDance, maybe those risks are very sort of front of mind. But I'm curious, when companies are trying to partner to fight cancer or climate change, what are we losing as well?

And so just sort of trying to grapple with some of those implications. And then I guess my final point is, I was recently reporting on this national data bureau, that China kinda created to sort of try to harness data for their own uses. And you lay out very sort of methodically this case that, this data strategy from the top levels of the government.

But I'm curious to what degree, the CCP is very aspirational. How is that being executed? They're creating this sort of national data bureau in part because a lot of these, even within provinces, across companies, it's unclear to me the degree to which they're talking to each other. I think last year there was this big data breach in Shanghai with a bunch of police records.

And so, these data systems aren't perfect. I am kind of curious also the degree to which, these policies are being effectively implemented. But, yeah, again, I just really wanna applaud you on this report, and it's really interesting things to think about as I try to cover these companies you talk about, Susan, please.

 

>> Susan Aaronson: Okay, thanks, nice to meet you all. I'm gonna rain on this parade, and I apologize for that. First of all, I wanna agree with what everyone said, which is this is an important piece of research, and I recommend that you read it. But I found it utterly unconvincing for three reasons, basically, based on my own recent review of China's use of data governance and policies to stimulate XR.

And I would say if there is any nation that actually has a grant, well, there are two that actually think very coherently about data. I would say it's the EU, and South Korea. And if you want evidence of plans and strategies that turn into actual policies, regulations and incentives, it's South Korea.

So, we can talk about that later. But, so there's a couple of things that I found troubling, but I also, again, I'm being nice person and said in a nice way. First of all, data is not like any other good service because it is simultaneously a good ended service.

That's thing one thing two it is an inexhaustible resource. It's not an exhaustible resource like oil, to compare it to. That is troubling, it is simultaneously something. So, I'm not gonna say the first step can be reason to grandchildren are around, if not beyond that, right? You and I don't know the uses.

It can be a commercial asset, a global public good, right? To solve wicked problems like, how do diseases spread? To think about data as this one thing, is troubling to me. There are three main types of data, personal, public, there's also open data, which can be a mix.

But public is data paid for or controlled by governance or research collected by governance, and then proprietary data, right? Intellectual cropping, trade secrets, algorithms are an example of that. Okay, so, my first concern is that I do the, when I read English translation and all of China's various data strategies and strategies related to data-driven sectors.

I do not see an effective translation of those strategies into policies. You do see, very good AI regulation, which is why people are paying so much attention to China's AI regulations. But you also see nuttiness on the part of China, regarding asking foreign companies to share various types of proprietary.

Or, well, almost all that is proprietary data, which also maybe include personal data with the government. So, that's one point. The next point I'd like to make is that the United States needs China to keep us on our toes. I am grateful, that TikTok is a threat to Facebook.

And because I wanna see Facebook do better, I want Facebook to succeed. And I think Facebook has become fat and lazy. And it's learning from TikTok, just as it's learning because it sort of missed the generative AI window. I think in the same way, China understands that it's got to make choices related to its data.

And I just wanna give you one example, right? So, I do a lot of work on AI because I work for NSF trustworthy AI institute, where I'm co PI. And in that work, we look at why do firms choose to make some algorithms open source, and others use trade secrets to protect their algorithms, right?

And China is almost all open source. So that's interesting, right? That they're willing to share the code with everybody in the view, that that code would be better if they get lots of comments on it, okay? So that's thing one. But the other side of it is China's data is protected by the great firewall.

They do not have free flow of data, and they probably won't unless the polity changes. And that has made their generatives AI weaker, why? Because there's a lot of data that is scraped around the world, that goes into large learning models, that they can't include in their generative AI, because they censor it, right?

So they're paying a price for that because they won't have good generative AI, as a result of that. And I think those distinctions are important. China has to learn it needs that feedback loop, to do a good job on data-driven technologies such as AI. And so, while I think the autism analysis is thoughtful, well researched in source, and I wanna repeat those things, this is a really well sourced paper.

I just disagree totally with the conclusion and the recommendations. In my mind, the United States would be so much better off if China had its act together on data. And not saying, because China understands that data is a national security asset. I think China does not yet really understand the potential of data.

