Thursday, March 31, 2011
Tuesday, March 23, 2010
The Meaning of Google's Exit from China
Google announced today it will close its China-based search engine, redirect users to an uncensored site based in Hong Kong, and pull out its flagship business in response to cyber attacks by China-based hackers. Even though Google will shut down its local search engine, it will maintain some businesses in China. I have been thinking about the significance of this episode. I think it has implications at least for Google, China, and the international system. Here are few thoughts on each.
I have two themes to convey:
1. Openness is critical to economic development and global influence. My view here based on hundreds interviews I have conducted over the past six years in East Asia as part of an ongoing research project on the future of Asia.
2. We will increasingly see a future of convergence and negotiation in the international system as power gaps between states shrink. My view is based on an event series I have been running at Carnegie Council that started at the Nixon Center in 2007 that we call the "Rise of the Rest" after Fareed Zakaria's expression to describe what I see as biggest question in international relations of our time: What does the rise of China and other emerging countries mean for international norms and power?
1. What it means for Google and other companies
Google has opened up the range of options for companies operating in morally questionable environments.
From Google's perspective, being in China was a trade off. It was a question of doing some evil in order to do some good and make some money. They put it on a scale and decided that the amount of good it could do in China was worth it. That is no longer the case. During my trip to China last winter, everyone, including Chinese, complained about corruption, arrogance, fakery, and a lack of trust in that society. The common global business question about China (how do we get in?) has now been turned upside down (is China worth it?). Google's move has expanded the debate. Meanwhile, U.S. Chamber of Commerce's Myron Brilliant said this week that the "wolves can no longer be kept at bay:" U.S. companies will begin to push for retaliation against mercantilist industrial policies in China. It is no longer a given that you have to be in China to succeed. Companies and people can take into account ethical implications of their actions.
Google founder Sergey Brin has been the moral compass of Google. Drawing from his experience growing up in the Soviet Union, he has never been comfortable with censorship. He recently said that to him it wasn’t so much important whether the Chinese government was involved with the cyber attacks on Google. His point was that the Chinese government and the PLA have tens of millions of people in it. So even if there were a Chinese government agent behind this, it might represent "a fragment of policy." China's government is so big, you can't hang it on the government. But that is a problem: who is accountable? Are there rogues in the government? If so, can other countries safely trust this country?
Brin has said in a recent public speech "We from the outside provided notification when the local laws prevented us from showing information, and the local competitors followed suit in that respect. So I feel like our entry made a big difference. But things started going downhill, especially after the Olympics. And there's been a lot more blocking going on since then. Also our other sites, YouTube and whatnot, have been blocked. And so the situation really took a turn for the worse."
Brin and co-founder Larry Page have touted Google's ability to spread democracy through access to information. "At its best, Google is data-driven with an ethical trump card," says Larry Brilliant, who headed Google's philanthropy. Brin gives credit to Northrop Grumman, whose data were stolen about the F-35 fighter, for coming forward and helping with Google's investigation. He encouraged more companies to come forward.
My point is Google's mission and culture go beyond profits.
No one knows precisely how extensive the cyber attacks were but the FBI, Pentagon, and just about every single serious China watcher has been talking about China's cyber attacks for a long time. The nature of US-China relations and vulnerabilities is changing; it makes previous flare ups, for example over Hainan island, look quaint. The gravity has grown over the past year and culminated in December when more than 20 companies were attacked. It is very serious. Human rights organizations have used Gmail to communicate with people in China. If Gmail were compromised it would literally put people's lives in jeopardy.
2. What it means for China
This story shows a bad turn for China in terms of moral leadership in the world and economic development at home.
Can the Chinese government censor information and foster growth? Fareed Zakaria calls that the trillion-dollar question. So far China has been successful at embracing markets while maintaining a controlled political system. I share his view that that this system cannot last. China is still in the early stages of modernization. But it is it's difficult to imagine China being "a truly innovative country at the cutting edge of the information age, of global economics, if it has all these constraints on information, all this political control on human-to-human contact, which is what the next wave of the information age is all about."
Can China be a world leader that is admired, imitated and that shapes the global system and global values? Again I agree with Zakaria's doubts that "an insular, inward-looking China that maintains tight political control over information and human contact will end up being the country that becomes the model for the world."
