Techno-Nationalism and Diplomacy: the US-China Race to Reshape Alliances, Institutions and Standards

OCTOBER 2020

Techno-nationalism and diplomacy: The US-China race to reshape alliances, institutions and standards

BY ALEX CAPRI RESEARCH FELLOW, HINRICH FOUNDATION Contents

INTRODUCTION 4

OVERVIEW OF REPORT 7

I. THE US-EU TRANSATLANTIC ALLIANCE AND CHINA 9 US-EU disagreements 9 EU digital regulations 9 Spotlight: The European Court of Justice’s decision on the Privacy Shield System 10 Confronting Silicon Valley 11 Overview of EU-China relationship 12 Confronting techno-authoritarianism 13 Chinese surveillance AI 14 Spotlight: The spread of techno-authoritarianism 15 Clashing values and diverging geopolitics 16 Case study: China’s 17+1 strategy in Europe 17 Europe’s pivot to digital democracy 18 New international technology alliances and AI partnerships 19 US-EU technology partnerships 19 Other factors driving technology alliances 20 Spotlight: European sovereign technology fund 21 US “repair & prepare” technology initiatives 21

II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS 22 NATO 22 Hybrid warfare 22 Spotlight: Hybrid warfare and the media 23 NATO cyber defense response 24 NATO Article 5 Collective Defense Commitments 25 The techno-diplomatic challenges of cyber warfare 26 Spotlight: “China Standards 2035” 27 Wassenaar Arrangement: Techno-diplomacy and export controls 29 Wassenaar’s Cold War origins 30 Spotlight: Semiconductors and Wassenaar 32

2 Contents

III. TECHNO-DIPLOMACY’S IMPACT ON INTERNATIONAL RULES FRAMEWORKS 34 Can the WTO be revamped and rehabilitated? 34 China as a digital rules obstructionist 34 Coalitions of the willing 35 Free trade agreements with digital rules and frameworks 35 Spotlight: The Digital Economy Partnership Agreement 37

RESEARCHER BIO: ALEX CAPRI 38

ENDNOTES 39

LIST OF FIGURES Figure 1 – Global use of Chinese AI surveillance technology 14 Figure 2 – Confucius Institutes in the “17+1” countries 17 Figure 3 - Digital democracies equal approximately 50% of global GDP (PPP basis) 19 Figure 4 – Distribution of cyber-attacks in selected global regions during 1st half 2020, by category 24 Figure 5 – Wassenaar member countries & US techno-diplomacy semiconductor export licensing 29 Figure 6 – Share of the global semiconductor industry by country in 2018 and 2019 32

3 Introduction

American diplomats have been export controls, these developments persuading other nations to block have put Beijing’s diplomats in crisis Chinese technology from their digital management mode. In August 2020, networks. for example, shortly after Washington’s announcement of the Clean Network In August 2020, Washington launched program, Beijing dispatched foreign the Clean Networks program, an minister Wang Yi and other diplomats initiative that seeks to expunge on a five-nation European tour to Chinese technology from carrier assuage a growing China backlash. networks, data storage, mobile apps, cloud networks and undersea cables.1 Beijing’s imposition of the national security law in Hong Kong as well These actions have created an as its internment of ethnic Muslim existential crisis for Chinese companies, minorities in China’s western Xinjiang which have come under fire as they autonomous region were just several are increasingly viewed as de facto of the latest provocations causing proxies of the Chinese Communist European policy makers to rethink Party (CCP). In the broader context of a relations with China. US-China technology cold war, Chinese companies’ linkage to Beijing has Thus, for Beijing, it has become relegated them to the status of malign increasingly difficult to find sympathy actors. in Europe regarding Washington’s campaign to crush Huawei.4 Four Techno-nationalism of the five countries visited by the Chinese foreign minister were linked The Clean Network program is a The Clean Network Program is a to Huawei: the Netherlands (to try and reflection oftechno-nationalism : reflection of techno-nationalism. obtain access to vital semiconductor mercantilist-like behavior that links Techno-diplomacy is the realpolitik manufacturing equipment) and France, tech innovation and enterprise directly behavior of advancing a nation’s Italy and Germany (to persuade them to the national security, economic techno-nationalist agenda. not to block Huawei 5G technology prosperity and social stability of a from their telecoms networks). nation. 2 Shortly after Mr Wang’s five-nation According to the US State Department, European tour, Washington dealt thirty countries have signed up to this another blow to China’s technology program, including the UK – which, ambitions when it announced export itself, is calling for a 5G alliance of ten restrictions on Semiconductor democratic countries to provide an Manufacturing International Corp alternative to Huawei, the Chinese (SMIC), China’s most advanced micro- telecoms equipment maker. These ten chip company.5 countries include India, Australia, South Korea, France, Canada, Germany, Japan, Italy, the US, and the UK.3 The rise of techno-diplomacy Techno-diplomacy is the realpolitik- When viewed together with behavior of advancing a nation’s Washington’s ongoing campaign of techno-nationalist agenda through

4 INTRODUCTION

enticements, partnerships, and Techno-diplomacy between nations is concessions, as well as through the motivated by four underlying themes. threat of negative outcomes. Techno- diplomacy plays out across a range 1. Digital democracy versus of different forums and institutions, techno-authoritarianism including, increasingly, on social The linkage of technology to media platforms and other forms of fundamental ideological values has digital media. This behavior is rooted become a defining issue in the in realpolitik practices, but techno- global technology landscape. The diplomacy is tied to core ideological authoritarian use of data and values, which will be discussed artificial intelligence (AI) to conduct throughout this study. censorship, surveillance and mass monitoring of populations is in direct Techno-diplomacy will play an In September 2020, China’s Ministry of conflict with democratic standards increasingly important role in Foreign Affairs announced the Global regarding privacy and freedom of advancing the strategic interests, Initiative on Data Security (GIDS), expression. values and policies of China. a project aimed at defining global standards for data security. Its real These contrasts will accelerate purpose, however, could be construed decoupling, fragmentation and as an attempt to deter others from realignment throughout the digital signing up to Washington’s Clean economy. Governments will devote Network program. increasing amounts of time and resources to shaping public opinion Under the GIDS, China calls on all regarding these values. countries to handle data security in a “comprehensive, objective and 2. The emergence of international evidence-based manner.”6 The initiative technology alliances and also denounced “mass surveillance partnerships against other states” and condemned Like-minded democratic nations the use of “backdoors in products and will coalesce around the formation services to illegally obtain users’ data…” of public-private partnerships and alliances dealing with AI ethics, More importantly, however, Beijing’s cyber security and defense, R&D and high-profile rollout of the GIDS innovation. Techno-diplomacy will underscores the role that techno- increase government-to-government diplomacy will play in the winning engagement as policy makers of hearts and minds during the next increasingly look to draw upon phases of the US-China technology war. common values and leverage each other’s markets, resources, and firms. Underlying themes of techno- diplomacy Techno-diplomacy will see the US and European Union (EU) set aside The linkage of technology to As the US-China technology cold differences over tariffs, defense costs fundamental ideological values has war escalates, techno-diplomacy will and tech regulations to cooperate become a defining issue in the global play an increasingly important role and refocus on the long-standing technology landscape. in advancing the strategic interests, transatlantic relationship. Key values and policies of China, the priorities will include addressing US, Europe, and a host of other Beijing’s techno-nationalist international stake holders.

5 INTRODUCTION

and mercantilist practices. Other 4. New international institutions democracies, including India and and rules frameworks Japan, will join these alliances and As the world undergoes a partnerships. fundamental realignment around technology standards and Although the EU will maintain values, existing institutions must Rules frameworks must be updated substantial trade ties with China, accommodate these changes. Rules to define and enforce appropriate Brussels is rebalancing its frameworks must be updated governance standards. relationship with Beijing – treating to define and enforce appropriate it as a systemic rival7 which will governance standards involving result in further “strategic trade in data and e-commerce, for decoupling” from Beijing. Thus, example. Beijing’s efforts to pull the EU closer into its orbit will become Regarding the EU-US transatlantic less successful, particularly in light alliance, NATO will be revamped to of China’s increased authoritarian address hybrid warfare threats from leanings. China, Russia and other state and non-state actors. Regarding the 3. The spread of hybrid warfare need for new rules frameworks, Hybrid warfare involves a mix countries will explore alternatives to of economic, cyber, diplomatic, the World Trade Organization (WTO), information and security related which is struggling to address, actions, all of which are designed to among other things, today’s disrupt or disable an opponent challenges regarding digital trade, without engaging in open hostilities. e-commerce, and Chinese mercantilism. Balancing the appropriate amount of Since the outbreak of the global offensive cyber-military tactics with Covid-19 pandemic, intelligence Alternatives to the WTO will other “softer” approaches will become agencies in democratic countries include bilateral digital trade a core focus of techno-diplomacy. report an increase in Chinese agreements, digital carve-outs hybrid warfare activity, particularly into larger multilateral free trade regarding the use of digital media. agreements – such as the CPTPP – or As Beijing’s influence, censorship even the creation of new multilateral and disinformation campaigns frameworks involving like-minded become more widespread, countries members. will begin to adopt new regulations – an outcome which could see major As it prosecutes its techno- ramifications for the media industry, nationalist objectives, for example, particularly as China looks to the US will look to influence increase the presence of its state- multilateral alliances such as backed TV entities in local markets, the Wassenaar Arrangement8, the such as its expansion of CGTV and international voluntary framework other networks in the EU. that includes the EU and other member countries, which seeks Balancing the appropriate amount to control the dispersal of “dual of offensive cyber-military tactics use” technologies, such as with other “softer” approaches, semiconductors. therefore will become a core focus of techno-diplomacy.