Helps solve some of its many problems, from the bubbles that it seems to constantly experience in real estate and finance. To how do you find jobs for all these highly skilled college graduates that are underemployed today? There's been a study that you might want to look at by Thomas Streinz, and it looks at the influence of China and global data governance.

I think it came out last year, but basically they examined every country where there was belt and road and whether or not China tried to influence like. Country's data governance and Internet governance policies, and they found none, basically, so it's worth looking at that. I also feel like the United States, we have so much benefited from an open approach to data, yet we really do not understand data at all.

We don't understand that public good nature, that it is a global public good, versus the commercial nature of data. We do understand the distinction between public, personal and proprietary data. But we have not gotten our act together on these things, and I'm not hopeful that we will. So I am worried about ideas that make us more like China.

I think we have to be more like the US, which means that we understand openness, whether it's open immigration, open ideas, open source models, and we should welcome that. Sorry, thanks for hearing.

>> Glenn Tiffert: Yeah, sure.

>> Matthew Johnson: I wanna give Matt an opportunity to respond to everyone's remarks. Well, look, as Glenn mentioned, I'm formerly an academic, and I have done presentation and critique, and then now I am at the stage of the process where I want to respectfully acknowledge, but not honestly, like, close off time for questions.

By going into a length response here, I would just say one I identify fully with the concern that somehow, a more kind of suspicious atmosphere might make certain kinds of, like, human benefiting research and cooperation possible. That is a concern that I certainly share and should be highlighted.

So, nothing that we're talking about here is easy, it's obviously going to require certain trade offs. And the other would be with respect to openness and free and open societies, bedrock ideals of this country. Why hamper with that in a way that would potentially sounds like I would be advocating setting off on some other trajectory, which I certainly don't.

At the same time, the evidence that I found is also concerning, and I think that it is concerning because what it basically says, and maybe you have to read a lot of science fiction to get this. But what I think it basically says is that it's not unusual for leninist systems either.

Xi Jinping's vision, the vision of China is a sort of cybernetic vision of a world that is, in fact, increasingly interconnected, but it is increasingly connected and controllable. And the more levers of control that China has in that interconnected, controllable world, the better for China and that they can be wielded strategically in order to advance China's interests abroad.

We already know that China uses mechanisms of economic coercion and trade to punish countries with which its leaders are displeased. And I think we know now that China is working together with Russia to reshape the world order in a way that reflects what leaders of those countries say they see.

As an inevitable historical tendency toward multipolarity that is gonna break the unipolarity of current system to the extent that it remains. And those are two agendas that China's current leadership has already begun to implement. One is economic coercion, making the world more economically depending on China and wielding that dependency in order to affect outcomes in China's national shift outcomes toward China's national interest side of the balance sheet.

And then also working together with Russia to reshape global security architecture and norms. And so to the extent that data is part of this equation as well, and I think that what I've established here is that Xi Jinping sees that it is, and the rest of the party has fallen into line, the mechanisms of state government, etc.

Have fallen the line that needs to be sort of viewed through a similar sense of how China defines and will pursue strategic objectives. So what are the risks in this more interconnected control world? One is that key parts of US infrastructure that are produced by or otherwise controlled by it, I'll get into what I mean by that.

China could potentially be altered influence, shut off in the event of a conflict with the United States. There's, this issue appeared recently in the case of cranes that are used to move goods through US ports. We could also apply that same logic to drones, to autonomous vehicles to keep parts of the grid, the energy grid.

To key parts of our emerging new energy vehicle sectors where the batteries are increasingly that subsector is China dominated basically. This is getting a little bit of the field from data, but what I'm saying is anything that can be used for leverage in an increasingly competitive world that China is actively seeking to reshape is first stop going to be used for leverage.

And what I see is, and I also used to work more on propaganda and data, propaganda is one of those sort of ineffable. How does it really work? How does it change our world? Obviously, the same can be said about data, but I don't think that means that we shouldn't ask the question.

About how it is that more information and more controllability in the hands of competitor countries. Can reshape outcomes in a way that disadvantages openness and cooperation and all of the other ideals that we care about.

>> Susan Aaronson: Can I just say one thing on that, though?

>> Matthew Johnson: Sure.

>> Susan Aaronson: It reminds me of the debtor predator relationship in the sense, because you see all these companies pushing back against China and leaving China at a time when China needs foreign investment because the pandemic recovery didn't happen.

So it is that catch 22, right?

