Welcome, China Watchers. This week’s guest host is Alexandra S. Levine, a technology and politics reporter at POLITICO whose coverage focuses on privacy and data protection issues in the U.S. and around the world. She is also a lead author of Future Pulse, POLITICO’s weekly dispatch exploring how tech is shaping health care. Prior to joining POLITICO in 2019, Alex was a Metro reporter at The New York Times, where she spent three years at the helm of the popular New York Today column. Over to you, Alex. — John Yearwood, global news editor
The Covid-19 pandemic has heightened digital surveillance around the world. But in China, where citizens had already been subjected to mass tracking by the government, the crisis helped expand an authoritarian system that has been refined and cemented as the norm.
Yet, as the Chinese surveillance state grows, so does public pushback. Case in point: A Chinese professor goes to a zoo in Hangzhou, which requires a scan of his face before he can enter. Dismayed, the professor files the first-ever lawsuit there over the use of facial recognition — and in April, shockingly, he wins.
The unusual ruling has become an important and curious data point as Washington tries to wrap its head around China’s evolving privacy landscape and assess the superpower’s fast-advancing privacy law, which is likely to pass later this fall — well before the United States has its own privacy law on the books. Some in Congress are “deeply alarmed” that China is outpacing the U.S. on a national privacy standard.
“Europe’s way ahead of us. China is about to go ahead of us,” said Senate Commerce Consumer Protection Chair Richard Blumenthal (D-Conn.). “The rest of the world is leaving us behind.”
Congress has been slow-moving on a comprehensive national data privacy law, and the Biden administration has yet to formally call for such protections. States and foreign powers, meanwhile, are moving faster than the federal government. Several states have already passed their own privacy rules — the Colorado Privacy Act is expected to become law any day — as have Europe and Brazil. There have also been recent developments in Africa and India, which is likely to adopt its own general data protection law by the end of the year.
It’s easy for Americans to be dismissive of Chinese privacy efforts and cynical about how much such a law, under Beijing’s regime, could possibly protect civilians from government surveillance or companies’ bad behavior. But the tale of professor Guo Bing, and other consumer protection cases bubbling up there, are proof that growing, bottom-up demands for privacy in China are starting to be acknowledged — and experts say taking those tensions into account is key to understanding the implications of the looming privacy law.
China is now one of the world’s most active players on digital regulation, and its crackdown on ride-hailing app Didi is just the latest example. The last 20 years have seen a significant liberalization and shift in attitudes — including the public’s increasing desire for more rights and control over their data — that would have been unthinkable two decades ago in a Communist China, said former NSA general counsel Glenn Gerstell.
China’s draft privacy legislation, the Personal Information Protection Law, shows the government responding to popular will and addressing the same consumer backlash against tech giants that exists around the world, including in the U.S. and Europe, Gerstell said. It’s modeled off Europe’s General Data Protection Regulation and similarly targets Big Tech companies’ use of personal data, with similar approaches to consent and individuals’ rights to access and delete their information. Privacy advocates see real potential benefits — but therein lies the paradox.
“There’s just this incredible dichotomy between on one hand, a government that appears genuinely to want to respond to popular concerns over the role of Big Tech and its pervasiveness,” Gerstell said in an interview. “And yet, it’s the same government that is capable of just extraordinary breaches of human rights, an incredibly authoritarian approach to its system of government, [and] surveillance capabilities and powers unlike anything we can imagine.”
The biggest open question is whether the privacy protections, written mainly by the Chinese government, will apply in any meaningful way to state surveillance.
Many China watchers agree the most fascinating part of the bill — and the biggest cause for skepticism — are the provisions that apply to so-called “state organs,” purporting to put constraints on what the government can do with citizens’ personal information. Those rules are rife with loopholes, according to Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center, who specializes in the geopolitics of data privacy.
“It’s very vague, and it of course, in typical fashion of Chinese law, has massive national security carve-outs,” Sacks said.
One section, for example, creates exceptions for situations that “will impede State organs’ fulfillment of their statutory duties and responsibilities,” according to a translation from Stanford’s DigiChina Cyber Policy Center. That has raised eyebrows over how strong the law can be from an enforcement perspective and why the Chinese government would restrict its own ability to access companies’ data.
One theory is that the language could give the government leverage when it requests access to data from private companies, which may try to push back on those asks if there is no clear legal justification.
