Laptop Battery January 2001: Network Associates Technology, Symantec,
and Trend Micro gain entry to the Chinese market by donating 300
live computer viruses to the Public Security Bureau -- China's
state police -- raising Pentagon concerns about China's information
warfare capabilities.
According to the indictment, Jones would steal various IBM and Penguin computer servers from Verisign's warehouse in Virginia and sell them to Johnson. Johnson would then sell the servers to several individuals, who would sometimes place them for sale on eBay. As a result of this scheme, the indictment alleges that Jones and Johnson caused Verisign to lose more than $120, 000 worth of computer equipment. In the indictment, Jones and Johnson are charged in three counts with causing the interstate transportation of stolen property, namely IBM 330 and 335 servers, in violation of 18 U.S.C.
Thinkpad December 2001: A human rights activist accuses Nortel
Networks of coperating with China's police by enhancing digital
surveillance networks and transferring to the Chinese Ministry of
State Security technology developed for the FBI.
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Microsoft February 2002: A former Yahoo China executive confirms
that the company routinely censors its chat rooms and search
functions. Several Chinese engineers claim that, in the late '90s,
Cisco Systems fashioned a "special firewall box"
for Chinese authorities to block Web sites.
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Laptop Computers Why are American corporations, which have labored hard to
present positive global images, providing censorship and
surveillance technologies to what many see as China's Big Brother
Internet? The short answer: money. Building China's Internet means
making lots of it, and companies that want access to this new
market often must give the Chinese leadership what it demands.
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Laptop Computer Their willingness, however, to placate the leadership has begun
to attract the attention of journalists, dissidents, and
hacktivists, as well as, most ominously, for U.S. business
interests, shareholders, and Congress. On May 30, Cisco Systems and
the U.S. Securities and Exchange Commission received a proposed
shareholder resolution (a method shareholders use to change
corporate policy). The shareholder, who prefers not to be named,
attacked the morality of Cisco's China operations and proposed that
the company report annually to shareholders on all its products
sold to state-owned entities in countries, like China, that employ
national firewalls or monitor Internet traffic. Seven weeks later,
Cisco's lawyers responded with an 18-page document (with narrow
margins) rejecting the shareholder's proposal as unfeasible and
inflammatory. Client confidentiality would be damaged on a global
scale, according to Cisco. Plus, the company added, the
shareholder's accusations were misleading: China's public security
standards are equivalent to U.S. government standards, and Cisco
has not "specially designed any products whatsoever for the
government of the PRC to block or filter content."
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Desktop Computer While it may be technically correct that Cisco also sold its
"special firewall box" to countries other than China (even though
it may have first developed it for China), the company's portrayal
of business-as-usual in China is disingenuous: it's unlikely Cisco
was able to capture 75 percent of the Chinese router market without
making major concessions to the Chinese government.
Notebooks The underlying dilemma -- adhering to American democratic ideals
while placating Chinese autocratic demands -- explains why Cisco's
lawyers were tied up for weeks refuting a shareholder proposal that
by most accounts likely won't amount to much.
Lenovo But Cisco should not expect the same outcome in Washington.
Think tanks like the American Enterprise Institute and Rand have
supplied research and witnesses for congressional committees
concerned with human rights in China. And the U.S.-China Security
Review Commission, a bipartisan committee that reports to Congress
on the national security implications of U.S.-China trade,
privately questioned Cisco and Nortel Networks on their China
operations. Nortel claimed that it didn't make the technologies it
is accused of transferring, and Cisco replied with an abbreviated
version of its shareholder resolution response. The commission's
July 15 report to Congress explicitly mentions AOL Time Warner and
Yahoo as possibly complying with the demands of Chinese
authorities, but lets off Cisco, Nortel, and others with a
nonspecific reference to assisting "the Chinese Government in
sensitive areas such as remote surveillance, online censorship, and
virus acquisition."
Hard Drive Two weeks later, the House of Representatives Policy Committee,
a forum for discussing specific legislative initiatives, stated the
official position of the Republican majority in a report
dramatically entitled "Tear Down This Firewall." The committee
advocates massive government intervention to free the global
Internet. The report, however, stops short of calling for sanctions
on the transfer of U.S. firewall and surveillance technologies to
China.
Travelstar Despite the subdued language, Washington's mood should not be
misread. The prominence of the Internet in China in two major
reports, both of which invoke national security, suggests that
preliminary export controls or, more likely, a corporate code of
conduct, may be waiting in the wings. As one influential government
official told me confidentially, "This is more than a PR problem
for U.S. Internet companies. This is potentially the downfall of
corporate appeasement to the PRC."
Gateway Meanwhile, concerned by the heat on U.S. companies and
protective of their "New China" image, Chinese authorities have
implemented excellent damage control. Chinese ISPs recently lifted
blocks on most U.S. news Web sites (while continuing the
comprehensive blocking of Chinese democracy and labor sites).
Simultaneously, a state-affiliated shill for Beijing's Internet
objectives, the Internet Society of China, rolled out a "voluntary"
pledge of corporate responsibility for the industry, emphasizing
"self-discipline," "trustworthiness," and a commitment to "state
security" and "social stability." In other words, don't block the
entire CNN Web site, but anything potentially offensive to Beijing
should mysteriously experience technical trouble. But, as
experienced by AltaVista and Google in early fall, Chinese
authorities haven't sworn off completely blocking access to Web
sites. Three hundred Chinese firms signed the pledge -- as did
Yahoo. Human Rights Watch, a nonprofit watchdog group, attacked
Yahoo, whose actions now seem particularly irksome given the larger
context: Beijing is shutting down most of its Internet cafs,
cracking down on proxy servers, which allow people to surf the Web
anonymously, and has sentenced a man to 11 years in prison simply
for downloading political content.
Laptop Parts The Chinese policy of "voluntary" hair-trigger censorship,
combined with the appearance of liberalization (in short, a public
relations coup), could ultimately backfire on Western corporations
(see "Restricted Area"). The Communist Party is a notoriously
unreliable partner: What if China's state police end the next
worker uprising using guns and Motorola location-tracking
technology? Or what if Chinese officials move beyond the discussion
phase to implement a national identification system developed by
Xerox or Nortel -- both of which, sources say, are interested in
supplying such technology -- and then use it to track the movements
of and round up Chinese Christian groups? How will U.S.
corporations handle these scenarios? "Just good business" in
Beijing might mean a congressional crackdown in Washington.
Software Technology companies should avoid the Chinese Internet pledge
and the national ID contract, and should take credit for their
restraint. Corporations like Microsoft, which fought China on
encryption and won, should guard their U.S. flank by spearheading a
collective statement expressing concern over China's Internet
censorship and surveillance. There's safety in numbers -- no single
corporation should bear the brunt of the Chinese leadership's
anger.
Hard Drives "Voluntary," "corporate responsibility," "trust" -- these are
our words, not theirs. The Chinese leadership just pirated them.
There's still time to drop the denials, adopt a unified strategy,
and do
business as if our words had meaning.
Electronics Ethan Gutmann, a visiting fellow at the Project for the New
American Century, is finishing a book, Beijing Boot Camp (Encounter
Books, 2003).
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