>> Matthew Johnson: Yeah, so there is a tight rope that leaders in Beijing have to walk also, which is wanting more strategic autonomy and at the same time. Feeling like the time is not yet right to say we're not interested in foreign investment in critical sectors or in foreign MNC's coming in and manufacturing sectors.

That's absolutely true. But I don't see it as a deterrent to our coercive strategic behavior.

>> Orville Schell: Because I have to run to the airport I wanna make one last call, I think, one of the most important. The things for us to do is to recognize that we are in a process here.

It's moving very rapid. And the situation is changing constantly. And that requires us because we have such different political systems. Chinese wars, they don't get ideological. It's like getting into a cold war. I'm sorry to tell you that ideology does matter. Systems do matter. And they matter because as they conflict and become more powerful and more contentious, threat levels rise.

And that's precisely what's happening. The data, which seem to innocuous, kinda bland lingua franca, common currency, suddenly acquires a very different caste. Because it can be used, as you said, to manipulate, punish, and to console. And if there's one thing Xi Jinping, it seems to me, it is control.

And this is his Leninist background. This came of age in a cultural revolution. I think this is how the England, Abigail will. And so I think it's really important not just this realm. But every realm in which we interact with China, whether it's just in commerce, buying bamboo furniture, whatever.

To understand that this whole interaction has become irradiated by increased sensing threat that has to do with China's global tension control system. So just putting this in the larger political context. Glenn, you'll forgive me if I take my leave.

>> Glenn Tiffert: Thank you very much, Orville, for joining us.

Let's give him a. So I'd like to spend a few minutes in conversation with the panelists. And then happy to take some questions. But let me start by posing, I think, a big picture question that all of you have touched on. And that is this question of openness.

For most of our systems and our touch points with China. Openness arises as a question, as a challenge in one way or another. The question is, how can systems which are liberal, democratic and functioning civil societies, are premised on varying degrees of openness. Whether we're talking about Europe or the United States or Japan, Australia, Korea.

These are democratic nations, openness is integral to democracies. It is our operating system, in a sense, right? And even so on data, we have issues with Europe and the United States regarding regulation and exchange of data. But at least we have sort of similar languages and frameworks and underlying principles.

China, though, is coming from a completely different place, a very different operating system. Leninist systems, the Chinese party state, just like the soviet state before it and its neighbor, North Korea, are not premised on openness. These are not principles that they share. And so the cognitive dissonance between a world that is committed to openness in principle.

And one that's committed to control and information control in particular. Because information is power in a very palpable sense for the party. How do we manage that incompatibility? Because openness with regard to a system that weaponizes information feels like unilateral disarmament. So I wanna pose that to all three of you, and get your reaction.

 

>> Susan Aaronson: Well, it's interesting you would say that, because in AI, there's this huge debate now. Because, as you know, in the United States, science is supposed to be replicated or in western countries, right? Which means the data has to be open. And if you have a federally funded project, directly or indirectly.

Your data has to be made available, made secure in a certain way and tested by others, right? And China buys into that, though, too low. But today, because of generative AI, which is based on large language models, which are web scraped, which should appall all of us. Because you and I we gave not one width of our consent to that use, right?

And proprietary systems are also essentially did not give their permission. I don't know if you all saw the Washington Post, an analysis of this. But the bottom line point is many scientists are terrified of this. Because they feel that their data is being taken without their consent. And portrayed in certain ways through the large learning models, in ways that may be incorrect and they can correct it.

So this is a constant debate in the West. I think it's a newer debate in China. But there is this weird dichotomy in China. And as a non-China expert, I don't know what to make of it. So, for example, during Trump administration, right, before the pandemic, universities really started to suffer.

And then the pandemic, of course, made it worse. Because most universities have tons of training students. And not just Chinese students, right, students from Lebanon, now Salvador and Greece, right? And we live on that because they keep our students on their toes and vice versa. Just as I want students from North Dakota and Mexico, etcetera, right?

And so you want that mix because you need that competition. You need that debate. You need that openness. So the weird thing about China is they're a part of it in terms of science. And they're a part of it in terms of travel. Who hasn't been to Switzerland or Paris, and been shocked that all not suits the pandemic.

But how many Chinese people are traveling, which is a form of openness. So China is essentially saying, we're okay with our people either studying at Oxford or Stanford. And we're okay with them traveling to Washington, DC. What's up with that? And then they do horrible things to Australians related to information control regarding the soldier in Afghanistan who was accused of torture.