The law “could, in a kind of backwards way, make it easier for those state organs to access the data, because now they can cite this law as part of their legal justification,” Sacks said. More generally, she added, the government wants to expand its control over vast troves of data from Chinese internet platforms like Alibaba and Tencent, and this legal framework can both help it build out its digital economy and better tap into data that it sees as a strategic economic asset.
There are other open questions around how the law would affect Western companies doing business in China or dealing with Chinese citizens’ data elsewhere. A section on the transfer of personal data “outside the borders of the People’s Republic of China for business” purports to apply extraterritorially, which could create problems for American firms that must comply. Those transfers would be subject to the rules of China’s cyberspace authorities, Gerstell said, which “could well conflict with either their own series of obligations in the United States, or their own corporate obligations,” he said. “You could see the U.S. company being caught between the proverbial rock and a hard place. … That’s not a good position to be in.”
Privacy advocates are generally not confident that people living in China will have adequate protections under the law beyond where it deals with the abuse of their data online. Many believe it’ll have little effect on data collection by the Chinese government and won’t stand in the way of authorities using any means necessary to go after perceived national security threats, such as political dissidents.
Even so, close observers emphasize that influential voices who’ve had some input in the draft — like scholars or private sector leaders — are operating in a fraught environment.
“Researchers and scholars within China’s political system [are] pushing up against the bounds of what they’re allowed to do,” Sacks said. “The question is: how far can they go within the constraints of that system?”
Meanwhile, back in the U.S., Congress has been laser-focused on legislating around China. Lawmakers last session introduced hundreds of bills and resolutions related to China. And more recently, this past June, the Senate passed a major bipartisan bill to counter China’s growing economic and geopolitical power. But prospects for a national privacy law are looking worse by the day.
And with China poised to pass its own privacy framework ahead of the the U.S., some congressional leaders are not happy.
“I am beyond concerned — I am deeply alarmed — that China is moving forward with a so-called privacy standard,” Blumenthal said in a recent POLITICO Live interview, pointing to China’s hacking abilities as a major national security threat that’s been exacerbated by the lack of a U.S. privacy standard. “Because privacy protection is data protection, it is national security protection.”
But privacy experts argue that China’s nearing the finish line on a privacy law will do little to faze the American public or move the needle on legislation in Congress.
“This will not add a lot of urgency to Congress by itself,” said Gabriela Zanfir-Fortuna, the Future of Privacy Forum’s director for global privacy.
“I don’t think in this particular area the U.S. feels that it’s in a competition with China — not at all,” she added. “Given that this also has a lot of civil rights-type implications, and fundamental rights implications, I do not see the U.S. looking at China as a jurisdiction that is in competition with the type of civil rights protections that are here.”
There has long been bipartisan support in Congress for enacting a national privacy law. But two major sticking points — whether a federal law should preempt state rules, and whether individuals should be able to sue companies over privacy violations — have stalled progress, and a path forward remains elusive. Lawmakers have held no hearings this Congress on the comprehensive privacy law, and any such legislation is unlikely to pass in the first two years of a Biden administration. The Biden team did not immediately respond to a request for comment on where they are on the issue or when they might formally declare support for such protections in the U.S.
It’s unclear whether the facial recognition suit brought against the zoo by Guo Bing, the Chinese law professor, under an existing consumer protection law, will have broader ramifications for surveillance in China.
“Legally, it looks like the impact of my lawsuit will be much less valuable than I’d anticipated,” he said in a recent interview with Chinese state media, noting that the zoo, as a result, was required only to delete his personal data, but not to change its practices.
But the imminent privacy law, the largest effort yet in a flurry of privacy-related activity in China, could be another step in that direction.
“There is always a gap between law and reality everywhere,” said Zanfir-Fortuna, “and I’m very curious to see how wide — or not — that gap will be in China.”
And now, back to your regular China Watcher programming…
— A tech update from Protocol | China. Protocol | China, backed by Robert Allbritton, publisher of Protocol and POLITICO, tracks the intersection of technology and policy in the world’s largest country. Sign up for the newsletter and learn more about Protocol’s research here. This week’s coverage includes Didi’s effects on future cross-border IPOs from China and another Chinese crypto crackdown, this one on software.