6 Overview of report

This study is the third in a series of the partnership has sunk to historically Hinrich Foundation essays on US- low levels of trust. China techno-nationalism, authored by Research Fellow, Alex Capri. We also examine Europe’s current relationship with China and reveal that, The first essay in this series – which despite deep trade ties, China’s recent followed a ground breaking study on geopolitical and techno-nationalist semiconductors – covered US-China behavior has exposed deep fissures strategic decoupling and focused on in the Sino-European relationship. As the re-shoring and ring-fencing of a deep dive, we look at how China’s critical supply chains as well as on so-called 17+1 platform in Eastern “in-China-for-China” planning and risk Europe has backfired – amplified by scenarios. occurrences in social media and the digital landscape, in general. The second essay focused on the US- China techno-nationalist competition Next, we examine how the exportation and the pursuit of the “innovation of China’s model of techno- Techno-diplomacy will drive important advantage.” It examined the underlying authoritarianism around the world has outcomes that lead to the creation of dynamics and tensions between accelerated the rebalancing of Europe’s new institutions and rule frameworks. markets, non-state actors and relationship with China and motivated governments. its pivot to the values of digital democracy. This study looks at how the above developments are compelling In the final part of Section I, we do a governments to pursue strategic snapshot of “Transatlantic Alliance 2.0,” alliances and partnerships, and how which features new partnerships and inherent ideological differences alliances around AI and standards that between the Chinese system and those promote digital democracy. of open market, liberal democracies will influence outcomes. II. Impact of techno-diplomacy on international institutions Techno-diplomacy, therefore, will drive This section does a deep dive into the important outcomes that lead to the revamping of NATO and addresses creation of new institutions and rules how new technology-driven threats frameworks, or produce outcomes such as hybrid warfare and cyber- that profoundly influence existing security are spurring new levels of institutions. teamwork between the EU and the US. We examine how NATO’s mission This report is comprised of three is increasingly being re-oriented sections: to address a rising technology powerhouse, China, and what this I. The US-EU transatlantic alliance means for the world. and China In this first section, the focus is on the Washington’s proactive cyber defense current US-EU state of affairs and why posture is being embraced by NATO,

7 OVERVIEW OF THIS STUDY

Must new rules frameworks be and we look at how techno-diplomacy III. Techno-diplomacy's impact on created exclusively for open market, will be required to manage challenges international rules frameworks liberal democracies? regarding NATO’s Cyber Pledge and In this final section, we examine the Article 5. impact that techno-nationalism and related diplomatic developments Next, we examine how China has are having on multilateral rules been working to influence multilateral frameworks, such as the World Trade institutions such as the International Organization (WTO). We attempt Telecommunication Union (ITU), the to answer the question whether International Standards Organization new frameworks must be created (ISO) and others to adopt Chinese exclusively for open market, liberal standards for both hard and soft democracies. (virtual) technologies, and how the US and its allies are adopting techno- Finally, we discuss how digital trade diplomatic countermeasures. and cross-border data flows require new kinds of rules and standards, and Finally, we do a deep dive into the we explore how new rules regarding Wassenaar Arrangement, another technology standards and ethics are historical Cold War multilateral treaty, being baked into multilateral FTAs, and examine how the US is using its bilateral FTAs and “digital-only” influence within the alliance to achieve agreements. a more coordinated effort regarding export controls on semiconductor and other “dual use” technology.

8 I. The US-EU transatlantic alliance and China

Europeans and Americans have US-EU disagreements the bedrock of the transatlantic differing views when it comes to the US-EU relations are at their most security alliance since 1947. The regulation and taxation of the digital disharmonious juncture since the importance of NATO, as a cyber- landscape. creation of the Bretton Woods oriented institution, will be Accords9, near the end of the discussed in more detail later in this Second World War. At that time, report. America and more than forty of its allies came together to plan a new EU digital regulations rules-based order. This resulted In addition to grappling with the in the creation of multilateral trade disputes, the Europeans and institutions such as the World Bank, Americans have differing views the International Monetary Fund when it comes to the regulation and (IMF), and, sometime later, the taxation of the digital landscape. General Agreement on Tariffs and Trade (GATT) – the forerunner of With the passage of General Data today’s embattled WTO. Protection Regulation (GDPR) legislation, the EU has taken Since the 2016 election of US an assertive posture regarding President Donald Trump – who ran citizen data privacy rights. These on a platform of populism and anti- regulations, which apply to the globalization – his administration private data of EU citizens, mandate has targeted the EU in a series that companies must obtain an EU 10 of Section 301 investigations citizen’s consent before using or and trade disputes that have selling data, and must also expunge eroded trust and tested goodwill any private data from their systems amongst longtime friends. These at the request of an EU citizen. The GDPR has disrupted the business investigations have included models of the large American digital tariff increases on more than 100 The GDPR has disrupted the business companies and data capitalism. categories of European goods, for models of the large American digital example. companies and data capitalism, in general. No longer can data be sent Beyond tariffs, in 2018, the US across borders without appropriate President went so far as to question measures in place to scrub, remove the value of NATO, which has been or block the sharing of private data.

9 SPOTLIGHT The European Court of Justice’s decision on the Privacy Shield System

The Court of Justice of the European Union headquarters in Luxembourg. (Source: Gwenael Piaser/Flickr)

The EU is breaking new ground with In September 2020, the need for As a result of the ECJ ruling, US anti-trust legislation, much of it constructive EU-US techno-diplomacy companies, like other foreign aimed at Silicon Valley’s dominant became more acute after the European companies, are required to sign companies. Court of Justice (ECJ) struck down “standard contractual clauses” (SCC) – “Data Shield,” a system that allowed US non-negotiable legal contracts drafted companies to effectively comply with by European authorities. the GDPR standards when transferring the data of EU citizens outside the But if US laws regarding law EU to the US. Under Data Shield, US enforcement, national security and companies could transfer data as long public interest override Europe’s new as they had “appropriate safeguards” in data privacy standards, as defined in place, something that was rather vague Europe’s SCC contracts, large amounts and hard to ascertain. of transatlantic digital commerce could be blocked by the EU for non- The EU-US Privacy Shield arrangement compliance with GDPR. allowed some 5,300 US companies – most of which are small-medium US digital companies have enterprises (SMEs) or tech start-ups – commoditized personal data to the to sign up to higher privacy standards point that “surveillance capitalism,” and conduct transatlantic business.11 a term attributable to the author, Shoshana Zubof, has become common But a privacy advocate challenged the place. The challenge of data privacy, in agreement on the grounds that US general, has become a matter that will national security laws, which allow law require special attention discussions for enforcement agencies access to private regulators in both the EU and the US. citizen data and the right to perform Here, the EU has the power to influence surveillance, violate the EU’s GDPR. regulatory trends across the Atlantic.

10 SPOTLIGHT: THE EUROPEAN COURT OF JUSTICE DECISION ON THE PRIVACY SHIELD SYSTEM

The ruling by the ECJ, which followed a standards are at issue, rather than series of US Section 30112 investigations export subsidies or tit-for-tat tariffs. and the subsequent levying of higher This underscores the importance of tariffs against European goods, looks techno-diplomacy, going forward. like retaliation. In this case, privacy

Aerial view of Apple Park, the corporate headquarters of Apple Inc., located in Cupertino, California. (Source: Daniel L. Lu/Wikimedia Commons)

Confronting Silicon Valley Margrethe Vestager, the EU Commissioner for competition, has Large differences regarding digital Beyond data privacy, the EU is breaking signalled that Apple and Amazon, for trade between the US and the EU are new ground with anti-trust legislation, example, could face anti-trust measures unlikely to be resolved soon. much of it aimed at Silicon Valley’s dominant companies. for using merchant data to compete with, displace and supplant these 14 After assessing US$8 billion in fines same companies on their platforms. against Google – which have not Under new legislation, the fine could diminished Google’s stranglehold be as high as 10% of Amazon’s global on the market – the EU’s Digital revenues. Facebook, meanwhile, Services Act (DSA) is on the verge of could face fines regarding “fake news” implementing new measures: forcing standards. big tech firms to offer smaller rivals access to their data on standardized On matters of digital taxation, the EU and non-discriminatory terms.13 is pushing new boundaries that are aimed at the US tech giants as well,

11 I. THE US-EU TRANS-ATLANTIC ALLIANCE AND CHINA

with a digital services tax ranging from The EU has cooperated with China between 2% and 7.5%, depending on in ways that the US presently does the country.15 not, including G2G collaboration and research regarding the Covid-19 Despite all these differences, the pandemic,17 and, more broadly, B2B and Americans and the Europeans share G2B collaboration on climate change. common underlying democratic and By contrast, the US, under the Trump market practices when compared administration, famously pulled out to the EU’s second largest trading of the Paris Climate Accord in 2019, partner, China. Even with seemingly and has eschewed any public-private large differences regarding digital trade partnerships on the issue.18 between the US and the EU unlikely to be resolved soon, when it comes Despite strong commercial ties, to data privacy, cooperation between however, in 2019, the EU labelled China Brussels and Beijing will be even more a “systemic rival,” a reaction to China’s problematic. growing geopolitical assertiveness and expanding influence within Europe’s economic and political landscape. Overview of EU-China relationship At a time of strained US-EU relations, The Covid-19 epidemic has opened Europe’s complicated relationship with up existing fissures in the relationship China is also at a crossroads. China is which will likely become permanent. Europe’s second largest trading partner One seemingly small public relations after the US, while the EU is China’s event, in April 2020, will end up largest trading partner, and trade having big repercussions for EU-China volumes are predicted to increase in relations. At the time, Beijing allegedly the coming years. The EU is currently pressured EU civil servants to change running a trade surplus with China in the language in a report regarding the services.16 assessment of the origins and early spread of the coronavirus.