And they kept beating the Australians about this. And eventually, he was found guilty of it. But get my point. Here, is that clear? It's this weird dichotomy in China. So I feel like they're evolving in some ways. They're just not there yet. I agree with you. China is never really the country unless somehow communist party is no longer in charge.

But that is fully open, and accepts free debate. There is some openness. And they do accept public comments on regulations. And they are responsive in some ways. Well, how do we explain that? Is it evolving over time? Is it because of their religion? I'm not sure I would put it on Marxist one in the system.

 

>> Grady McGregor: Yeah, well, I think the question of openness is so interesting. And I feel like China's very good at sort of taking advantage of. Western openness, I was raised in sort of Beijing when an Indiana Jones movie came out Thursday by Friday, you'd be watching a pirated DVD of it.

And so that is clearly still playing out today and the sophisticated systems of being able to, as you document, sort of take advantage of data openness is really interesting. Something Susan said earlier was really interesting as well, just in terms of how much China's own maybe paranoia, if that's the wrong word around this issue, is also hamstringing.

If you think about in terms of maybe generative AI, I can think of other examples maybe the stalled DD IPO, if there's hamstringing their own sort of economic growth. I've been tracking a case of, there's a scientist who was trying to work on both sides of the US-China border.

But, was accused of smuggling out blood samples and therefore leaking Chinese genetic data when he was a sort of innovative biotech founder. To what degree is maybe China's lack of openness maybe also holding it back ,that makes sense?

>> Glenn Tiffert: Do you have thoughts on that?

>> Matthew Johnson: On openness generally?

 

>> Glenn Tiffert: Yeah. Up or down?

>> Matthew Johnson: Yeah, thumbs up? Yeah, you all just heard my points for the most part, so I don't have too much more to add. I think I would just say, basically, it would be good if more of those examples of cooperation and transparency and mutual trust existed.

And I think I share Orville's sense that under Xi Jinping, China is just moving in a different trajectory right now. So I still think you can find those examples, but I think they are fewer and fewer. And a lot of the participation in international fora and international research, etc, is being instrumentalized in ways that are ultimately about commercial advantage and strategic advantage.

And that's a real danger there, you can have what, in a kind of local and short term sense feels good, solid collaboration. But the problem is that trust levels are low, the acuity of the competition is high. And so it just means that I think a lot of those more human to human of experiences are, one, they're sort of shrinking in terms of scale and frequency.

And two, they're being instrumentalized in ways that I think that the participants themselves might object to but may not really have a choice.

>> Susan Aaronson: Yeah, and I really like the terminology you came up with, because China isn't adhering to internationally accepted norms of cyber behavior. And you came up with this term accumulation splat system, which I really like, because that's been true for many years that seems so unacceptable, cyber theft.

And that is the opposite of the mess. There's a word that's come up several times just in the remarks from everyone, and that is trust.

>> Glenn Tiffert: And I think we had greater trust several years ago, mutually between the United States and China. That trust is broken down, and we're entering a security dilemma where each, through the eyes of the other, hears threat.

And that lack of trust, I think, is toxic to systems that are premised on openness. Because you can only be open with someone that you do trust for fear that, you know, they're gonna use your openness against you. And I don't know how we get back to that place where we do not perceive each other in those terms, but instead it seems to be deepening.

And I think Xi Jinping, actually, if you read his writings, I mean, it was clear when he came to power, he sensed an existential threat to the party's power. He spent a lot of time talking and speaking about how the Soviet Union collapsed, how the soviet communist party collapsed, and how that was not going to happen under his law.

And there are ways in which you could explain everything that came after that through that lens. It's a little simplistic, but there is a truth to it fundamentally. And so I think the breakdown in trust is really, I think, what is causing the openness to unravel among our traditional allies and partners, where we preserve that trust.

The system is still functioning quite well, but its countries, I think you would disagree at things, but please.

>> Susan Aaronson: Well, I think if President Biden hadn't made his remarks two days ago about Xi Jinping being a dictator, which has some truth to it, right? And just as it is true that this man identified data early on, before other members of his party, as a means of control, there's no doubt about that.