In essence, China's stability right now depends on an ultimately self-defeating strategy. Both for its own advancement and for its soft power and influence in the world, China will eventually need to open up, which will create a new set of risks. Ma Yuanye, a 55-year-old biologist in Kunming in southwest China, was quoted by Washington Post as saying, "Without Google, our academic research will be seriously affected. If Google is blocked, we will see nothing but darkness."
According to the interviews I conducted last winter in China, one freedom is seen as the most crucial to economic development. That's freedom of speech. It is the only way Chinese society, companies, government, etc. can tackle its rampant corruption problem, which will impede the advancement of China. It is essential for the efficient use of capital, scientific development, effective market functions, fair trade, sound diplomatic relations, and intellectual property protection. Without freedoms or the provision of public goods, the China brand will remain weak.
Some may argue that information censorship keeps political unrest under control. To the contrary, without representational democracy, Chinese society is searching for some kind of valve to release its pressure and frustrations—over corruption, jobs, deadly product and building safety problems, pollution, and land rights. Right now without freedom of speech, the balloon is being squeezed into Wild West internet forums in which people spread rumors and gossip. The country would benefit from a professionalized media sector with incentives to break stories freely. We are seeing the emergence of citizen, online justice: So called human-flesh hunting, cyber-posses exacting justice on their own.
Comparing China today to Soviet-era Eastern Europe, Rebecca MacKinnon put it, "China's censored environment makes it easier for the Chinese government to lie to its people, steal from them, turn a blind eye when they are poisoned with tainted foodstuffs, and cover up their children's deaths due to substandard building codes."
One of the biggest questions of our time will be how we make the inevitable compromises in global business and international affairs. I see a convergence of ideas and moral values. The Chinese are taking some of what is good from the West and rejecting other things. The West might be able to take some things that are good in China. We have to assess the merit and ethics of all decisions and stick to what we believe is right because what is right is also a practical matter. In the long run, I feel China will come to that conclusion as well. It is a business concern, too. Another release valve in Chinese society can be people's relationship and connection with companies. Visits to China have suggested to me that building an ethical, trusted brand in the Chinese market would be a huge opportunity. Worldwide, people admire China, but it is shallow compared to the admiration they feel for the United States and its institutions, rule of law, openness, etc.
I would like to propose something provocative. It's not a precise analogy but without free speech, will China suffer the stagnation of the USSR? Bad information, drying up of cheap labor, and decreasing marginal productivity gains led to USSR economic stagnation in the 1980s. Can China's market make right choices without a free press? We already see non-performing loans, a potential property bubble, and labor shortages and wage rises. Similarities in China and USSR include: Drying up surplus labor, centrally planned/managed economies, farming to urban industrialization, lack of innovation, and poor information. Side effects of censorship include wasted resources (as Natan Sharansky has argued), limited market power (inefficient capital use, corruption, etc), squeezed discourse into "human flesh hunters," and rumor. Without free press and open society, limitations abound.
3. What it means for the international system?
Some have described today's world as multi-polar or comprising a West and a Rest or two "worlds." I prefer Zakaria's "the rise of the rest." Given that global manufacturing is centered in China, the country will have more opportunities to build up its technology control capacity. It is also using industrial policy to encourage home-grown technology, pushing out opportunities for foreign companies. One question in my mind is whether we will see an increasing gap between two "worlds" with competing norms—between emerging markets or and rich countries or between state capitalist countries and free market democracies.
China scholar Harry Harding sees the world as an embryonic global community with two metaphorical political parties. One led by the United States as the elitist reform party that promotes democracy and self determination. The other led by China as the populist conservative party that promotes stability, harmony, and order in domestic systems. One wants democracy at the national level and hegemony at the international level while the other wants democracy at the international level and hegemony at the national level.
I see the Google story illustrating what I see as the likeliest resolution of these tensions in international affairs between these two worlds: a convergence of norms, governance, and practices. After two months of negotiations, Google will maintain some business in China, and other American companies such as Bing and Twitter will seek to gain market share in China. Similarly, we will see convergence and negotiation rather than dictates on issues like climate change, UNSC, Iran's nuclear program, corporate governance, and World Bank and IMF governance. This week, the Japanese government conceded to give technological data to Chinese government purchases of Japanese high tech products in a compromise. Cooperation will come from this process and an acknowledgment of shared interests. Looking at China's refusal to budge on censorship, what's certain is China won't be lectured to or bossed around--sometimes to its own detriment.