Chinese Premier Li Keqiang speaking at the EU-China Summit, 2013. (Source: Herman Van Rompuy/Flickr)

12 I. THE US-EU TRANS-ATLANTIC ALLIANCE AND CHINA

Language in the original draft China’s system of digital document stated that Beijing had used authoritarianism – in which the state both overt and covert tactics to engage relies upon hard technology, digital in “a global disinformation campaign to platforms, and data from Chinese tech deflect blame for the outbreak of the companies to engage in censorship, pandemic and improve its international surveillance and citizen control – is image.”19 Chinese diplomats allegedly fundamentally incompatible with the threatened economic reprisals if the liberal democratic model. EU published the document, and they were successful in getting the original In 2016, at the second World Internet language removed from an edited, Conference, Chinese President later publication. Xi Jinping outlined what China considered the cornerstones of internet The consensus was that the EU had governance:20 been coerced into putting commercial interests and fear of Chinese economic – Respect for cyber sovereignty reprisals ahead of its commitment – Safeguarding peace and security to civil society. This event marks – Fostering open cooperation the beginning of a fundamental – Building good order China’s system of digital reassessment on a broad range of authoritarianism is fundamentally issues which is likely to result in a The need for control and “good order” incompatible with the liberal significant adjustment of Sino-EU have been baked into Beijing’s model democratic model. relations. of techno-authoritarianism. According to a report from Freedom House, Confronting techno-authoritarianism an NGO, along with the building of telecommunication networks Three themes will define how supply and infrastructure, China has been chains, data and the internet continue cultivating the political and media elites to fragment and coalesce around in client states, and is providing training competing techno-nationalist systems: and instruction on how to manage cyberspace and citizen behavior in a – Privacy manner that mirrors Beijing’s modus – Free speech operandi.21 – Surveillance

Surveillance cameras installed in Tiananmen Square, Beijing (Source: Jack Hynes/Flickr)

13 I. THE US-EU TRANS-ATLANTIC ALLIANCE AND CHINA

176 countries are actively using AI Beijing has hosted, for example, two surveillance purposes and sixty-four technologies for surveillance purposes. week-long seminars on “Cyberspace countries are using facial recognition Management for Officials along the Belt systems. and Road Initiative” which, according to Freedom House, covers topics such as Chinese companies, including Huawei, “big data public-opinion management Hikvision and Dahua – all on the systems,” and tools for “positive energy US restricted entity list – supply AI public-opinion guidance system.”22 surveillance technology in sixty-three countries, thirty-six of which are part Chinese surveillance AI of China’s Belt and Road Initiative According to a working paper by the (BRI). Huawei, alone, is responsible for Carnegie Endowment for International providing AI surveillance technology to Peace, globally, 176 countries are at least fifty countries worldwide.23 actively using AI technologies for

Figure 1 – Global use of Chinese AI surveillance technology

Regions using Chinese AI surveillance technology

Regions using other AI surveillance technology

Countries using Chinese companies to supply their AI surveillance technology Chinese AI surveillance companies Algeria China Iraq* Mexico Rwanda* UAE* CEIEC Megvii* Huawei* Argentina Denmark Italy* Mongolia* Saudi Arabia* UK CloudWalk* SenseTime* ZTE* Armenia* Ecuador Ivory Coast Morocco* Serbia* US Dahua* Yitu* Hikvision* Australia Egypt* Japan Netherlands Singapore* Uruguay *Companies on the US Entity List Bahrain* France Kazakhstan* Nigeria South Africa* Uzbekistan*

Bangladesh* Germany Kenya* Oman* Spain Venezuela* Bolivia* Ghana Kyrgyzstan* Pakistan* Tajikistan* Zambia Botswana Hong Kong Laos* Panama* Thailand* Zimbabwe Brazil India Malaysia* Philippines* Turkey* Myanmar* Indonesia* Malta Romania* Uganda Chile Iran* Mauritius* Russia* Ukraine* Source: https://carnegieendowment.org/publications/ *Countries included in China’s Belt and Road Initiative interactive/ai-surveillance

14 SPOTLIGHT The spread of techno-authoritarianism

As Chinese technology becomes Huawei, which is also building Bolivia’s more widely used around the world, 5G network. delinking it from Beijing’s overarching value system has become increasingly Zimbabwe – In Zimbabwe, the difficult, if not impossible. A number government has partnered with of examples involving developing CloudWalk, a Chinese company, to countries have added to this view. implement a real-time surveillance system that utilizes facial recognition The Philippines – Under the technology.26 Long known for its Duterte regime, media groups oppressive rule under strongman have attended courses in China on Robert Mugabe, Zimbabwe’s new “Socialist Journalism with Chinese regime, under Emmerson Mnangagwa, Characteristics.” The Philippines has continued in the vein of has ignored US pressure to block authoritarian rule and is representative Huawei from building the country’s of how surveillance technology is being 5G networks.24 The spread of both used in less developed countries to the censorship and the repression of monitor and silence political opponents journalists in the Philippines under the and critics.27 Duterte regime has been linked directly to Beijing’s techno-authoritarian model. The African Union headquarters, Addis Ababa – In what is considered Malaysia – In Malaysia, another an early catalyst to Washington’s country that has embraced Huawei’s campaign against China technology 5G infrastructure, the police wear companies, the French newspaper, facial recognition cameras provided Le Monde, reported that a China- by Yitu, a Chinese company that built computer network, used in the makes surveillance technology, which African Union building in Addis Ababa, has been placed on the US restricted allegedly had a “backdoor” inserted entity list along with other Chinese that allowed for the direct transfer AI surveillance-tech firms such as of data to a server in Shanghai.28 The SenseTime, Megvii and HikVision on African Union building, which was the grounds that that these companies completed in 2012, was built at a cost have been complicit in human of US$200 million, and was a “gift” from rights violations against the Uighur the Chinese government. This reflected population in China’s Xinjiang province. a common practice throughout Africa, where Beijing has been building Bolivia – Authorities in Bolivia have infrastructure and public facilities deployed more than 2,500 facial such as stadiums, hospitals and roads recognition cameras as part of the in countries where it has commercial country’s BOL-110 Integrated System of and geopolitical interests. In 2017, biometric surveillance technology for some five years after the network had 25 “Citizen Security.” Surveillance tech been installed at the African Union companies like Dahua and HikVison are building, technicians noticed a peak part of a Chinese ecosystem including in data usage between midnight and

15 SPOTLIGHT: THE SPREAD OF TECHNO-AUTHORITARIANISM

2:00 am every night when the building of technology and the extension was empty. An investigation revealed of Beijing’s distinct political and that the African Union’s confidential ideological techno-nationalist data was being copied onto servers in objectives. From a European Shanghai. perspective, growing awareness of this phenomenon is accelerating its All of these examples demonstrate “rebalance” with China. a clear linkage between the use

Clashing values and diverging Hong Kong, and called for the filing of a geopolitics case against the Chinese government in 29 EU policy makers have grown As a reaction to China’s expanding the International Court of Justice. increasingly proactive in suspending model of techno-authoritarianism, EU existing EU-China initiatives. policy makers have grown increasingly The EU’s crisis of conscience over proactive in either suspending existing human rights issues has also shifted EU-China initiatives or looking to create to other more market oriented new constraints on Chinese behavior challenges: after more than seven within Europe. years of negotiations, the EU-China Comprehensive Agreement on Since the EU’s coronavirus document Investment (CAI), has been put on affair, described above, Beijing’s hold, indefinitely. EU policy makers ongoing actions regarding the have concluded that Beijing is unlikely internment and forced “education to change its practices regarding state campaigns” of ethnic Uighur Muslims subsidies, market access, technology in Xinjiang province and the imposition transfer and IP protection. the national security law in Hong Kong have galvanized EU policy makers to The EU is now fully engaged in take further actions regarding the weighing the costs and benefits of rebalancing of Sino-EU relations. having a major economic partner that is not only a “systemic rival” but a regime In June 2020, members of the European whose political values are increasing at Parliament adopted a resolution odds with EU core values. condemning China’s security law in

16 CASE STUDY China’s 17+1 strategy in Europe

Beyond techno-authoritarianism, Figure 2 – Confucius Institutes in the “17+1” countries ubiquitous digital media have amplified and exacerbated geopolitical fears FINLAND regarding a rising China. NORWAY

In August 2020, the EU’s foreign SWEDEN policy chief, Josep Borrell, accused ESTONIA ★ Beijing of employing a “divide and RUSSIA rule” tactic with its member states.

37 LATVIA One of the issues driving Mr Borrell’s CONFUCIUS ★ DENMARK assertion was China’s so-called “17+1” INSTITUTES LITHUANIA arrangement with the smaller Central ★ and Eastern European countries, many of which have been targeted BELARUS for strategic infrastructure and POLAND ★★★★★★★ investment, including the education, NETHERLANDS GERMANY telecommunications and tourism

BELGIUM sectors – all areas that would increase CZECH REPUBLIC LUXEMBOURG ★★ UKRAINE Chinese influence and political SLOVAKIA leverage. ★★★ FRANCE AUSTRIA HUNGARY MOLDOVA ★★★★★ Additionally, Chinese investments in SWITZERLAND

SLOVENIA ★ ROMANIA ports throughout Europe, including ★★★★ CROATIA ★ COSCO’s majority ownership in

BOSNIA AND SERBIA Greece’s Piraeus port, and its pressing HERZEGOVINA ★★ ★★ efforts to invest in Lithuania’s port ITALY BULGARIA ★★ MONTENEGRO ★ KOSOVO of Klaipeda, have set off alarms in European capitals. MACEDONIA ★ ALBANIA ★ Hungary, Poland, the Czech Republic GREECE ★★★ TURKEY and Slovakia have been recipients of the majority of Chinese money. Greece recently joined the platform in 2019, which is seen as an important link in Beijing’s Belt and Road Initiative.

Policy makers, thought leaders and the general public throughout the 17+1 ★ Number of Confucius Institutes in each country group have become disenchanted with Members of the 17+1 format Beijing, concluding the relationship EU 17+1 members Non-EU 17+1 members EU member states Non-EU member states has been one-sided and less about

Source: https://chinaobservers.eu/wp-content/uploads/2020/04/CHOICE_Empty-shell-no-more.pdf reciprocal trade than about advancing China’s geopolitical ambitions.

17 CASE STUDY: CHINA’S 17+1 STRATEGY IN EUROPE

Much of this discourse has played branded BRI conferences, designed to out along with allegations of promote CCP content, again, for which digital influence campaigns and the the Chinese embassy remained a silent weaponization of social media. promoter.