But at the Blinken meeting, they agreed to all sorts of trust building exercises, travel, joint stuff. Forgive me for being Kalyana, but I do think the United States very much recognizes that we need China, certainly on global warming, certainly on Ukraine. We have to keep the lines of communication open related to Taiwan.

But I'm just wondering, with you guys, who are China experts as opposed to me, how is it that one remark could almost be seen as derailing? Cuz both sides have an incentive to want the trust, I mean, things could get worse in China soon, financially.

>> Matthew Johnson: Yeah, so, I mean, I think going to that meetings, we're sort of straying from data here, I hope people forgive, if you like current events.

 

>> Glenn Tiffert: We're in Washington.

>> Matthew Johnson: So the thing about those meetings was the first meeting was with Qin Gang was the new foreign minister. But then Secretary Blinken had two other meetings. One is with Wang Yi, who's the party's former minister of foreign affairs and is now the foreign affairs chief above Qing Gang, and then with Xi himself.

And in those meetings, Secretary Blinken and delegation were basically told in uncompromising terms by Wang, who was kinda the hatchet man. That the US was gonna have to stop all of this behavior that was detrimental to China's interests, should have stopped, that was the message. The content of the meeting was for Wang to lecture the US side about why everything they were doing vis-a-vis China was wrong, US policy toward China was wrong.

Now he's a more authoritative source than his subordinate Qin, which I think actually means that levels of trust may be perhaps a bit lower than the dialogue between Secretary Blinken and Minister Qin would have indicated. With Xi it was a somewhat, in terms of words, gentler, because Xi playing a sort of benevolent autocrat role in that setting.

He did, Sit at the head of the table and kind of preside over the meeting, at least that's what we know according to photographs. And his message at the same time was also simply that the United States and China were going to have to get along. But that also meant the United States basically, again, doing nothing to harm China's interests.

Now the problem when you have a competition between two powerful countries. And the premise of that competition is that one of those countries should do nothing that could be construed as harming the other countries interests, then you don't really have a competition at all. And the message being sent by Beijing is that the US shouldn't bother competing, why?

She keeps using this phrase about history and sort of new forces and the world being in a new era of history, and what he really means by that, I think you'll find an accurate description. Or kind of exegesis in his discussions with his dear friend, as he calls him, Vladimir Putin in Russia.

Where the two of them talk about together being the active agents of a change in era, of a change in historical cycle. And this is Xi's vision that China is on the right side of history, which is another phrase that China's diplomats frequently use, and by implication the United States is on the long side of history.

And so history in, I think it is somewhere about Marxist Leninism, so history in Marxist Leninism being a kind of like inevitable and inexorable force. Because it's shaped by deep material itself is shaped by deep material forces that just kind of happen dialectic process, there's no controlling, right?

China's on the right side, the US is on the wrong side, and therefore the US has to simply acquiesce, that's Sheen's message. It's not a message of trust at all, it's a message of get out of our way, and to the extent that that's not what is being interpreted in Washington, I think that's a strategic miscalculation.

 

>> Glenn Tiffert: So I wanna turn to the audience now because I think that's a, that's a really good, provocative, strong statement, yes, please, right over here.

>> Speaker 6: You are free to try to adress and forward diplomat, it's very clear that China under sheets and will weaponize whatever I, it hasn't yet, and then he talk of moderation.

This met, I think we should have to look at this problem as the war has begun. And so I wanna ask, at the risk of building more hideous David center to allow it, is it time to eat that skin or is that chimpanzees?

>> Matthew Johnson: I think not an easy fix, I shouldn't put it in those terms, but to your point at the end there.

I think the idea that we move more in a direction in which cloud storage services and data centers that support them are offshored, that's probably the wrong direction. And it was out in the New York Times even today, the Biden administration is looking more critically at Huawei and other Chinese cloud providers, and I think that's at least a very fair first step.

Why not at least begin to mitigate or moderate even though those are not necessarily appropriate terms for the scale of the conflict. But why not at least take those as a starting point, that we need to not voluntarily offshore important information? I mean, I think I'm in agreement with you right there, that we need to take, we being the US federal government, state governments.

Others need to take a decisive step toward understanding where data goes and understanding that there's a competition and making the right choices. Which are probably not to continue to integrate our data infrastructure with the infrastructure of a competitor, that's absolutely right.

>> Glenn Tiffert: Would others like to address the question?

