Defense Dossier

DEFENSE DOSSIER ISSUE 30 A VISION FOR 5G COMPETITION MAY David A. Gross, Megan L. Brown, and Tawanna D. Lee 2021 PROTECTING THE U.S. SUPPLY CHAIN FROM CHINA Alexander B. Gray COUNTERING CHINA IN AFRICA Jacob McCarty THE CHALLENGE OF CHINA’S RIGHTS ABUSES Olivia Enos THE CHINESE THREAT TO PRIVACY Klon Kitchen AMERICAN FOREIGN POLICY COUNCIL DEFENSE DOSSIER AMERICAN FOREIGN POLICY COUNCIL Explaining the World. Empowering Policymakers. The Chinese Threat to Privacy Klon Kitchen hese days, it is widely understood that, in the words But Beijing likewise knows that American techno- Tof The Economist, “the world’s most valuable re- logical leadership will not be easily overtaken, and that source is no longer oil, but data.”1 The massive scope of China’s domestic technology industries are not robust cyber-enabled data theft perpetrated by China over just or mature enough to win on their own. The CCP, the last decade supports this assessment. Already back therefore, is pursuing a strategy of “military-civil fu- in 2011, the Office of the National Counterintelligence sion,” where the Chinese government and the country’s Executive was assessing that “Chinese actors are the industries partner on mutually-beneficial priorities and world’s most active and persistent perpetrators of eco- objectives—often leveraging state monetary and espio- nomic espionage.”2 Ten years later, it has been discov- nage capabilities in the process. ered that Chinese hackers have compromised more than To put it simply, Beijing is attempting to prove a 400,000 Microsoft Exchange servers in 115 nations, new concept of governance that links the wealth of its including more than 30,000 in the United States, giv- version of capitalism with the stability and security of ing Beijing full access to the victims’ emails and leaving technological totalitarianism. If successful, China will them vulnerable to further exploitation.3 likely find a host of would-be authoritarians around the If the United States is going to prevent China from world eager to sign up for this new model, and it would systematically syphoning “the world’s most valuable be well-positioned to supply the capabilities and infra- resource,” it must understand the strategic rationale of structure needed for its implementation in those plac- the Chinese Communist Party (CCP) for hoarding data, es. Indeed, techno-totalitarianism could become a key how that data is subsequently employed, how it is being export along China’s Belt & Road. collected, and what can be done to mitigate the threat. At the root of this strategy is the acquisition and use of data, which the CCP uses to build wealth, to secure itself, and to shape the international environment. CHINA’S TARGETING OF DATA IS RATIONAL China is like every other nation in the history of the THE THREE ROLES OF DATA world in that it seeks to build and wield geopolitical influence to secure itself and its interests. The CCP has Data is not valuable in and of itself. Data must be ex- also determined that collecting and using this influ- amined, assessed, and leveraged toward some broader ence will, in part, depend on the nation’s leadership in objective. But, when this is done effectively, data can emerging technologies that are shaping modern gover- provide a decisive advantage. To this end, the CCP’s nance and economics. It has specifically identified the data acquisition efforts can be understood as supporting following industries as priorities: information technol- three goals. ogies, robotics, “green” energy, aerospace, ocean engi- First, data is key for economic energy. Harvard profes- neering, power equipment, new materials, medicine, sor and business strategist Michael Porter observes, “In- and agriculture.4 novation is the central issue in economic prosperity.”5 Klon Kitchen is a resident fellow at The American Enterprise Institute where he focuses on technology and national security. You can follow him on Twitter at @klonkitchen and you can subscribe to his weekly newsletter at www.thekitchensync.tech 20 This is certainly true for the United States, where every monitoring of Uyghur Muslims, primarily in China’s consumer technology sector job supports almost three Xinjiang Province, is staggering. It is also emblematic of non-tech jobs in the American economy, and where the the government’s willingness to use data to monitor, ha- U.S. tech sector supplies $1.3 trillion in annual wages, rass, and target anyone deemed a threat to the state. In $503 billion in tax revenue, and contributes nearly 12% Xinjiang, Uyghurs are under nearly-total surveillance, of national GDP (~$2.3 trillion).6 regularly have their devices searched and copied, and Similarly, in China, electronics and technology sales are even required to download government surveillance revenues