Some key events which have effectively Utilizing social media for political dented the 17+1 platform: influence and coercion In 2019, in Vilnius, Lithuania, a public China trade imbalances and deficits gathering in support of pro-democracy In 2018, the value of accumulated protest in Hong Kong, was met deficit with China, within the group, by a crowd of pro-Beijing counter totaled some US$75 billion.30 protesters which engaged in heckling and intimidation. The event had been Disinformation and influence organized and directed over social campaigns media by Chinese diplomats, who were In 2019, the Chinese embassy in Prague on the scene. surreptitiously financed a course at the most prestigious university in These seemingly small, inconsequential the country, the Charles University, events, when magnified on social with the aim of spreading the official media, have exacerbated broadly Chinese party narrative regarding the held negative perceptions of Beijing’s BRI – which external experts called agenda in Europe and have paved the propaganda.31 way for further rounds of geopolitical recalibration. Also included in the operation: funding for a series of Charles University

As Sino-US relations deteriorate, Europe’s pivot to digital democracy As Sino-US relations deteriorate, Washington will accelerate efforts Differences in the application of Washington will accelerate efforts to block Chinese tech firms from technology around privacy, free speech to block Chinese tech firms from expanding into overseas markets. and surveillance have driven the expanding into overseas markets, world’s democracies to collaborate in through, for example, its Clean 32 advancing common standards. The US Networks initiative. Beijing will and the EU will form the bedrock of respond by accelerating is own supply this block, which will draw in Canada, chain “de-Americanization” efforts. It Australia, New Zealand, Japan and will also try to pull Europe more closely others. India, despite a record of into its orbit and in general, drive heavy-handed treatment of internet a wedge between America and its freedoms, is tilting toward joining this historic allies. pro-democracy camp, a development that will have historic consequences But the chances of Beijing achieving for China and the world’s techno- this last objective are decreasing nationalist landscape. substantially.

18 I. THE US-EU TRANS-ATLANTIC ALLIANCE AND CHINA

New international technology two markets dominate the world’s alliances and AI partnerships innovation landscape. Furthermore, The US and the EU, together, account the majority of the world’s top for more than 30% of the world’s GDP. ranked research universities are in If Japan, the UK, South Korea, Canada, North America and the EU, in high Mexico and Australia are added, the concentrations, making the possibilities world’s leading democracies contribute of successful EU-US technology alliance more than 45% of global GDP. With very high. India included, this number jumps to more than 50% of global GDP. China is US-EU technology partnerships A series of international partnerships now at about 17% of global GDP, based A series of international partnerships have emerged with the objective of on purchasing power parity, making it and collaborative alliances have promoting democratic standards and the world’s largest economy, just barely emerged, all with the objective of 33 values around the use of technology. edging out the US. promoting democratic standards and values around the use of technology. In terms of R&D, as we detailed in a previous Hinrich Foundation study, The G7 AI Pact if the US and EU R&D investment In May of 2020, the US joined other expenditures are combined, these G7 members – Canada, France,

Figure 3 – Digital democracies equal approximately 50% of global GDP (PPP basis)

CHINA 16.4%

OTHER COUNTRIES 31.4%

INDIA JAPAN

6.7% 4.3% 1 . 8%

The US and the EU, together, account SOUTH KOREA for more than 30% of the world’s GDP. AUSTRALIA 1%

UNITED STATES World’s Region 16.3% EUROPEAN UNION AUSTRALIA SOUTH 16%KOREA OTHER COUNTRIES 1.8% UNITED KINGDOM EUROPE 2.5%

UNITED KINGDOM 2.5% ASIA CANADA CHINA MEXICO 2.1% 1.5% 16.4% NORTH AMERICA

Note: Graph not to scale EUROPEAN INDIA 6.7% UNION Source: JAPAN https://howmuch.net; https://ec.europa.eu/eurostat/documents/2995521/10868691/2-19052020-BP-EN.4.3% 16.% pdf/bb14f7f9-fc26-8aa1-60d4-7c2b509dda8e UNITED

AUSTRALIA STATES CANADA 1.5% 1%

19 I. THE US-EU TRANS-ATLANTIC ALLIANCE AND CHINA

Germany, Italy, Japan and the UK, in Other factors driving technology a technology-focused pact with the alliances purpose of studying and providing Even as the US and the EU work to recommendations to encourage the form partnerships around common creation of AI technologies that respect standards as countermeasures to privacy and civil liberties. Chinese techno-nationalism, they will pursue transatlantic techno-diplomacy The US, under the Trump on other matters, particularly to sort administration, had not been out differences over digital taxation and appreciative of the effectiveness of European anti-trust regulations against multilateral organizations, in general, the big American “FAANG” (Facebook, but the group’s objective of serving as Alphabet, Amazon, Netscape, Google) a countermeasure to China’s techno- companies. nationalist model, in particular, finally 34 Issues of data privacy and data moved the US to join the pact. Issues of data privacy and data ownership are also problematic in ownership are also problematic in today’s data capitalism model. The Global Partnership on AI (GPAI) today’s data capitalism model – or as Similar to the G7 AI Pact, the GPAI Shoshana Zuboff calls it: “surveillance is an international initiative created capitalism.”36 But these differences will by France and Canada along with not deter the EU from recalibrating its Australia, the EU, Germany, India, commercial ties with China or stop it Italy, Japan, Mexico, New Zealand, the from its pivot to the US. Republic of Korea, Singapore, Slovenia, 35 the UK and the US. As the G7 AI Pact, the GPAI and other coalitions – such as NATO’s cyber The GPAI’s mission is to guide defense organizations – evolve, they responsible development and use will tap into key trends that are driving of AI in a distinctly democratic way. today’s economic and political zeitgeist. In the same spirit of the EU’s other “progressive” agreements involving, for These include the establishment example, trade, the GPAI emphasizes: of new sovereign wealth funds to boost innovation in industries of the – Inclusion future and other initiatives designed – Diversity to protect key sectors. These “neo- – Innovation mercantilist” measures are a direct – Economic growth response to China’s state-centric model and its economic practices. While these The GPAI also seeks to instigate a measures are anathema to the laissez- series of funded public-private research faire economic mind-set – despite partnerships focused not only on AI that model having been upended by technical standards but also on privacy, decades of Beijing’s economic policies free speech, and surveillance. and trade practices – they are a necessity in today’s techno-nationalist landscape.

20 SPOTLIGHT European sovereign technology fund

Having lacked a sovereign wealth fund From a US perspective, this is not in the past, the EU has established its necessarily a bad thing, considering EUR100 billion “Future Fund”37 which is Europe’s sovereign fund will also trigger designed to promote a new generation an increase in transatlantic public- of European tech companies, and private partnerships around ongoing AI protect existing local companies initiatives, such as the GPAI and NATO’s – some of which are currently in cyber – partnerships, which, in turn, a distressed state because of the will bring together new ecosystems of economic effects from the coronavirus companies, including start-ups, venture – from acquisition by foreign tech capital funds and universities. giants including the American FAANG and the Chinese BAT (Baidu, Alibaba, Tencent) companies.

US “repair & prepare” technology technology in the US. EU and US G2G initiatives efforts will produce partnerships US presidential candidate Joe Biden has that will be, like the GPAI and G7 AI proposed a US$300 billion technology Pact, inclusive of companies pursuing fund38, which would include investment democratic values. in next generation wireless networks and other digital infrastructure in the Here, for example, Nokia and Ericsson, US. This is part of a larger proposed two European telecommunication US$700 billion plan that would seek to equipment manufacturers, could not only “repair” aging infrastructure, see increased involvement in the US but “prepare” for the future by technology landscape – particularly investing in education, R&D and as they step up open-sourced building a new digital infrastructure. collaboration around 5G networks.

Regardless of which party and One major component of this plan Regardless of which party and candidate wins the 2020 US involves the development of “clean- candidate wins the 2020 US presidential presidential election, techno- tech”, as a policy response to climate election, techno-nationalism will nationalism will continue to change. Here, the EU – which, from a continue to drive investment in new drive investment in new digital competitive standpoint, missed out on digital infrastructure, partnerships, infrastructure, partnerships, and the first wave of the tech innovation and alliances. Meanwhile, China’s alliances. around the digital economy – has a ongoing Made in China 2025, Digital burgeoning clean tech sector that Belt and Road and other initiatives will could participate in America’s public underscore the importance of a revived spending initiatives. transatlantic partnership.

The same applies for other US spending Successful partnerships and alliances, initiatives, including the US$100 billion however, require transparent and Endless Frontier Act39, designed to functional rules frameworks. develop AI and other leading-edge

21 II. Impact of techno-diplomacy on international institutions

NATO Hybrid warfare occurs below the For the past seventy years, the threshold of armed conflict and North Atlantic Treaty Organization involves a mix of economic, cyber, (NATO) has been the bedrock of diplomatic and information-related the transatlantic security alliance, actions, all of which are designed which now includes thirty member to disrupt or disable an opponent countries, most of which are in without engaging in open hostilities. Europe. Led by the United States, Liberal democracies are especially NATO was instrumental in assuring Liberal democracies are especially vulnerable to hybrid warfare. conventional military preparedness vulnerable to hybrid warfare as on land, sea and in the air during hostile actors have learned, in the Cold War with the former Soviet particular, to weaponize open Union. This war effectively came to political systems and free speech by an end in 1989, when the Berlin Wall, leveraging social media platforms to an emblem of decades of super- sow disinformation and stoke social power rivalry, was torn down. disharmony. Recent documented events regarding attempts to influence elections in the US and Hybrid warfare in Europe, for example, have been The world of 2020 presents NATO The world of 2020 presents NATO attributed to Russia.40 with an entirely new kind of threat. with an entirely new kind of threat, one for which missiles and aircraft carriers are of little or no use: hybrid warfare.

22 SPOTLIGHT Hybrid warfare and the media

Chinese diplomats are becoming more active on western social media platforms. (Source: Pixabay)

In 2019 and 2020, events involving conspiracy theories, including one that China’s imposition of the national stated the coronavirus was a creation security law in Hong Kong, and the of the US military.42 spread of the coronavirus, resulted in Chinese diplomats and other officials In general, social media has become migrating to western social media an increasingly toxic arena. But as platforms such as Twitter, WhatsApp state-actors have learned to conduct A major component of China’s soft and Facebook. A review of social media influence operations in this space, power and influence projection messages by more than 100 Chinese NATO has doubled down on its efforts involves the scaling up of its foreign diplomats, as reported by the media to build new frameworks for pursuing broadcasting presence overseas company, POLITICO, revealed a four- info-war countermeasures. fold increase in online posts by Chinese officials from a year earlier.41 Traditional television broadcasting is also becoming a fixture in the hybrid This so called “wolf-warrior” digital warfare landscape. A major component messaging campaign was oriented of China’s soft power and influence towards promoting Beijing’s narrative projection involves the scaling up of pro-democracy protests in Hong of its foreign broadcasting presence Kong and discrediting unfavorable overseas. According to a report from views on China’s handling of the initial The Economist, Beijing is spending coronavirus outbreak in Wuhan. The billions43 to position its TV broadcasting campaign included the circulation of in local markets around the world.