 

>> Speaker 7: Wanna make a terminological appeal, could we instead of talking about China, say Xi Jinpings China as much as we possibly can, number one. Number two, instead of saying leninist, which means nothing to the average American say fascist, which is what we're dealing with. And the third thing, instead of saying we shaking international order, think about whether we would have described Napoleon as we shaping the international order, I think it's much too bland.

And with respect to all of that, I haven't heard enough discussion, but I would like to hear about a great asymmetry here, which is that Xi Jinpings. China has access to 1.4 billion captive data producers and another, I guess 3 or 4 billion in the non developed world who may have rapidly infiltrating and collecting their data.

And our feeble attempts to keep them out of our data sources is pretty feeble, I believe. So there's a huge asymmetry here where they control what they want to be used and they also have access to what we. I don't know, I'm not saying there's an obvious answer to that, but it seems to me if you're gonna talk about competitive strategies, which is a common buzzword dependent on.

I would call them conflictual strategies, competition, isn't that asymmetry something important?

>> Susan Aaronson: Can I just address that high, Paul, you're presuming that economies of scale and scope lead to competitiveness in data, right? The more data sources you have, there's no evidence of that, in fact the opposite is true.

What matters is the quality, completeness, accuracy of the data set, so one of the problems China has had, and I'm not even just talking AI. Lemme talk, it has tried to put to developing countries through Belt and Road, some of its facial recognition technologies. And people say the reason China wants to make those sales is so that they can get lots of people of color into their data set.

So they're feeling that they don't have completeness of data, maybe they're trying, I wouldn't argue with that, but I think your presumption is wrong. And in fact, more and more, we are trying to do two things, and you know this because DARPA funded in 2014 and did not succeed, to effectively anonymize data.

And number two, I just lost my train of thought, creating synthetic data sets. So a synthetic data set means that you take a data set of personal data related to, let's say, people you might wanna extend credit to versus those you don't want to. And you remodel it to make it not actually resembles, but it is not the same, and more and more firms are learning to use that because they're not good at protecting And also, you need to put the blame squarely here because we don't have a national data protection.

So, just to summarize your presumption that economies and scale and scope yield, you go ahead. I'm not saying that quantity is more important, quality is more important, but they're getting our quality and their quantity. How do you know that? Cuz I mean, while I agree with this, there is no evidence, just as the United States, and I understand this, did not present evidence as to why TikTok was a national security threat based on the laws that China has, that China requires firms to share data at times.

We need to see the evidence. I'd like to see the evidence that China is actually accumulating this data and analyze.

>> Matthew Johnson: To those points, I think this is actually a moment in which the horse maybe has not fully bolted from the barn. And to the extent that AI cooperation with China is still on the agenda.

I think there are very legitimate reasons to openly and transparently discuss whether that should in fact be the case. Because the other thing about these technologies that included is that we can't predict the future. We don't know where these technologies are going to go. It may be that data in volume and quantity does not have the same impact on technological advancement now, but it could well in turn.

So I think that there is perhaps still a pretty good case to be made that the amount being collected does matter. We just simply don't have all the answers right now because AI technology is new and data technology is new. We seem to be sleepwalking, though, into almost like a new technological era in which we assume that all of the old rules apply.

And I think that really merits some serious ethical and national security discussion. That's my personal. The risks are potentially great. Maybe I watched too many terminated. But I think that joking aside, AI is clearly very powerful. Its potential for misinformation is already clearly very powerful. Its potential for manipulating images, its potential for simulating human interactions, all incredibly powerful and are, I think, certainly going to have an impact on the next several years.

These aren't medium term.

>> Susan Aaronson: Yeah, I agree with that.

>> Matthew Johnson: Eating that beast again with a competitor.

>> Susan Aaronson: United States, in the US government, I mean, one of our biggest feats with Europe is the collection of personal data by the US government, right? So we have an agreement with the EU.

Meanwhile, America, if you believe that US companies practice surveillance capitalism, US companies are the biggest data collectors in the world. And this did not start with Google's emergence. This started with banks in the 1930s, giving credit around the world. This is not something that's new. And one thing I've often wondered, but no one knows this, who does have lots of the world's personal data, what firms do?

I wonder sometimes, does Citibank have more because it's precursors have been around than Google does? My God is Google has more because it collects it in different ways through different products and services. But if you've been around for forever, serving the globe, Mastercard, another one, you have an awful lot of the world's data, and where do you store it?