— PROGRESSIVES WANT COOPERATION WITH CHINA: “Over 40 progressive groups sent a letter to President Joe Biden and lawmakers on Wednesday urging them to prioritize cooperation with China on climate change and curb its confrontational approach over issues like Beijing’s crackdown on Hong Kong and forced detention of Uyghur Muslims,” POLITICO’S Alex Ward reports. “To combat the climate crisis and build a global economy that works for everyday working people — in the U.S. and China alike — we must shift from competition to cooperation,” the groups, including the Sunrise Movement and the Union of Concerned Scientists, wrote in their letter. “The Biden administration has long claimed it could silo its climate cooperation and geopolitical competition with China,” Ward reported. But progressives don’t believe them, setting up a growing fight between the left and the White House over how to handle two of the greatest foreign policy challenges of our time.
— BIDEN MUM ON CCP ANNIVERSARY: If the Chinese Communist Party had hopes that it’s July 1 100th anniversary would merit even a lukewarm White House message of recognition, it ended the day in disappointment, Phelim Kine reports for China Watcher. Chinese state media kept a running tally of congratulatory messages from foreign leaders but Biden wasn’t one of them. Instead, the topics of July 1, 2021, White House press statements included everything from infrastructure and the Surfside Condo Collapse to a readout of National Security Adviser Jake Sullivan’s call with Vietnam’s deputy prime minister, Pham Binh Minh. What attention the anniversary received from other quarters in Washington, D.C., likely underwhelmed CCP observers. The sole congratulatory statement came from the National Committee of the Communist Party of the United States of America, which name-checked “the Chinese dream of national rejuvenation.”
The CCP likely wishes that the two U.S. lawmakers who did choose to comment on the anniversary had instead pursued a Biden-like silence. They included a Newsweek opinion piece by Sen. Marco Rubio (R-Fla.) titled “A Century of Misery for the Chinese Communist Party” and a statement via Twitter by Rep. Elise Stefanik (R-N.Y.) that demanded accountability for everything from “millions killed at the hands of the regime” to the CCP’s “blatant cover-up of the origins of COVID-19.” And that was just the morning.
Throughout the day, China figured prominently as a focus of U.S. government attention in ways that seemed calculated to offset the CCP’s exuberantly hagiographic rendering of the wisdom and benefits of its first century. A July 1 U.S. State Department statement excoriated the impact of Hong Kong’s National Security Law on the one-year anniversary of its imposition by Beijing. Later that day, State Department dropped its annual Trafficking in Persons report lumping China — along with states that included North Korea, Syria and Myanmar — in the report’s Tier 3, the worst of three rankings reserved for countries “whose governments do not fully meet minimum standards“ and are “not making significant efforts to do so.” The report’s sting was likely compounded by its explicit mention of “a government policy or pattern of widespread forced labor, including through the continued mass arbitrary detention of more than one million Uyghurs, ethnic Kazakhs, ethnic Kyrgyz, and other Muslims in the Xinjiang Uyghur Autonomous Region.”
Perhaps mindful of these slights of omission and commission, China’s Xinhua state news agency marked July Fourth with a lurid cartoon captioned: “How a gun-happy nation spends its #FourthofJuly weekend.” The cartoon featured a maniacal gunman dancing in front of a gravestone with the inscription “Death from Firearm.”
— CHINA’S ECONOMIC CLOUT: China’s growing global economic power is the key “magnet” for its widening geopolitical influence. That’s one of the key conclusions of a new RAND Corporation report, “Understanding Influence in the Strategic Competition with China,” published last week. That economic influence in countries that Beijing seeks to foster closer diplomatic ties with comes in the form of both measurable indicators including foreign direct investment and trade flows, as well as “clandestine outreach—sometimes with financial incentives” to opinion leaders and elites in the targeted countries. RAND recommends that the United States can counter that expansion of Chinese economic influence through tactics including the development of “investment tools capable of offering countries an alternative to Chinese money” as well as underwriting transparency mechanisms, such as journalism and independent research, to carefully monitor China’s economic influence activities in key states.
— VITASOY GENERATES ONLINE ANGER: Hong Kong-based soy beverage titan Vitasoy International Holdings Limited is paying the price this week, literally, for incurring the wrath of Weibo users. The trouble started when Vitasoy last week issued a statement of condolence for the family of a Hong Kong-based employee who reportedly committed suicide after being implicated in the stabbing of a Hong Kong policeman. By Wednesday, the hashtag #Boycott Vitasoy had 15 million shares on Weibo. Vitasoy scrambled to contain the brand damage by issuing a statement on Saturday apologizing for the condolence message and attributing it to a staff member who wrote it “without authorization.” Too late. Vitasoy investors in China and Hong Kong seemed to take the Weibo hint and within 24 hours, Vitasoy’s share price on the Hong Kong Stock Exchange plunged more than 14 percent. Adding insult to injury, that tumble prompted the hashtag “#Vitasoy evaporates about 1 billion Hong Kong” to get more than 400 million shares on Weibo by Wednesday.