China Media Group, for example, This development has been watched one of China’s largest state-owned closely in the EU as it deliberates on media companies, is looking to set up how to regulate foreign companies that headquarters in Brussels. Known as “the receive state funding while operating voice of China,” it acts as the umbrella in the EU. The European commission organization for CGTN, another rapidly may eventually audit and vet such expanding state-owned network.44 companies to determine if they merit an operator’s license. Among other In June 2020, the American government things, fair reporting, transparency and required China’s major media news independence may become criteria for agencies in the US to register as approval of a broadcasting license in “foreign missions,” due to being the EU. “substantially owned and effectively controlled” by the CCP.45

NATO’s cyber defense response At a summit in 2018 of NATO Leaders, NATO’s transition to a cyber-oriented it was divulged that cyber security defense institution began in 2016, when threats had become more “frequent, 47 the organization declared cyberspace complex, destructive and coercive.” a domain of warfare. This transition is NATO’s Cyber Defense Pledge calls occurring increasingly through techno- for the defense of critical national diplomacy, which involves member networks and infrastructure. Each ally countries’ military, government has the responsibility to improve its officials and non-state actors, such as resilience and ability to respond quickly cybersecurity firms.46 and effectively to cyber-attack and other hybrid warfare threats.

Figure 4 – Distribution of cyber-attacks in selected global regions during 1st half 2020, by category

125%

100%

75%

50% Share of total cyber attacks

25%

0% Global Americas EMEA APAC

Cryptominers Mobile Botnet Infostealer Banking Ransomware

Source: Check Point Software Technologies, Statista

Additional information: Worldwide; Check Point Software Technologies; H1 2020

24 II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS

Since 2016, this pledge has been Just as hybrid warfare combines the catalyst for a series of initiatives information, economic, security, designed to facilitate NATO’s transition, diplomatic and other elements, cyber- including: defense requires more public-private partnerships that blur the line between Cyberspace Operations Center (CYOC) commercial and military objectives. This A fully dedicated entity charged with outcome mirrors the rationale behind strategic planning, coordination, the concept of “dual-use,” which intelligence gathering and oversight of applies to export controls designed to key cyber operations. control or block the flow of controlled technologies to restricted entities. NATO Cooperative Cyber Defense Center of Excellence In the context of NATO’s cyber defense Responsible for developing human efforts, non-state actors will be pulled capital and talent through education, into strategic partnerships, which will training and innovation programs. also make them targets of cyber-attack. We will cover this topic, in more depth, Cyber Coalition in a subsequent report in this series on Organizes and oversees NATO’s joint techno-nationalism and cyber-security. exercises and manages scenario preparedness and crisis management NATO Article 5 Collective Defense exercises. Commitment Under Article 5 of the NATO Charter,

Cyber-defense requires more public- NATO Industry Cyber Partnership an attack against any one member Facilitates and enables public- private partnerships that blur the line of the alliance constitutes an attack private partnerships with technology between commercial and military against all, requiring other members companies, cyber security firms, objectives. to come to another member’s defense. academic institutions and other stake In 2019, NATO Secretary General Jens holders. Stoltenberg stated that in the event of

First NATO Council meeting at the new NATO headquarters in Brussels. (Source: NATO/Flickr)

25 II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS

“serious” cyber-attack, the collective decoupling in other areas of the commitment under Article 5 would be technology landscape, from perceived triggered. “non-secure” threats such as Chinese social media platforms and cloud The techno-diplomatic challenges of infrastructure. cyber warfare According to numerous reports, in The US and its NATO allies are 2018, US Cyber Command launched confronted with two fundamental a preemptive attack on the Internet challenges, both of which are being Research Agency in St Petersburg – an addressed through techno-diplomacy. alleged Russian troll49 factory – during In the first instance, there is the the US November mid-term elections, question of what constitutes a “serious effectively shutting down its networks threat” regarding cyber security, and preventing it from spreading and, in the second instance, how is misinformation.50 “sovereignty” defined in cyberspace? Both questions are important as they A less lethal form of techno- will need to be properly answered diplomacy involves old fashioned before NATO establishes clear rules – public attribution: when a bad actor for friend and foe alike – for triggering is exposed, it is publicly named and Article 5. shamed. More powerful states in the alliance can resort to other punitive The US and its NATO allies are Meanwhile, in 2018, the US Congress actions, including sanctions, export confronted with two fundamental and the White House expanded the controls, cancellation of investment challenges, both of which are being rules regarding cyber warfare and the and other types of diplomatic and addressed through techno-diplomacy. kinds of methods US Cyber Command economic reprisals. A perfect case – under the US Department of Defense of public attribution involves the US – could employ in hybrid warfare.48 The campaign against Huawei. laws produced two concepts that will change the way NATO engages in cyber Within NATO, the US, the UK, warfare: Netherlands, Denmark and Estonia and Lithuania – two Baltic States – Forward presence that suffered massive cyber-attacks – Persistent engagement – have used public attribution after being targets of cyberattacks. Public Both allow offensive and pre-emptive attribution is increasingly linked to cyber operations aimed at state and social media campaigns. non-state actors. Thus, as the US and its allies increase these types of offensive activities, they are likely to accelerate

26 SPOTLIGHT “China Standards 2035”

The spread of Chinese technical One of China’s most grandiose – some Soft technologies standards would facilitate techno- would say, unrealistic – techno- Soft technologies include AI algorithms, authoritarian practices such as “social nationalist ambitions involves its encryption for cyber security, social credit scores” and biometric ID and “China Standards 2035” plan. This media and other digital platforms surveillance practices. medium-term strategy compliments and apps. the Made in China 202551 plan which outlines Beijing’s goal of dominating Taking advantage of ubiquitous manufacturing in 10 leading emerging underlying “hard” technologies and and foundational industries of the infrastructure – made by state- future, including 5G, robotics, machine backed companies – China Standards learning and semiconductors. 2035 would allow Beijing to scale- up its technology footprint around China Standards 2035 takes things a the world and push out competing step further, beyond just dominating systems. As these hard technology manufacturing, by enabling Chinese ecosystems dominate, the CCP would companies to dictate global use them to standardize practices interoperability standards and around censorship, surveillance, and functions for hard technologies as well citizen monitoring – as is documented as systems and platforms. This would elsewhere in this report. confer huge advantages to China, by perpetuating a virtuous cycle of up- As such, the spread of Chinese scaling its home grown technology technical standards would facilitate ecosystems around the world, and, techno-authoritarian practices such as simultaneously, by giving Beijing “social credit scores” and biometric ID the ability to weaponize its digital and surveillance practices, which would monetary systems, surveillance and be linked to commercial inclusion or censorship technologies, and other marginalization, for example. commercial systems. China, multilateral institutions and China Standards 2035 is focused technology standards on two dimensions: Beijing’s central planners have made it a priority to gain influence Hard technologies in multilateral technology standard Beijing wants to set international setting institutions. For the past several standards regarding the technical decades, the CCP has been placing aspects, functions, and interoperability Chinese techno-diplomats in key of key types of equipment and “hard” international standards bodies such as: systems. This includes autonomous vehicles, advanced manufacturing – International Telecommunication systems and robotics, machine learning Union (ITU) and quantum computing, additive manufacturing (3D printing), advanced – The International Standards materials, 5G communications Organization (ISO) infrastructure and more.

27 SPOTLIGHT: “CHINA STANDARDS 2035”

– the International Electrotechnical standards setting at the ITU and IEEE, Commission (IEO) largely because, as a restricted entity, US companies were prohibited from – The Institute of Electrical and interacting with it, without a special Electronics Engineers (IEEE) license. Thus, American firms stayed away from important public events and These multilateral standards-setting meetings, thereby ceding influence to institutions have been – until now – their Chinese rivals.52 disproportionately lobbied by Chinese companies. Now that the US, the EU and the world’s other digital democracies are US techno-diplomacy and beginning to coalesce around common international standard setting digital standards and practices, they are institutions turning their attention to multilateral standards setting institutions. The US Department of Commerce recently revised its rules regarding US These collaborative campaigns companies’ interaction with Chinese between Washington and its allies will restricted entities in order to allow for make it virtually impossible for Beijing increased participation and lobbying to see China Standards 2035 through to at international technical standards fruition – another sign of the growing institutions. efficacy of US techno-diplomacy. Huawei, in particular, has been very active in influencing international

28 II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS

Washington is pivoting away from a Wassenaar Arrangement: Techno- its influence over these institutions one-dimensional approach of export diplomacy and export controls remains relatively strong. control enforcement and moving Washington is pivoting away from a towards leveraging institutions. one dimensional approach of export One such entity is the Wassenaar 53 control enforcement and moving Arrangement. This group of forty-two towards leveraging institutions. Despite member countries has been entrusted the Trump Administration’s disdain for with a voluntary export control regime. international organizations, American Its members exchange information on unilateralism has turned to selective transfers of conventional weapons and 54 multilateralism – if and when it can dual-use goods and technologies. be used to thwart China’s techno- nationalist agenda. Through these exchanges, Wassenaar was designed to promote “greater Despite America’s turning away from responsibility” among its members its historic leadership role in the world’s regarding the exports of weapons and, international institutions, for many of increasingly, to monitor and control which the US was the chief architect, the disbursement of dual-use goods,

Figure 5 – Wassenaar member countries & US techno-diplomacy semiconductor export licensing

Key semiconductor global value chain countries and key US allies

Historic US allies & digital democracies. *India has done a recent techno-nationalist pivot toward the US, despite having a poor record regarding internet freedoms.

