The latest GoodFellows, on just how much we need to ramp up Cold War 2 against China.
Since it was two against one, and I didn't get a response in, I'll add one unfair late hit. In discussing Huawei, and whether Chinese state planning would allow them "economic dominance" in the next decades, my colleagues jumped to the charge that Huawei equipment would include nasty backdoors that the Chinese government would use to spy on us.
I think here they confused "economic competition" with security competition. The topic was whether state planning could give a nation "economic domination" of anything important. The reply that we need to worry about security implications does not answer the question.
The charge I think has also been overstated. Huawei has every interest to assure people its equipment does not have back doors, and my impression is they convinced the UK pretty well on that. Moreover, the US government is explicit in its desire that Apple and other US companies give the NSA back doors. I would welcome more knowledgeable commentary on this issue before next week.
"The topic was whether state planning could give a nation "economic domination" of anything important." The word "important" is superfluous.
ReplyDeleteYes, all those adding and subtracting machines the Soviet planned economy had built may well have had back doors integrated.
Gimme a break.
The NSA's track record with security breaches via Kaspersky Labs would leave me on the skeptical side of any Huaweii assurance about the absence of back doors on its equipment.
ReplyDelete"Moreover, the US government is explicit in its desire that Apple and other US companies give the NSA back doors."
ReplyDeleteSo, wouldn't that strengthen the plausibility that the Chinese government would indeed implement back doors through Huawei? Even with the help of the US Constitution, US courts, and public opinion, it's a struggle for Apple and other US firms to avoid acceding to NSA demands. Those tools aren't even available with respect to Huawei and the Chinese government.
Also, the concern is that consideration of only internal private costs and benefits might lead to adoption of Huawei technology without considering externalized security costs. Defense and security are the classic public goods after all. The fact that the UK is tempted to adopt Huawei technology against the wishes of its security partners like the US would seem to demonstrate that such concerns are more than hypothetical. If even the explicit UK-US security alliance is not enough to give due consideration to security externalities, then why would we expect say private firms' decisions about adopting Huawei technology to properly reflect the externalized security costs?
Machiavelli and Hobbes are good lenses by which to analyze what is going on with China.
ReplyDeleteMachiavelli sought to replace wisdom with power in "The Prince." Hobbes rewrote "The Prince" with "Leviathan" in which the central message is monitoring and enforcement lead to stability, echoing Machiavelli's position that the public is both an asset and a threat. However, all of that rings hollow, because what it is really about is controlling everything and expanding out, mowing over anything that got in the way. European imperialism, which is really just a continuation of Roman tendencies, played out, taking advantage of less advanced societies/economies. Read Jared Diamond's "Guns, Germs, and Steel."
Huawei: The problem here is that coupled with back doors in 5G networks, China can grab data on everyone and everything. They already have a social credit app that monitors how well you're supporting the regime. Play nice and you get perks. Don't play nice and the hammer comes down. Plus transmitting sensitive data over 5G networks with a backdoor is particularly disturbing. But, there's a work around: good encryption. The networks won't care what's being transmitted. Its job is simply to deliver data. Snag all you want - good luck trying to break the encryption.
Here's some other sobering articles:
https://www.theamericanconservative.com/articles/americas-monopoly-crisis-hits-the-military/
TLDR: "This story of lost American leadership and production is not unique. In fact, the destruction of America’s once vibrant military and commercial industrial capacity in many sectors has become the single biggest unacknowledged threat to our national security. Because of public policies focused on finance instead of production, the United States increasingly cannot produce or maintain vital systems upon which our economy, our military, and our allies rely. Huawei is just a particularly prominent example."
Why can China compete economically the way it does?
https://www.ted.com/talks/yasheng_huang_does_democracy_stifle_economic_growth/transcript
“So exactly why did China grow so much faster? I will take you to the Cultural Revolution, when China went mad, and compare that country's performance with India under Indira Gandhi. The question there is: Which country did better, China or India? China was during the Cultural Revolution. It turns out even during the Cultural Revolution, China out-perfomed India in terms of GDP growth by an average of about 2.2 percent every year in terms of per capita GDP. So that's when China was mad. The whole country went mad. It must mean that the country had something so advantageous to itself in terms of economic growth to overcome the negative effects of the Cultural Revolution. The advantage the country had was human capital -- nothing else but human capital. “
So, the world has taken advantage of the cheap labor costs. There is a price to paid for this cheap labor, however, which we are seeing play out now on the world stage.