— CHINESE STUDENT VISA FUROR: Chinese Foreign Ministry allegations that the U.S. had denied more than 500 visa applications for Chinese students seeking to study in the United States struck a nerve on Weibo this week. The hashtag “#Foreign Ministry’s response to more than 500 Chinese students being rejected by the United States” had more than 100 million hits by Tuesday. Foreign Ministry spokesperson Zhao Lijian blamed the visa denials on the Trump-era Presidential Proclamation 10043 that bars entry to Chinese researchers and students linked to China’s “Military-Civil Fusion” strategy. Zhao slammed that visa restriction as “a poisonous legacy of the Trump administration.”
— U.S. TECH WARNINGS ABOUT NEW HK LAW: An international trade grouping of technology firms, including Google, Facebook, Amazon and Apple, released a letter on Monday that warned the Hong Kong Special Administrative Region government that proposed penalties in its new law aimed to criminalize doxxing “violated global norms and trends” and threatened their ability to do business in the territory. The Asia Internet Coalition described the new law’s criminal sanctions as posing grave risks to “due process and freedom of expression and communication.” The AIC cautioned that unless Hong Kong rethink the law’s penalties, technology companies would have no choice but “to refrain from investing and offering their services in Hong Kong.”
— NEW TWIST ON CHINA’S ‘DOMINO STORY’: In April 1954, then-U.S. President Dwight D. Eisenhower warned that a victory for Vietnamese communists in French Indochina would spark a “domino effect” of communist victories across Southeast Asia. Japan Deputy Prime Minister Taro Aso on Tuesday appeared to posit a 21st century version of that theory, warning that a Chinese military attack on Taiwan would pose a “survival-threatening situation” for Japan and an imminent threat to Japanese territory. “We need to think hard that Okinawa could be the next,” Aso told Kyodo News. Aso declared that threat would require Japan and the United States to defend Taiwan in the event of a Chinese invasion of the self-governing, democratic island. Chinese foreign ministry spokesperson Zhao Lijian blasted Aso’s remarks in a Tuesday press conference, deeming them “extremely wrong and dangerous.”
— GERMANY TACKLES CONFUCIUS INSTITUTE: The German government will invest $24.8 million over the next four years to develop “independent China competence” at domestic research institutes and universities. That competence, hinged to a syllabus “based on European values” appears to be an implicit rebuke of the role and influence of Confucius Institutes in Germany. CIs, Chinese state-backed language and cultural training centers established within universities across the world over the past decade, have been a lightning rod for criticism internationally over the past decade for allegedly operating as a key component of “China’s overseas propaganda set-up.” The German government initiative follows the move by the University of Hamburg last year to end its relationship with a CI due to “political influence and information leak” concerns.
— EU-CHINA INVESTMENT DEAL CONFUSION: A virtual mini-summit on Monday between German Chancellor Angela Merkel, French President Emmanuel Macron and Chinese President Xi Jinping has sown confusion over the status of a vexed European Union-China joint investment deal. The EU suspended finalization of the EU-China Comprehensive Agreement on Investment in April after the Chinese government placed five European Parliament members on a visa blacklist. China’s shiny new official “Diplomacy in the New Era” website trumpeted on Tuesday that the mini-summit had rendered a possible breakthrough in the impasse over the CAI. The website stated that Merkel “hopes that the EU-China investment agreement will be approved as soon as possible.” However, the German foreign ministry’s own brief statement on the meeting made no such reference, stating only that the three leaders “exchanged views in particular on the status of relations between the EU and China.” The Elysée Palace statement was equally ambiguous and detail-free, noting only that Macron and Merkel noted “European expectations on access to the Chinese market and fair competition conditions.” Stay tuned.
Thanks to: Ben Pauker, Phelim Kine, Alex Ward, Luiza Ch. Savage, Matt Kaminski and editor John Yearwood.
Do you have tips? Chinese-language stories we might have missed? Would you like to contribute to China Watcher or comment on this week’s items? Email us at [email protected].