Non-EU and/or non-NATO

Argentina Estonia Japan Norway South Africa

Australia Finland Latvia Poland Spain

Austria France Lithuania Portugal Sweden

Belgium Germany Luxembourg South Korea Switzerland

Bulgaria Greece Malta Romania Turkey

Canada Hungary Mexico Russia Ukraine

United Croatia India* Netherlands Slovakia Kingdom

Czech Ireland New Zealand Slovenia United States Republic

Denmark Italy

Source: https://www.wassenaar.org/participating-states/#contact-links-box-AR

Source: https://chinaobservers.eu/wp-content/uploads/2020/04/CHOICE_Empty-shell-no-more.pdf

29 II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS

with the aim of preventing hostile would acquire controlled technologies actors from receiving these controlled that would further its advancement of technologies.55 nuclear weapons capabilities.

The Wassenaar Arrangement utilizes Unlike COCOM, in today’s Wassenaar, virtually the same nomenclature for members lack veto authority over other export control classification numbers members’ proposed exports, a power (ECCN) as the American system and that COCOM members exercised – and mirrors Washington’s controlled through which the US used to exert its commodities and technologies lists. will on a regular basis. The system serves as a harmonized Washington’s renewed interest in international export control and Washington’s renewed interest in Wassenaar is driven by a host of licensing framework that governments Wassenaar is driven by a host of realpolitik conclusions. and businesses have been using for realpolitik conclusions: compliance enforcement and corporate governance since 1995. – Unilateral actions by the US regarding technology transfer to China are far less effective than Wassenaar’s Cold War origins multilateral efforts exercised Wassenaar’s roots go back to the through strategic partners. end of World War II, to the US and Soviet Union cold war-era, where – Joint enforcement of export it was known as the Coordinating controls requires harmonization of Committee for Multilateral Export functional rules and procedures Controls (COCOM). It was created to among members – something restrict exports to the former Soviet Wassenaar provides in abundance. Union and Eastern bloc, and motivated by concerns that the Soviet Union

Soviet nuclear missiles being paraded through the Red Square at the height of the Cold War, circa 1963. (Source: Reddit)

30 II. IMPACT OF TECHNO-DIPLOMACY ON INTERNATIONAL INSTITUTIONS

– Export controls, alone, will delay China, by contrast, lacks these but not prevent technology capabilities and Beijing’s tech- transfer to hostile actors, thus they champions, from Huawei to Tencent, should be accompanied by targeted remain highly vulnerable to losing diplomacy, purpose-driven alliances access to US semiconductor and cooperative ventures. technology. At the time of this publication, Washington’s campaign Despite not having a veto mechanism in to block Huawei’s access to Wassenaar, the US has been effectively semiconductor technology has put influencing the organization, primarily the company in “survival mode,” and to leverage its techno-nationalist Huawei’s 5G infrastructure and smart weapon of mass destruction: phone businesses in existential crisis.57 semiconductor technology. China’s top techno-nationalist priority, Washington has leveraged its Washington has leveraged its therefore, centers on developing Wassenaar partnerships to tighten Wassenaar partnerships to tighten its own domestic semiconductor its chokehold on US technology in its chokehold on US technology in capabilities and reducing its semiconductor value chains. semiconductor value chains. As we dependence on American businesses. have documented in previous reports To do so, however, it must obtain in this techno-nationalism series, US critical IP, technology, and talent from companies dominate key components abroad, at a time when the US and of the global semiconductor value its allies are turning to multilateral chain, including research and institutions to block these efforts. design capabilities and specialized manufacturing and tooling equipment, all of which are vital for production of microchips.56

31 SPOTLIGHT Semiconductors and Wassenaar

The latest changes to the Wassenaar Within the Wassenaar group, the around the US’s intentions to cut Arrangement reflect growing US and its historic allies UK, France, off semiconductor technology to consensus around the US’s intentions Germany, Japan and others were Chinese interests. Blocking access to cut off semiconductor technology instrumental in revising export controls not only delays Beijing’s use of to Chinese interests. on military-grade cyber software technology to further its broader and semiconductor manufacturing geopolitical objectives, it retards the technology. This action was a CCP’s corporate espionage and cyber countermeasure to an increase in intrusion capabilities. cyberattacks and cyber intrusions with suspected links to China.58 The two latest revisions are aimed at highly specialized portions of the Japan threw the full weight of semiconductor value chain: its support behind this action, as Mitsubishi Electric Corp. and NEC 1. Computational software designed Corp., – both, major players in the for the development of patterns nation’s semiconductor and defense on extreme ultraviolet lithography. and infrastructure industries – are Computational lithography allows frequent targets of cyber intrusion and semiconductor manufacturers to corporate espionage. simulate real circuit models and correct deviations during wafer The latest changes to the Wassenaar manufacturing. It is mainly used arrangement reflect growing consensus to solve problems such as nano-

Figure 6 – Share of the global semiconductor industry by country in 2018 and 2019

125%

100%

75%

50% Shared of total cyber attacks

25%

0% 2018 2019

United States South Korea Japan European Union Taiwan China Others

Source: SIA, Statista 2020

Additional information: Worldwide; SIA; 2018 to 2019

32 SPOTLIGHT: HYBRID WARFARE AND THE MEDIA

The door is closing for Chinese scale mask repair, chip design/ 2. Technology required for the companies when it comes to manufacturing defect detection slicing, grinding and polishing of alternatives to US tech. and correction during 300 mm (12 inch) silicon wafers. semiconductor manufacturing.59 A wafer is a thin slice of semiconductor, such as a crystalline A small handful of companies silicon, used for the fabrication dominate the technology in this of microchips. The wafer serves space, namely, the Dutch and the as the substrate for microelectronic Americans. ASML, in the technology built in and upon the Netherlands, owns specialized wafer. software, as do KLA Tencor, Synopsis, Mentor Graphics and China currently has no capabilities Ansys, all American companies. for mass producing high yield (the Another American software margin of error is almost impossible company, Cadence Design, was to achieve) 300 mm wafers. recently acquired by Siemens of Germany, representing another The market for slicing and grinding Wassenaar member country that silicon wafers is controlled by five has been formulating companies: Shin-Etsu and Sumco countermeasures to Chinese of Japan, Global Wafer from Taiwan, techno-nationalism. Germany’s Sitronic, and SK Siltron from South Korea. Japanese In the case of the Netherlands, companies control more than half the US government has turned the market.60 to diplomatic pressure, in order to prevent the issuance of an export An equally small number of license by the Dutch government to American, European, and Japanese ASML, for the sale of extreme companies dominate the market for ultra-violet lithography machines wafer polishing. to China. Thus, by adding software to the list of controlled items, the These actions represent increased door is closing for Chinese multilateral efforts, let by the US, companies when it comes to to counteract Beijing’s techno- alternatives to US tech. nationalist agenda. More broadly, they demonstrate how the US and its allies are collectively leverage international institutions such as the Wassenaar Arrangement to achieve their own objectives.

33 III. Techno-diplomacy’s impact on international rules frameworks

When it comes to governance of trade, set and enforced harmonized rules the digital economy has upended the around customs valuation and rules of world’s existing institutions and rules origin, for example, and has provided a frameworks. dispute resolution mechanism for trade disagreements between countries. The world requires new rules frameworks to address the challenges Another role of the WTO involves its The WTO has failed to produce the of the digital economy. New rules function of providing a forum for trade necessary rules framework, and the addressing e-commerce, digital liberalization. Here, when viewing world needs to find ways to create taxation, e-identities, dispute trade liberalization in the context of and execute new rules frameworks. resolution and data privacy have not the digital economy, the WTO has been harmonized or universally defined. failed to produce the necessary rules framework. The world needs to find ways to create and execute these new rules In 2019, about half of the 164 member frameworks. This could involve WTO countries launched discussions revamping existing organizations such on new rules to accommodate digital as the WTO, to take on, for example, commerce – dealing with issues such the function of an “e-WTO.” Otherwise, e-signatures and identities, the banning more realistically, groups of countries of duties on e-commerce and on-line would take it upon themselves services transactions, cyber-security to establish new agreements and and other issues.61 These talks continue mechanisms to define and enforce their but the large number of participating unique values and standards. countries involved make it unlikely that a consensus will emerge. And, even if These types of arrangements could agreement was possible, with such a include: large group of countries participating, the amount of time it takes to reach – Multilateral FTAs with specified any agreement is simply too long. digital/technology focused rules and standards China as a digital rules obstructionist More fundamentally, because of – Bilateral FTAs with specified digital/ Beijing’s export model of techno- technology rules and standards authoritarianism, which relies on technology and AI for censorship and – Digital-only agreements (more surveillance, China has obstructed narrow than an FTA with digital sub- efforts of other countries to craft digital sections) between specific parties standards tied to transparency, privacy rights and free speech.62 Can the WTO be revamped and rehabilitated? In 2001, China became a member of Since 1995, the modern-day WTO the WTO on the grounds that it would has been the designated multilateral commit to liberalizing its economy. institution charged with facilitating Many erroneously believed that China’s the rules for international trade. It has ascension to the WTO would lead to

34 III. TECHNO-DIPLOMACY’S IMPACT ON INTERNATIONAL RULES FRAMEWORKS

its adoption of free market behavior and the Environment.63 Such a move as well as a shift toward a more open, would signal a paradigm shift back to democratic political process. an era of “managed trade,” something which is anathema to the liberalized China’s Communist Party has, however, trade model. Yet China’s mercantilist China has doubled down on its doubled down on its state capitalist model of managed trade has already state capitalist model of massive model of massive government effectively upended the liberal, open government subsidies, protectionism subsidies, protectionism and forced trading system, thus continuing with and forced technology transfer. technology transfer. Politically, the CCP the status quo would only perpetuate hardened its repressive practices as Beijing’s unfair trade advantages. well, thus the WTO seems an unlikely forum for the world’s open market Free trade agreements with digital democracies to press their case for a rules and frameworks new digital rules’ framework. Rather than trying to reengineer or create new rules frameworks at The US has also placed its own national large bureaucratic institutions such priorities ahead of compliance with The US has also placed its own as the WTO, or create an alternative WTO rules. In September 2020, a WTO national priorities ahead of compliance institution to the WTO, countries panel announced that the US had with WTO rules. are more likely to utilize free trade violated WTO rules by imposing tariffs agreements (FTAs) or other standalone on China, the EU and others, under the agreements to define and frame their Section 301 Investigations undertaken digital rules. by the USTR. Washington’s response was unequivocal: the US would ignore Multilateral FTAs the WTO ruling and proceed as it Multilateral FTAs require all members wished. to adhere to a harmonized set of rules, which would make digital trade a more Should US presidential candidate seamless experience. Joe Biden win the 2020 election, there is speculation that this new The Comprehensive and Progressive administration would seek to reform Transpacific Partnership (CPTPP), for the WTO. Perhaps the dispute example, currently with eleven existing resolution mechanism would be member countries, including Japan, bolstered. Nonetheless, the future Singapore, Vietnam, Canada and status of the WTO remains uncertain. Australia, has specific chapters devoted to digital trade. Thus, in the future, Coalitions of the willing techno-diplomacy efforts may gravitate A question that has begun to circulate towards multilateral agreements, given Countries are more likely to utilize in trade policy circles is: could a the seamlessness of having one set of free trade agreements (FTAs) or other coalition of willing nations form a new rules that applies across a wide area standalone agreements to define and global trade institution with standards and many nations. This encourage more frame their digital rules. that require open market principles countries to aspire to join these trade and democratic ideals? Such a forum blocks. would have to exclude China and other nations with “non-market” economies. However, if new rules or standards are proposed and must be negotiated, the These ideas were recently proposed by amount of time it takes for multiple Mogens Peter Carl, a former European governments to agree could take years. Commission Director General for Trade