As for the United States, its strength over competitors remains its openness. Thomas Friedman on Saturday wrote about the 2010 Intel Science Talent Search, which honors the top math and science high school students in America. Most finalists hailed from immigrant families, largely from Asia. Alice Wei Zhao of a Wisconsin high school, who served as a spokeswoman of the finalists told the audience: “Don’t sweat about the problems our generation will have to deal with. Believe me, our future is in good hands.” (As long as we remain open.)
Thursday, January 28, 2010
With China Rising, Moral Gaps Abound
Few people should have a regular column. I am not naming any names. But Newsweek's Fareed Zakaria is one of the handful of people who are smart, insightful, and original enough to deserve one. For instance, Zakaria rightly pinpointed "what is really at stake" in the recent Google vs. China episode. As we have argued here and Harry Harding has argued in Policy Innovations, it is about shaping global norms, or ethics. As he put in his Newsweek column, here is how Zakaria put it in CNN Opinion:
So far China has been remarkably successful at maintaining a system that has embraced markets, but also maintained a very controlled political system. My own view is that that cannot last forever, but that China is still in the early stages of modernization, and it is quite possible that it will be able to continue doing this for several decades. But I think it's very difficult to imagine China being a truly innovative country at the cutting edge of the information age, of global economics, if it has all these constraints on information, all this political control on human-to-human contact, which is what the next wave of the information age is all about. Ultimately the question is: Can China be a world leader that is admired, imitated and that shapes the global system and global values? There I have my doubts that an insular, inward-looking China that maintains tight political control over information and human contact will end up being the country that becomes the model for the world.
This is precisely what I heard last month during my month-long Asia trip, which took me to Singapore, Tokyo, Yokohama, Shanghai, and Nanjing. China's lack of openness broadly speaking is having a negative impact on its development. Specifically, the lack of free press and free expression is inhibiting the country's ability to tackle corruption and spur innovation. These ethical matters are not optional for civilizational advancement; they are essential for China to make the next leap, to be seen truly as a model, to emanate ideas, culture, brands, and enterprises that the world will seek.
In the coming years, assuming China's economy remains stable, the big picture question will be: How will China influence global norms?
As this expansive New York Times article put it, cataloging a decade's worth of China issues:
When the United States was snapping at the heels of the British empire, the global hegemon of the early 20th century, the situation caused plenty of friction, even though both countries spoke the same language, shared similar cultures and were liberal democracies. China, in contrast, is a Confucian- Communist-capitalist hybrid under the umbrella of a one-party state that has so far resisted giving greater political freedom to a growing middle class. Now its ascendancy is about to set off what many officials and experts see as a backlash on both sides of the Pacific.
My guess is that China's influence on the world will result in a convergence of norms. More equality among nations at the global level and eventually more equality among people at home in non-free countries like China. The Google episode in China seems to prove my point: Companies like Google and countries will seek compromise. As relative power equalizes between companies and countries, it will be a process of real negotiation. The alternative is conflict or even disaster.
During my visit to China last month, I presented to a Chinese university several of the ethical gaps I see emerging between China, the United States, poor countries, and the rest of the world in the climate change arena. These gaps, in my mind, will make the climate change mitigation and adaption process difficult.