How do you use it? As Matt is saying, I agree, we need a discussion of that. My vision of it, I just want to reiterate though, is that I fear that what you're positing will mean less access to the world's data for the United States. Look, she'd give you.

 

>> Matthew Johnson: We're here to business report.

>> Grady McGregor: I wish.

>> Susan Aaronson: But because to me, I see data like children. I realize that sounds ridiculous, but I look at it, I take a march. Yes and perspective to me, what I see is potential. It's got potential to be used for business uses and it's got potential to be used for public good purposes, simultaneously.

And that's why I think we need to really think as citizens about the role of data in society. But that discussion has not occurred here. And frankly, I haven't seen it really anywhere except for Germany. And even there, very few people actually participate in that discussion,but they talk about it as digital abort goods.

And they've written a data strategy for the economy and the polity. And that's interesting. They're trying to push it forward at new end. Because they understand that the more that you share data, including personal data that is protected and hopefully anonymized, or made through a synthetic data set, the more opportunities you have to innovate and to one, none.

 

>> Glenn Tiffert: I think we had some questions over here, I think. Yeah, yes.

>> Speaker 8: For Doctor Susan, because earlier you mentioned that you're not as much as an expert compared to the other panelists. I'm China.

>> Susan Aaronson: Yeah.

>> Speaker 8: But I wanted to ask what motivated you to investigate China's approach to data accumulation and exploitation?

 

>> Susan Aaronson: Because I am a consultant to the XR association. That's thing one. Okay. So, but since 2018, I run a think tank at GW that maps the governance of data around the world. So we look at what are the strategies, what are the laws and regulation, what are the structures that those governments put in place to address or to accommodate personal, proprietary and public data?

So, for example, do they have a public data thread? Like some nations actually say, you need to treat public data differently from data that is from Wikipedia, that is widely available to the public, but is not produced by the government. What of that public data should be secret, and what should be shared?

 

>> Glenn Tiffert: Susan, can I ask a corollary related to that? Because I think that's a really effective strategy for countries that are rule of law countries. But if you were to collect, say, constitutions around the world, you would be convinced that China had freedom of speech.

>> Susan Aaronson: You make a good point.

 

>> Glenn Tiffert: And so, I think a sort of methodological issue for countries that are opaque and that also have profound rule of law issues. That I think requires maybe an adaptation to that methodology when you're confronting nations that have different political and ideological systems. Just the poll.

>> Susan Aaronson: But I mean, the way that researchers address that, though, is that we try to have counterparts in each country.

That at least we do examine our data sets and correct us if we got it wrong. I don't define China as opaque, right? I think it makes up statistics and it is opaque in some areas. But I think as this report reveals, there's a lot of Chinese data that it's open, right?

It's certainly not, as it has different norms than the United States. But I hear you. I think you're making a good point, and it is something you struggle with. Actually, the problem is more developing countries, because they don't, you know, it's much more important to them to understandably to address public health problems, not IPR systems.

 

>> Glenn Tiffert: Other, yes, please.

>> Speaker 9: Thanks so much. No, I was going to add on a small point I was reporting on last week, there was a conference in Riyadh that I think DGI, sense time and Huawei were all, like, major presenters at, and talking to sort of experts around the region.

 

>> Grady McGregor: It's like these countries could partner with companies that, you know, American companies, but like, the standards, much more complicated contracts. Instead, you could partner with sense time to build out with. So it's, you know, how do American companies, or companies with better sort of data practice standards compete?

And I don't know how to answer that question, but I think it's, as these countries become more entrenched in the developing world and around the world, I think you're, is it creating these two separate, like, data spheres?

>> Susan Aaronson: Well, I wrote a paper called Digital Realms, and we had that hypothesis that there were three separate data spheres, but I actually saw the EU, China, and I would say everybody else, but that is no longer true.

I think, honestly, the United States is like, unfortunately, because of our gridlock in Congress, we're nowhere been seen on these issues internationally. I hope that'll change. I spend a lot of time each day trying to make the change, but can't say I'm succeed.

>> Speaker 9: Thanks so much, everyone.

Take those off of what Grady was saying, and forgive me, I'm not an academic, so I might have a much more specific question from the report. So I noted that data trading platforms, as sort of sites of trade in data, as a good, to your earlier point, are mentioned, sort of once in the report.