topped $630 billion in 2019, and nine of the software on their mobile phones. Their communica- world’s 20 largest internet companies are Chinese.7 tions, images, medical data, economic spending, online While economic numbers coming out of China are no- viewing, and their family and social interactions are toriously suspect, a Tufts University survey8 ranks the known by the government – often with the help of the nation as the world’s most rapidly evolving digital econ- country’s leading tech companies, which collect, process, omy. There can be no doubt that the nation’s financial and analyze this data. future is inextricably linked to its technology industry. Thus, the systematic and sustained gathering of intellectual property, proprietary secrets, trade secrets, and other data is critical for China’s economic growth. One Beijing is attempting to prove a in five North American-based companies now say China has stolen their intellectual new concept of governance that property.9 As of 2019, this was projected links the wealth of its version to have cost the U.S. economy more than of capitalism with the stability $600 billion.10 Beijing has clearly concluded that its prosperity is best achieved by lever- and security of technological aging that of others. totalitarianism. Second, data is seen as essential for in- ternal social strength. It can be said that the CCP’s primary concern is its own stability and security, and that data harvesting is a key means of achieving these ends. Specifically, data col- Finally, the third goal of China’s data collection is “ lection is used by the CCP to manipulate public attitudes external political power. Aggressive data collection and and behavior, and to suppress anyone who is thought to exploitation not only facilitates economic growth and challenge the government’s authority. government stability, it also enables all of the other Beijing’s social credit score regime exemplifies the elements of national power. Traditional and corporate nation’s cultural shaping operations. Here, the CCP espionage are the backbone of China’s military industri- leverages wide-scale surveillance and data collection to al base, its diplomatic strategies, its intelligence enter- monitor citizen’s economic, social, political, and online prise, and its international treaties and trade practices. habits in an effort to incentivize “good” behavior and Put another way, a robust pipeline of data feeds China’s constrain “bad” behavior. If you advance the Party’s engagement with the world by informing and shaping priorities, your social score goes up—giving you greater its ends, ways, and means. freedom of movement and increased access to benefits like public services and travel. If you engage in unap- THREE WAYS IN WHICH DATA IS COLLECTED proved behaviors, however, you may not be allowed to apply for certain jobs or to leave your home town. The Chinese government draws data from three prima- The situation is even worse for religious and political ry sources: open-source data stores, government espio- minorities. The sheer scope of the CCP’s ubiquitous nage, and corporate espionage. 21 “has 300 data segments for nearly every U.S. consumer.” Another “has information on 1.4 The systematic and sustained billion consumer transactions and over 700 gathering of intellectual billion aggregated data elements.” And still another “adds three billion new records each property, proprietary secrets, month to its databases.”12 trade secrets, and other data That data can enable a near-total recon- is critical for China’s economic struction of an individual’s identity, location history, interpersonal relationships and growth. One in five North networks, entertainment and purchasing American-based companies preferences and habits, and even future economic, social, and political outcomes. And all now say China has stolen their of it is available for sale to anyone willing to intellectual property. As of 2019, cut a check. “this was projected to have cost Or to steal it. Data brokers are a key target for the CCP. In 2017, suspected Chinese the U.S. economy more than hackers compromised the Equifax credit $600 billion. Beijing has clearly brokerage firm, exposing critical information for hundreds of millions of people. Two concluded that its prosperity is years prior, China broke into the Anthem best achieved by leveraging that Inc. insurance company and stole the names, of others. birthdates, addresses, social security numbers, and employment data for more than 78 million customers. While Americans are in- First, in discussing open-source information, consider creasingly concerned about how data collec- the following statistics from 2020:11 tion affects their domestic freedoms and privacy, there •

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