- The countries least responsible for climate change are the most vulnerable to its effects
- Emerging economies, such as China and India, no longer represent the interests of the poorest and most vulnerable, which seek immediate solutions, and are using the poor as a shield
- The pace of the international political process of negotiation in Copenhagen (and in Mexico City this November) does not match the scientific urgency of climate change
- Most of the countries that will most need to adapt to climate change do not have the political or budgetary capacity to place adaptation in their spending priorities
- Similarly, the security implications of flooding, droughts, and cyclones are not being considered by the countries most vulnerable to extremism and militants who could take advantage of disasters
- The right to "dirty" development and poverty relief is in opposition to the devastating consequences of climate change
- Exiting the dirty development path through clean tech can run up against the protection of intellectual property rights on technology
- The benefits accrued to previous generations by polluting contrast with the current conditions in poor countries
- Nuclear energy promulgation bumps up against the security interests of nuclear nonproliferation
- Central government goals of emissions reductions can oppose the goals of local governments, which are concerned about job creation or are plagued by local corruption and vested interests
- A global ethic on climate change therefore is needed since "finger pointing" will likely derail climate change negotiations yet "naming and shaming" is expected to be the likely enforcement mechanism
As scholar Samuel Fankhauser described in his Dec. 7, 2009 article "If it warms up, who's going to pay?" it may be better to consider adaptation support as "a way to show solidarity, to fairly deal with a shared challenge. The strong should help out the weak."
Photo by vasilken.
Sunday, January 17, 2010
Google's Rallying Cry in China
I was just interviewed with Daniel Gross by Newsweek On Air about Google's announcement that it may leave China due to hacking of Gmail accounts and censorship in China. Here are my comments from the interview today.
How essential do you see greater freedom to Chinese economic development, and how long can they continue their current influence on world markets without it?
One freedom is perhaps the most crucial to economic development. That's freedom of speech. It is the only way Chinese society, companies, government, etc. can tackle its rampant corruption problem, which will impede the advancement of China. It is essential for the efficient use of capital, scientific development, effective market functions, fair trade, sound diplomatic relations, intellectual property protection. Without freedoms or the provision of public goods, the China brand will remain weak.
Given that global manufacturing is centered in China, the country will have more opportunities to build up its technology control capacity. One question in my mind is whether we will see an increasing gap between two "worlds" with competing norms—between emerging markets and rich countries or between state capitalist countries and free market democracies.
What about the argument that without tight controls the pent up aspirations of China's 1.3 BILLION people could cause chaos? Is it ethical to stir that pot?
To the contrary, without representational democracy, Chinese society is searching for some kind of valve to release its pressure and frustrations—over corruption, product safety scandals, pollution, land rights. Right now without freedom of speech, the balloon is being squeezed into Wild West internet forums in which people spread rumors and gossip. The country would benefit from a professionalized media sector with incentives to break stories freely.
Even Americans who don't care much about internet freedom in China are worried about Chinese cyber-attacks on U.S. companies and the government. How extensive is it and what are they after?
No one knows but the FBI, Pentagon, and just about every single serious China hand has been talking about China's cyber attacks for a long time. The nature of US-China relations and vulnerabilities is changing; it makes previous flare ups, for example over Hainan island, look quaint. The gravity has grown over the past year and culminated in December when more than 20 companies were attacked. It is very serious. Human rights organizations have used Gmail to communicate with people in China. If Gmail were compromised it would literally put people's lives in jeopardy.
Leaving aside the cynical view of Google's move, is there a real ethical question about whether that particular company's presence in China—even if complicit with Chinese censorship—helps spread democratic values, slowly to be sure?
From Google's perspective, it was a trade off. How much evil would it have to do in order to do some good and make money. They put it on a scale and decided that the amount of good it could do in China was worth it. That is no longer the case. During my last trip to China last month, everyone, including Chinese, complained about corruption, arrogance, fakery, and a lack of trust in that society.
The question has now been turned upside down: Is China worth it? I think the biggest effect of Google's move is that it will expand the debate and increase the range of options. It is no longer a given that you have to be in China to succeed. Companies and people can now think in a broader framework that takes into account ethical implications.
In a panel discussion at the Carnegie Council last week, Ian Bremmer of Eurasia Group—a frequent guest on this show—said a major ethical challenge for many companies and Western governments will mirror Google's—how to co-exist with China despite very different value systems, respecting theirs and our own. How do we best approach making those inevitable compromises?
That is one of the biggest questions of our time. I see a convergence of ideas and moral values. The Chinese are taking some of what is good from the West. The West might be able to take some things that are good in China. The answer is that we have to assess the merit and ethics of all decisions and stick to what we believe is right. What is right is also practical. In the long run, I feel China will come to that conclusion as well. It is a business concern, too. Another release valve in Chinese society can be people's relationship and connection with companies. Visits to China have suggested to me that building an ethical, trusted brand in the Chinese market would be a huge opportunity.