(continued...)
I don't think Machiavelli is the correct lenses with which to view China. To my knowledge, most Chinese approve of the CCP even now despite what we perceive to be utter PR blunders. In fact, my colleagues regularly express their disdain for Westerners and remain loyal to "facts" as disseminated by the CCP, believing Western media as no more legitimate. Even regarding Covid-19, my Western educated Chinese colleagues remain indignant that they are not at fault, that they were transparent but now are vilified by Western politicians and media.
DeleteWe've persistently erred by viewing other cultures through our prism, like how we tried to train an Afghan army when historians testified in congress that there is no such thing as an "Afghan" people. Likewise, we'd expect Machiavellian states to be deft and surgical in their maneuvers - which the CCP is clearly not -, but the CCP nevertheless enjoys overwhelming domestic support, and not through fear.
Hi Anonymous,
DeleteBy your description, Machiavellian tactics have worked if it has produced a somewhat docile and pliable society/populace. *wink*
Best,
M
(Continuing on...)
ReplyDeleteWestern Economies placed bets that the Chinese market was going to surge into the middle class, allowing people to buy more stuff. The fascination with India is no different, as their GDP growth was only a little behind that of China's.
Dr. Cochrane is right: if we are going to compete economically, we have to get better at what we do, versus outsourcing it and forgetting our competitive advantages. Bureaucracy can certainly crimp the drive to innovate and slow it down. China's path dependency is wildly different than ours. While the Western World wants to see an integrated economy, because that tends to quell the desire to dominate (cooperation!), and it leads to specialization, China wants to see the world as a supplier to its own demands/desires. The moves they are making turns the world into a giant supply chain for China's ambitions (are the US's plans that different though? Yes and no - peace through cooperation, not domination, which is the big difference).
You want to contain them? You need a united front from all trading partners to have:
1. Real enforcement with real consequences. (Good luck with that.)
2. Abandon China altogether and let them figure it out. (Incredibly risky)
Option 2 presents some real problems because of the debt China holds. But, again, Dr. Cochrane is right: you can always say NO to a deal. Why aren't more saying no? Because they're desperate or have a desire to capitalize on China's ambitions - ride the wave, so to speak.
Best,
M
Mykel, Good point.
DeleteChina Offers cheap infrastructure loans to sovereigns with the financed projects as collateral.If those countries default, China via contract, owns those projects. "Why aren't more saying no?" The answer to your question: Pakistan and Nepal turned down infrastructure loans from China. It's no mistake they declined offers of loans as both Pakistan and Nepal border China. I suspect others will follow suit if the leaders are not corrupt.
Mykel, Good point.
DeleteChina Offers cheap infrastructure loans to sovereigns with the financed projects as collateral.If those countries default, China via contract, owns those projects. "Why aren't more saying no?" The answer to your question: Pakistan and Nepal turned down infrastructure loans from China. It's no mistake they declined offers of loans as both Pakistan and Nepal border China. I suspect others will follow suit if the leaders are not corrupt.
Some are saying no. Good.
Deletehttps://www.nairobiminibloggers.com/tanzania-president-cancels-10billion-chinese-loan-refers-to-the-terms-and-conditions-as-one-that-can-only-be-accepted-by-drunkard-person/
I think this is what HR was referring to in his recent piece on the Atlantic.
ReplyDeletehttps://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017
nice content.
ReplyDeleteYou said: "Moreover, the US government is explicit in its desire that Apple and other US companies give the NSA back doors."
ReplyDeleteWhat makes you think that the Chinese wouldn't do the same implicitly with Huawei?
If you look at the biography of Ren Zhengfei, who is formerly associated with the Chinese army, and how the Chinese government is running the propaganda machine for Huawei, a hidden partnership between the Chinese government and Huawei shouldn't be surprising.