35 III. TECHNO-DIPLOMACY’S IMPACT ON INTERNATIONAL RULES FRAMEWORKS

Bilateral FTAs commerce. Even if one does not exist, The forging of trade agreements it might be added at a later date. between just two countries may Again, this would be much easier to present the better option when it do between two countries, than in a comes to negotiating rules that apply multilateral setting. to a rapidly changing digital landscape. The time it takes for two parties to Digital-only agreements negotiate the terms of a bilateral deal is Rather than embedding a chapter much faster than what is required for a on digital trade inside a more multi-lateral negotiation. comprehensive multilateral or bilateral free trade agreement, some Ideally, a bilateral trade deal would countries are resorting to “digital only” include a section that addresses agreements. standards and rules for digital

Trade ministers from 11 countries gathered in Chile, Santiago, March 2018 to sign the CPTPP. (Source: Subsecretaría de Relaciones Económicas Internacionales de Chile/Flickr)

36 SPOTLIGHT The Digital Economy Partnership Agreement

An example of digital-only agreements The DEPA, which incorporates is the Digital Economy Partnership interoperability through digital Agreement (DEPA)64, which includes platforms, such as Singapore’s New Zealand, Singapore, and Chile. Networked Trade Platform, could The DEPA is ground-breaking in that it well become the prototype of larger incorporates a robust rules framework multilateral digital trade agreements that addresses: and could also be replicated in other bilateral digital-only agreements. – Data privacy and security – Transparency DEPA is an example of successful – Digital identities techno-diplomacy, in this case to – AI ethics promote standards that enable open – Payment platforms and markets and digital democracy. Fintech standards – Dispute settlement mechanisms

The US State Department’s Blue Dot chain initiative that would include program65 represents a further attempt digital trade rules66. Here, again, we see to create rules frameworks for digital techno-diplomacy at work, this time finance. The Blue Dot program brings in a coalition of the willing involved together governments, the private in efforts to build digital trade rule sector and civil society under shared frameworks into supply chains. standards for global infrastructure development. Certification by the Blue As the US-China technology cold war Dot Network would serve to validate continues to spill over into politics, market-driven, transparent, and economics and society, policy makers financially sustainable development and business leaders will become projects. further affected by the many variations of techno-diplomacy. Blue Dot Network was designed to attract private capital to infrastructure This will require not only new rules projects in developing and emerging frameworks and the modification of economies, and aims to serve as a existing institutions, it will demand countermeasure to China’s model of an entirely new way of executing government funded infrastructure, corporate good governance – across such as the digital Belt and Road, physical supply chains and the which has been spreading techno- management of data and digital authoritarianism. platforms.

Yet another multilateral arrangement This will be the featured topic of the with forward looking rules involves next Hinrich Foundation report in our India, Australia and Singapore, and ongoing series on techno-nationalism. their efforts to create a resilient supply

37 Researcher bio: Alex Capri

Alex Capri is a research fellow at the Alex has been a panelist and workshop Hinrich Foundation and a senior fellow leader for the World Economic Forum. and lecturer in the Business School at He writes a column for Forbes Asia, the National University of Singapore. the Nikkei Asian Review and other He also teaches at the NUS Lee Kuan publications and is a frequent guest on Yew School of Public Policy. global television and radio networks. He holds a M.Sc. from the London He is the author of Techno-Nationalism: School of Economics, in International How it’s reshaping trade, geopolitics, Political Economy. He holds a B.Sc. and society (Wiley), due out in 2021. in International Relations, from the University of Southern California. From 2007-2012, Alex was the Partner and Regional Leader of KPMG’s International Trade & Customs Practice in Asia Pacific, based in Hong Kong. Alex has over 20 years of experience in global value chains, business and international trade – both as an academic and a professional consultant.

He advises governments and Alex Capri businesses on matters involving trade Research Fellow, and global value chains. Areas of focus Hinrich Foundation and include: IT solutions for traceable Visiting Senior Fellow, supply chains, sanctions, export The NUS Business School controls, FTAs and trade optimization.

38 Endnotes

1 “Announcing the Expansion of the Clean Network to Safeguard America’ Assets”, US State Department press statement, https://www.state.gov/announcing-the-expansion-of-the- clean-network-to-safeguard-americas-assets/

2 Capri, A., “Techno-Nationalism: What Is It And How Will It Change Global Commerce?”, Forbes, 20 December 2019, https://www.forbes.com/sites/alexcapri/2019/12/20/techno- nationalism-what-is-it-and-how-will-it-change-global-commerce/#6a9deb1710f7

3 “UK seeks alliance to avoid reliance on Chinese tech: The Times”, Reuters, 29 May 2020, https://www.reuters.com/article/us-britain-tech-coalition/uk-seeks-alliance-to-avoid- reliance-on-chinese-tech-the-times-idUSKBN2343JW

4 Since placing Huawei on the restricted entity list in May of 2019, Washington has effectively crippled the company. As of September 2020, the US has choked off Huawei’s access to critical American microchip technology, which it needs to build smart phones and 5G network infrastructure. Once Huawei burns through an emergency stockpile of microchips, the world’s largest manufacturer of telecoms equipment will lose its capability to service existing 5G contracts and to build new networks.

5 Whalen, J., “US restricts tech exports to China’s biggest semiconductor manufacturer in escalation of trade tensions”, The Washington Post, 27 September 2020, https://www. washingtonpost.com/technology/2020/09/26/us-restricts-exports-chinas-smic/

6 Wong, C.H., “China Launches Initiative to Set Global Data-Security Rules”, The Wall Street Journal, 8 September 2020, https://www.wsj.com/articles/china-to-launch-initiative- to-set-global-data-security-rules-11599502974#:~:text=Under%20its%20new%20 %E2%80%9CGlobal%20Initiative,a%20text%20released%20by%20the

7 Burchard, H., “EU slams China as ‘systemic rival’ as trade tension rises”, POLITICO, 3 December 2019, https://www.politico.eu/article/eu-slams-china-as-systemic-rival-as- trade-tension-rises/

8 The Wassenaar Arrangement, https://www.wassenaar.org

9 Federal Reserve History, Creation of the Bretton Woods System, https://www. federalreservehistory.org/essays/bretton_woods_created

10 Congressional Research Service, Section 301 of the Trade Act of 1974, 31 August 2020, https://crsreports.congress.gov/product/pdf/IF/IF11346

11 “EU-US Privacy Shield for data struck down by court”, BBC, 16 July 2020, https://www.bbc. com/news/technology-53418898#:~:text=A%20major%20agreement%20governing%20 the,Court%20of%20Justice%20(ECJ).&text=US%20Secretary%20of%20Commerce%20 Wilbur,deeply%20disappointed%22%20by%20the%20decision

12 In September 2020, a dispute panel at the WTO ruled that the US’s imposition of duties on China, the EU and other countries violated WTO rules. Perhaps more significantly, however, the US has publicly stated it will ignore the WTO’s verdict, a sign that the WTO is in danger of becoming irrelevant. This will be explored later in the report.

13 Chee, F.Y., “EU throws new rule book at Google, tech giants in competition search”, Reuters, 1 July 2020, https://www.reuters.com/article/us-europe-tech-google-antitrust- analysis/eu-throws-new-rule-book-at-google-tech-giants-in-competition-search- idUSKBN242623

39 ENDNOTES

14 Chee, F.Y., “Amazon may face EU antitrust charges over merchant data in coming weeks: source”, Reuters, 12 June 2020, https://www.reuters.com/article/us-eu-amazon-com- antitrust/amazon-may-face-eu-antitrust-charges-over-merchant-data-in-coming-weeks- source-idUSKBN23I2V7

15 Asen, E., “What European OECD Countries Are Doing about Digital Services Taxes”, Tax Foundation, 22 June 2020, https://taxfoundation.org/digital-tax-europe-2020/

16 European Commission, “China”, Trade policy by countries and regions, https://ec.europa. eu/trade/policy/countries-and-regions/countries/china/

17 European Commission, “The EU’s Response to COVID-19”, 24 February 2020, https:// ec.europa.eu/commission/presscorner/detail/en/qanda_20_307

18 Friedman, L., Trump Serves Notice to Quit Paris Climate Agreement, The New York Times, 4 November 2019, https://www.nytimes.com/2019/11/04/climate/trump-paris-agreement- climate.html

19 Apuzzo, M., “Pressured by China, EU Softens Report on Covid-19 Disinformation”, The New York Times, 24 April 2020, https://www.nytimes.com/2020/04/24/world/europe/ disinformation-china-eu-coronavirus.html?auth=login-email&login=email

20 Wang, C., “Four principles on Internet governance reflecting a global norm based on international law”, ResearchGate, February 2016, https://www.researchgate.net/ publication/300046593_Four_principles_on_Internet_governance_reflecting_a_global_ norm_based_on_international_law

21 Shahbaz, A., “The Rise of Digital Authoritarianism”, Freedom House, https://freedomhouse. org/report/freedom-net/2018/rise-digital-authoritarianism