Photo by gwydionwilliams.
Friday, October 31, 2008
Digital Social Responsibility Panel at Japan Society
It has been an eventful week. On Wednesday, I participated in the Japan Society's panel on Digital Social Responsibility: Search for a Sound, Responsible Information Society with Charla Griffy-Brown of Pepperdine, Jun Kurihara of Harvard, and Harriet Pearson of IBM. This conference could not have been better timed: It took place hours after Google, Yahoo, and Microsoft agreed to new guidelines that would aim to protect human rights, privacy, and free expression. From the Scientific American:
The three software giants today (Oct. 29) announced creation of the Global Network Initiative designed to persuade oppressive governments to allow their citizens to freely express opinions, via the Web in particular, without fear of
retribution.
Participating companies must agree to "respect and protect the freedom of expression rights of their users when confronted with government demands, laws and regulations to suppress freedom of expression, remove content or otherwise limit access to information and ideas in a manner inconsistent with internationally recognized laws and standards," says the new group's guidelines.
The guidelines were a response to criticism from NGOs about Internet companies cooperating with the Chinese Government. From InformationWeek:
Yahoo helped launch the initiative after becoming one of several technology companies criticized for how they deal with restrictions on speech in foreign countries. Yahoo was accused of giving the Chinese government information about users that led to the jailing of dissidents. Google has been criticized for filtering search results to comply with demands from the Chinese government. MSN and Yahoo also filter search results to comply with Chinese government
restrictions...
GNI members said they commit to protect freedom of expression and privacy, partner with others for collective governance and accountability, and spread their objectives around the globe. They agreed to require governments to put information requests in writing and to interpret those requests as narrowly as possible.
As expected, there is already some skepticism about the initiative. From SA again:
Don't expect any radical chances results any time soon: companies joining the
initiative (at a cost of $100,000) have two years from the time they sign on to prove they're following the guidelines. It is unclear, however, the consequences a company faces if they join the initiative but fail to meet these guidelines.
1. A "ubiquitous network society" or "collective intelligence" is emerging from the Internet and Web 2.0, allowing for better and quicker response to crises and problems. The use of crowd sourcing is one such example. With so much information out there, will the global economy begin to put a higher premium on other skills, such as empathy? (BusinessWeek has made this argument, too.)
2. The Web is allowing companies and operations to move from an international model to a multinational model to a truly global model in which data are processed in multiple places, through cloud computing, for example. As John Ruggie mentioned at the Carnegie Council this week, the speed and scope of business has surpassed traditional governing organizations like states. How do we keep up
3. Web 2.0 can help mitigate risk (as well as create new risks) in many areas, including supply chain, brand, and public relations. Lines between competition and cooperation are blurred as are those between friends and enemies. How do we better facilitate these interactions, for example to boost the "integrity of the crowds," as I would put it. This point was brought up by Andrew Zolli at our Web 2.0 panel at the Carnegie Council.
4. Finally, ethical leadership or "courageous leadership," as Kurihara put it, will be needed to resolve the paradoxes and ethical dilemmas posed by Web 2.0. Zolli made a similar point at our panel by saying that ethical leadership is the fastest mover affecting brand value. The others are about stewardship--social and environmental.
(Photo collage from Japan Society of Kurihara, Griffy-Brown, Pearson, and me.)
Tuesday, October 30, 2007
Making the Internet Connection
"Innovation is possible literally anywhere that the internet is in operation," says Vint Cerf, Google's "Chief Internet Evangelist," in an interview with Andrew Edgecliff-Johnson of the Financial Times. Of the 6.5 billion people in the world, however, only 1 billion have access to and use of the internet. What does that say about the untapped potential for global innovation?
Cert highlights some of the challenges to extending internet connectivity to greater numbers of people around the globe. These range from infrastructure and capacity building (such as electricity and training) to security and privacy concerns. "If we ever move into a regime where the providers of basic internet service have any control over what users can put on the network as an application, then I see a potential hazard to innovation. At the present time, this is still a very open system."
As Evan O'Neil points out elsewhere, there are ethical issues related to the process of extending connectivity that may not be immediately apparent. Getting laptops into the developing world is a noble venture. But what if development is not the only motive?
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