Jianli Yang and Lianchao Han
U.S. President Joe Biden and Chinese President Xi Jinping finally held their much-anticipated virtual summit on Monday. After the meeting, intended to normalize relations and establish guardrails for contest, competition, and cooperation between the two world powers, U.S.-China trade talks are likely to resume shortly. In her recent speech at the Center for Strategic and International Studies in Washington, U.S. Trade Representative Katherine Tai laid out a new trajectory for the Biden administration’s trade policy.
Tai correctly pointed out that China’s state-centered, nonmarket trade practices were not addressed in the Phase One agreement, a trade deal signed by the Trump administration with China in January 2020, and stated that she intends to raise these broader policy concerns with Beijing. She vowed to use “the full range of tools we have … to defend American economic interests from harmful policies and practices.”
But there’s one key unfair practice that stands out and that the Phase One deal didn’t address: China’s internet market. The opening up of China’s internet should be a core component of the Biden administration’s new approach to its trade relationship with China. At present, China’s internet market combines bad trade practices, the harming of U.S. interests, and human rights violations. The United States has some leverage to change that and should use it.
China’s closed internet market is a long-standing non-tariff trade barrier. As early as 2011, the Obama administration pressed China to explain why its Great Firewall blocked U.S. companies from providing their online services to customers and businesses—in violation of international trade norms. In 2016, the annual National Trade Estimate Report cited China’s Great Firewall as a trade barrier, contending that, over the previous decade, China’s arbitrary blocking of foreign websites had “posed a significant burden to foreign suppliers, hurting both internet sites themselves, and users who often depend on them for their businesses.” Today, such unfair practices have only worsened.
While asserting strict control over the internet’s ideological and political content, Beijing has cited “national security” as a pretense to protect China’s internet market and block “unwelcome” websites, including those of its U.S. competitors. This makes it impossible for U.S. internet companies to enter the Chinese market as equals, thus creating a de facto ban on U.S. firms such as Google, YouTube, Facebook, Twitter, and many others. Some U.S.-based websites have gained limited access to the Chinese market—but only after acquiescing to China’s demands, such as providing a full backdoor to their technology.
Under the protectionist trade policy of the Chinese Communist Party (CCP), China’s digital economy has experienced massive growth over the past decade. According to a 2017 report by the McKinsey Global Institute, China accounted for less than 1 percent of global e-commerce transactions in 2005, but by 2016, China was clearly the biggest e-commerce market in the world, accounting for 42 percent of global transactions. In comparison, the United States’ share of worldwide transactions fell from 35 to 24 percent during the same period. In 2020, the estimated value of China’s digital economy reached 41 trillion yuan ($6.33 trillion), which contributes to a surging U.S. trade deficit as imports from China continue to soar. Such imbalance harms American workers and the U.S. economy.
Meanwhile, Chinese internet companies have taken extraordinary advantage of the free and open U.S. market. Chinese tech giants such as Alibaba, Tencent, and Baidu have all been given free and unfettered access to U.S. markets, including capital markets. In 2018, 33 Chinese companies (mostly tech firms) held initial public offerings in the United States, raising more than $9 billion in capital. China refuses to grant the United States any meaningful reciprocity in the internet arena. This unfair trade practice has severely harmed U.S. businesses and American workers, as well as consumers in China. It must be stopped.
The internet has changed how people shop, work, access information, and communicate with each other. Opening up the Chinese internet market would not only give U.S. internet companies myriad economic opportunities but would also provide a much-needed political space for civil society in China. The liberal world order’s greatest advantage over China lies in the free flow of information, freedom of speech, freedom of the press, and free markets—and a freer Chinese internet market would definitely enhance and strengthen this. We realize the Biden administration is shying away from intending to change China—for example, U.S. National Security Advisor Jake Sullivan said in a recent CNN interview that the object of the Biden administration was “not to bring about some fundamental transformation of China itself”—the approach we are proposing doesn’t even demand an end to domestic censorship in China but rather a level playing field for foreign ideas.
Beijing fully understands the double-edged sword of the internet and regards suppression of internet freedom as the key to the CCP’s perpetual rule over the Chinese people. At a Politburo study session in 2019, Xi reemphasized the importance of the CCP’s firm control over the internet. He warned cadres that without “securitizing” the internet, the CCP “won’t be able to hold power for long.”
But Xi wants the CCP to win this invisible war on “the battlefield without gun smoke,” so totalitarian China is using its vast state apparatus to censor, block, and restrict the ability of Chinese citizens to obtain or share information and opinions. According to a 2020 project by a team of researchers from four U.S. and Canadian universities, China’s Great Firewall currently blocks 311,000 domains, which prevents users from accessing proscribed websites from within the country. China’s vast censorship apparatus also uses the latest and most advanced techniques for rooting out banned content, phrases, and words.
At the same time, the CCP’s propaganda machine peddles fake news and spreads pernicious lies to incite ultranationalism domestically and hatred toward the United States globally. The most recent of these is the utterly false claim that COVID-19 originated in supposed experiments in the United States, instead of in China—a belief that has won few fans abroad but spread widely in China.
China is not satisfied with just controlling information within its own borders. Under the CCP’s “internet sovereignty” policy, China uses technology to censor content on foreign websites, including frequent attacks on U.S.-based websites for content it dislikes. China also exports its digital dictatorship to undermine democracies around the world.
The United States must make the opening up of China’s internet market a top priority. In future negotiations with China, the United States should frame the issue as one of unfair trade practices that the Phase One agreement failed to address. Washington must mobilize sociopolitical and financial resources and form a coalition of relevant U.S. stakeholders—including within the government, civil society, and the business and tech communities—to tear down China’s Great Firewall. It is equally critical that the United States work together with its allies to counter China on this vital issue, which affects the interests of all democracies.
As Tai stated to Congress in May, “We will not hesitate to call out China’s coercive and unfair trade practices that harm American workers [and] violate basic human rights.” Now is the time to call out China on its closed internet market. And if China refuses to reciprocate, the United States and its allies should not hesitate to deny Beijing access to their own markets.
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