22 Ibid

23 Feldstein, S., “The Global Expansion of AI Surveillance”, Carnegie Endowment for International Peace, 17 September 2019, https://carnegieendowment.org/2019/09/17/ global-expansion-of-ai-surveillance-pub-79847

24 Heydarian, R., “Ignoring the US, Philippines goes with Huawei”, Asia Times, 18 July 2019, https://asiatimes.com/2019/07/ignoring-the-us-philippines-goes-with-huawei/

25 Burt, C., “Chinese biometric surveillance technology deployed internationally amid criticism”, Biometric, 23 October 2019, https://www.biometricupdate.com/201910/ chinese-biometric-surveillance-technology-deployed-internationally-amid- criticism#:~:text=Authorities%20in%20Bolivia%20have%20deployed,China%20to%20 export%20its%20citizen

26 Ibid

27 Zimbabwe’s Mnangagwa vows to ‘flush out opponent’, BBC, 4 August 2020, https://www. bbc.com/news/world-africa-53642492

28 Dahir, A., “China ‘gifted’ the African Union a headquarters building and then allegedly bugged it for state secrets”, Quartz, 30 January 2018, https://qz.com/africa/1192493/china- spied-on-african-union-headquarters-for-five-years/

29 Timsit, A., “Parliaments are on the frontlines of Europe’s face-off ithw China”, Quartz, 20 June 2020, https://qz.com/1870052/eu-parliaments-are-shaping-their-countries-china- policy/

30 Elmer, K., “Europe’s ‘17+1’ countries dissatisfied with China relations, report says, as summit is postponed”, South China Morning Post, 7 April 2020, https://www.scmp.com/news/ china/diplomacy/article/3078830/europes-171-countries-dissatisfied-china-relations- report-says

40 ENDNOTES

31 EURACTIV Network, “China funded ‘propaganda’ course at Czech University”, 31 October 2019, https://www.euractiv.com/section/politics/news/china-funded-propaganda-course- at-czech-university/

32 US Department of State, The Clean Network, https://www.state.gov/the-clean- network/#:~:text=The%20Clean%20Network%20program%20is,as%20the%20 Chinese%20Communist%20Party

33 Eurostat, “China, US and EY are the largest economies in the world”, 19 May 2020, https:// ec.europa.eu/eurostat/documents/2995521/10868691/2-19052020-BP-EN.pdf/bb14f7f9- fc26-8aa1-60d4-7c2b509dda8e

34 Chafkin, M., “US Will Join G7 AI Pact, Citing Threat From China”, Bloomberg, 28 May 2020, https://www.bloomberg.com/news/articles/2020-05-28/g-7-ai-group-adds-u-s-citing- threat-from-china?sref=jeNvC3eC

35 French government, “Launch of the Global Partnership on Artificial Intelligence”, 17 June 2020, https://www.gouvernement.fr/en/launch-of-the-global-partnership-on-artificial- intelligence

36 Naughton, J., “The goal is to automate us’: welcome to the age of surveillance capitalism”, The Guardian, 20 January 2019, https://www.theguardian.com/technology/2019/jan/20/ shoshana-zuboff-age-of-surveillance-capitalism-google-facebook

37 Financial Times, “EU floats plan for €100bn sovereign wealth fund”, 23 August 2019, https:// www.ft.com/content/033057a2-c504-11e9-a8e9-296ca66511c9

38 “Joe Biden proposes a $700 billion-plus ‘Buy American’ campaign”, CNBC, originally from Associated Press, 9 July 2020, https://www.cnbc.com/2020/07/09/biden-proposes-a-700- billion-plus-buy-american-campaign.html

39 Mervis, J., “US lawmakers unveil bold $100 billion plan to remake NSF”, Science, 26 May 2020, https://www.sciencemag.org/news/2020/05/us-lawmakers-unveil-bold-100-billion- plan-remake-nsf

40 Simmons, A., “Russia’s meddling in other nations’ elections is nothing new. Just ask the Europeans”, Los Angeles Times, 30 March 2017, https://www.latimes.com/world/europe/ la-fg-russia-election-meddling-20170330-story.html

41 Scott, M., “Chinese diplomacy ramps up social media offensive inCOVID-19 info war”, POLITICO, 29 April 2020, https://www.politico.eu/article/china-disinformation-covid19- coronavirus/

42 Myers, S., “China Spins Tale That the US Army Started the Coronavirus Epidemic”, The New York Times, 13 March 2020, https://www.nytimes.com/2020/03/13/world/asia/coronavirus- china-conspiracy-theory.html

43 The Economist, “China is spending billions on its foreign-language media”, 14 June 2018, https://www.economist.com/china/2018/06/14/china-is-spending-billions-on-its-foreign- language-media

44 Parrock, J., “Voice of China’s European ambitions”, POLITICO, 8 September 2020, https:// www.politico.eu/article/china-europe-media-voice-ambitions-global-television-news- cgtn-global-television-news/

45 US Department of State, “Designation of Additional Chinese media Entities as Foreign Missions”, 22 June 2020, https://www.state.gov/designation-of-additional-chinese-media- entities-as-foreign-missions/

46 Brent, L., “NATO’s role in cyberspace”, NATO Review, 12 February 2019, https://www.nato. int/docu/review/articles/2019/02/12/natos-role-in-cyberspace/index.html#:~:text=The%20 CyOC%20serves%20as%20NATO’s,coordination%20for%20cyberspace%20 operational%20concerns

41 ENDNOTES

47 NATO, “Defending against cyber-attacks”, https://www.nato.int/cps/en/natohq/ topics_118663.htm?selectedLocale

48 American Journal of International Law, “US military undergoes restructuring to emphasize cyber and space capabilities”, Vol. 1143, Issue 3, July 2019, pp. 634-640, https:// www.cambridge.org/core/journals/american-journal-of-international-law/article/ us-military-undergoes-restructuring-to-emphasize-cyber-and-space-capabilities/ CE983ACA46178DBCB0CD7DBE50DE8FF4

49 The Cambridge Dictionary defines a troll as “Someone who leaves an intentionally annoying message on the Internet, in order to get attention or cause trouble.” The goal is to trigger emotional or sometimes violent reactions, which, when applied at scale to social groups and populations, can stoke antagonisms, spread lies, and lead to political instability and social unrest.

50 Nakashima, E., “US Cyber Command Operation disrupted Internet access of Russian troll factory on day of 2018 midterms”, The Washington Post, 27 February 2019, https://www. washingtonpost.com/world/national-security/us-cyber-command-operation-disrupted- internet-access-of-russian-troll-factory-on-day-of-2018-midterms/2019/02/26/1827fc9e- 36d6-11e9-af5b-b51b7ff322e9_story.html

51 Made in China 2025 (MIC 2025) was released by the Ministry of Industry and Information Technology in 2015.

52 Wei, H., Murphy, F., “Update: US to Allow Cooperation With Huawei on 5G Standards”, Caixin, 8 May 2020, https://www.caixinglobal.com/2020-05-08/update-us-to-allow- cooperation-with-huawei-on-5g-standards-101551250.html

53 The Wassenaar Arrangement, https://www.wassenaar.org

54 Dual use goods are products or technologies that have been designed for commercial uses but could also be used for military applications. This covers the majority of the world’s emerging and foundational technologies for the industries of the future.

55 “The Wassenaar Arrangement at a Glance”, Arms Control Association, December 2017, https://www.armscontrol.org/factsheets/wassenaar#:~:text=The%2042%20 participating%20states%20in,Netherlands%2C%20New%20Zealand%2C%20Norway%2C

56 Capri, A., “Semiconductors at the heart of the US-China tech war”, Hinrich Foundation, 17 January 2020, https://www.hinrichfoundation.com/research/wp/tech/semiconductors-at- the-heart-of-the-us-china-tech-war/

57 Cheng, T.F., Li, L., “Huawei in ‘survival mode’ as suppliers race to beat US deadline”, Nikkei Asian Review, 25 August 2020, https://asia.nikkei.com/Spotlight/Huawei-crackdown/ Huawei-in-survival-mode-as-suppliers-race-to-beat-US-deadline#:~:text=%22Huawei%20 is%20in%20a%20chaotic,survival%20for%20the%20Chinese%20company. &text=%22Huawei%20is%20battling%20for%20survival.%22

58 Kyodo News, “Int’l group agrees to control military software exports”, 23 February 2020, https://english.kyodonews.net/news/2020/02/36cfd58a338e-intl-group-agrees-to-control- military-software-exports.html

59 Ariat Technology, “New Wassenaar agreement ‘arranges’ Chinese semiconductors, increase export controls on computational lithography software and large silicon technology”, https://www.ariat-tech.com/news/New-Wassenaar-agreement-arranges-Chinese- semiconductors-increase-export-controls-on-computational-li.html

60 Ibid.

61 European Commission, “76 WTO partners launch talks on e-commerce”, 25 January 2019, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1974

42 62 Peker, E., “US, China Face Off Over Digital-Market Regulation”, The Wall Street Journal, 6 March 2019, https://www.wsj.com/articles/u-s-china-to-face-off-over-digital-market- regulation-11551878261

63 Stewart, T., “A new WTO without China? The July 20, 2020 Les Echos opinion piece by Mogens Peter Carl, a former EC Director General for Trade and then Environment”, WITA, 25 July 2020, https://www.wita.org/blogs/a-new-wto-without-china/

64 New Zealand Ministry of Foreign Affairs and Trade, DEPA Modules, https://www.mfat.govt. nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/ digital-economy-partnership-agreement/depa-modules/

65 US Department of State, Blue Dot Network, https://www.state.gov/blue-dot-network/

66 The Straits Times, “Japan, India and Australia working on achieving supply chain resilience”, originally from Bloomberg, 2 September 2020, https://www.straitstimes.com/asia/east- asia/japan-india-and-australia-working-on-achieving-supply-chain-resilience

43 The Hinrich Foundation is a unique Asia-based philanthropic organization that works to advance mutually beneficial and sustainable global trade. We believe sustainable global trade strengthens relationships between nations and improves people’s lives. We support original research and education programs that build understanding and leadership in global trade. Our approach is independent, fact-based and objective.

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