And then you allude, as you talk about the cluster strategy that the CCP is using to the fact that Huawei and other major companies in China that are telecoms companies are interested in partnering with the government on the creation of those centers. And so I track, I guess, the flow of data as a good throughout south and Southeast Asia and include China as well as part of that or just for the sake of this example.

Obviously, there are nuances and differences, but we see in south and Southeast Asia, large grows at these kind of like data centers where you're mining data and I'm talking about personal data as a good and trading it. So I'm interested cuz I don't know that much about that practice inside China specifically, like how that integrates within what the CCP has already kind of like outlined and what the potential is of that type of mining of data internally.

Is Huawei going to be mining from south and Southeast Asia data that's produced there and incorporating that within China? Is that going to be mostly Chinese nationalized data and sort of, I guess, a little bit more than the bullet in the report, although it was very useful.

>> Matthew Johnson: Yes, sure.

Great question on the is Huawei mining? I think the evidence probably tilts in the direction of there are certainly examples of China's telecoms players seemingly playing a role in intelligence collection. And I think more broadly, I think you could look at China's infrastructural expansion as an extension of the policies that I talk about in this paper as well.

In other words, it wouldn't necessarily be just through clandestine activity, but also by setting up partnerships with other research institutions like Huawei, Alibaba, others are big players in Malaysia, for example. That that creates more of these opportunities to shape the data environment and how China uses those ability.

Again, I can't give you the definitive answer right there because it's very contextual. But I think from a technical perspective and from a strategic perspective, the potential is definitely there. To your first question, which is about these data exchanges. The past couple of years, local governments started setting up.

This is sort of one of the ways in policy cascades started setting up exchanges that were meant to kind of like build off of directives from the top level of the government saying that data is a commodity. Data should be treated as a commodity, and data should be flowing more freely between different entities within China.

I read a lot of that as just another way of saying that we want to make sure we know where the data is, we know what it is. So part of these efforts also was that they catalog data as well. So it's not just like a trading platform, but it's also almost like a registry, is the idea.

These are still being piloted, I don't think they exist everywhere. But at the same time, those fit the pattern I think they fit the fact pattern pretty well. They are additional nodes through which ultimately government entities have full view of the data resources that exist, that they're disclosed.

Did you wanna address the question?

>> Glenn Tiffert: We have just a few minutes left, so, yes, over here. Thank you.

>> Speaker 10: Thank you all, once again. I'm just a little bit curious as to how this sort of data capture by Xi Jinping's China ties into its network of proxies.

Whether we're talking about some potential collaboration with Russia, Iran, other threats to the United States around the world. Is there a sense in which this data capture can lead to transmission and can lead to. You spoke about leverage, leverage that is extended to China's proxy network? And do you see that as viable as anything we have any sort of evidence for?

And if not, what is the likelihood of that sort of transmission and that sort of relationship?

>> Matthew Johnson: So I think on Russia, that is the million dollar question, or at least it would be a serious indicator of integration between those two countries if we were seeing even freer exchange information resources.

I only work with open source material, so I think that may be another kind of challenge to answering that question with any degree of precision. What we do know is during, sorry, she is China's defense ministers visit to Moscow. This is in March or April. The readouts basically indicated that the two countries had agreed to step up their military cooperation.

And so what that means for information exchange and other integration is a hard question to answer. But the proposal was that it increase in terms of other instances of cooperation. I think actually the Middle east is a really interesting one and a lot of different and very sensitive trajectories there.

But Chinese companies, data rich Chinese companies are working with sort of interesting hybrid entities like G42 to create new sort of like platforms for sharing and using, ostensibly for commercial purposes, data. And I think those are worth looking into more seriously. It sounds like people are beginning to ask these questions.

But, yeah, the strategies have actually, earlier point been around for a long time, but they are going global. They're supercharged by newer forms of technology. And the players involved now are definitely more than just China and Russia would combination goes without saying. And that, frankly, seems to be where the direction is going.

 

>> Glenn Tiffert: I wanna thank the panelists that for a really rich discussion. It's always good when we have a little bit of friction and sparks fly up, because if everyone agrees, and clearly we haven't thought of something, so. And I wanna thank all of you for joining us. We're gonna have a little reception afterwards with some wine, cheese, and we hope the conversation will continue.

Again, thanks.