Reviews | China is winning the big data war, thanks to Xi

President Biden returned from his summit with Chinese President Xi Jinping on Nov. 15 pledged to continue what he called “straightforward competition” with China. Yet Beijing is already beating the United States and its allies in one crucial area: data.

Data is the oil of the 21st century, the indispensable resource that will fuel artificial intelligence algorithms, economic strength and national might. The source of this data is all of us: our health records and genetic sequences, our online habits, our business supply chain flows, the terabytes of images swallowed up by phones, drones and autonomous cars.

Competing for global influence in the 21st century will require protecting and harnessing this data for commercial, technological and military advantages. So far, China is winning and the West is barely engaged.

Through a network of recent laws and regulations, Mr. Xi has worked hard to make the Chinese Communist Party the most powerful data broker in the world. How does Beijing do this? By pushing Chinese data out of the world, exerting new extraterritorial power over global data flows, and putting foreign companies operating in China in a legal bind – all while absorbing data from other countries through both legal and illegal means.

Xi knows that even locking down only Chinese data, representing the patterns and behavior of some 1.4 billion people, would hamper Beijing’s rivals in the quest for global economic superiority.

The Biden administration has spoken about the importance of data in our competition with China. But no visible strategy has emerged. It threatens the privacy, economic competitiveness, national security and future world position of Americans. It will be a major test of US policy in China in 2022.

Washington’s blind spot about how big data is central to Beijing’s ambitions, and how our own data is being harnessed in the service of those ambitions, is puzzling at a time when U.S. politicians are increasingly concerned with collection. and the potential exploitation of big data by the United States. giants of technology.

It’s even more puzzling because Americans, in a bipartisan fashion, are also aware of how Beijing exploits and militarizes other American resources, like our capital markets.

This is evident in the way Washington is finally – if sporadically – beginning to grapple with the self-destructive flow of US dollars into China’s military and global surveillance apparatus. While these types of measures still need to be scaled up significantly, at least policymakers now have some tools to restrict Beijing’s easy access to U.S. capital.

This is not the case when it comes to data, where Beijing believes it has a free hand and that the West is too distracted or inept to respond in any meaningful way. Mr. Xi thinks and acts big, and has done so from his early days in power.

In 2013, shortly after assuming the presidency in Beijing, Xi said, “The vast ocean of data, just like oil resources during industrialization, contains immense productive power and opportunity. Whoever controls big data technologies will control development resources and gain the upper hand. “

Since then, Beijing has built the framework to ensure that the massive accumulations of data serve the strategic interests of the Chinese Communist Party.

A series of laws implemented in 2017 affirmed the party’s power to access private data on Chinese networks, whether in China or associated with Chinese companies such as Huawei abroad.

Now, Beijing has quietly enacted a new set of laws – first the Data Security Law in September, followed in November by the Personal Information Protection Law – that go even further by requiring not only access. private data, but also effective control over it.

This has a huge impact on foreign companies operating in China. Not only must their Chinese data remain in China and be accessible by the state, but Beijing now demands to control whether they can send it to their own headquarters; in a corporate lab in California, say; or to a foreign government that has made a law enforcement or regulatory request.

Beijing’s new laws may make it a crime to comply with foreign sanctions against China that involve data, such as shutting down banking or cloud services to a Chinese entity linked to human rights atrocities. In these cases, foreign companies may comply with US law, or they may comply with Chinese law, but not both.

The impact of these laws is clear. Tesla, Apple and others have chosen to build dedicated Chinese data centers – sometimes in partnership with Chinese state entities, lest they lose access to the large Chinese consumer market. Goldman Sachs has come under pressure against sending memos to its US headquarters.

Beijing’s recent actions complement its long-standing efforts to buy, steal, and otherwise acquire data from foreign sources around the world. Beijing hacks databases of multinational companies. It manages “talent recruitment” programs in universities and foreign companies. It buys foreign companies, such as an Italian manufacturer of military drones. It funds its own data-driven start-ups in open foreign markets like Silicon Valley.

The approach is clearly non-reciprocal. It relies on access to foreign data while denying foreigners access to Chinese data – and seems to assume that foreign governments will not respond. The United States, after all, lacks a comprehensive federal approach to data governance, while the European Union’s General Data Protection Regulation focuses primarily on consumer privacy.

Will American and allied policymakers develop approaches to limit the flow of strategic data to China? For now, the response from the Biden administration is: maybe.

“Our strategic competitors see big data as a strategic asset,” US National Security Advisor Jake Sullivan said this summer, “and we have to see it the same way.”

It is clear and convincing language. But data did not appear to be high on Mr Biden’s agenda with Mr Xi, judging by official readings from the summit.

And to this day, American political remedies are in vain and insufficient.

In June, the administration issued a decree in favor of a new regulatory process to restrict cross-border data flows for reasons of national security. But the new process has yet to be used – not against Chinese drones, Chinese access to US data centers and biotech labs, or other potential targets.

Meanwhile, the engagement of U.S. diplomats and trade negotiators on data issues is dominated by bitter fights with European regulators over the privacy rules of U.S. tech giants. Beijing’s much greater threat remains largely overlooked.

The good news is that if democratic nations step up, they could be in a better position than Beijing, complicating its own progress with an apparent paranoia.

In recent months, Xi has cracked down on private Chinese tech giants like Alibaba and Tencent, forcing them to cede their data treasure to state-controlled third parties. This crackdown, which has wiped out more than $ 1 trillion in market value, will make these companies less innovative now that they no longer control their data.

But banking on Chinese authoritarian excess to preserve America’s advantage is not a strategy.

A smarter approach would start at the national level, with a real (and robust) implementation of the Biden administration’s June executive decree. This would result in the blocking or unwinding of agreements through which large volumes of sensitive US data flows to China, whether through medical records, cellphone apps or other channels, which are not intended for the ‘moment practically not regulated.

Democratic allies must also work together to promote data sharing among themselves while limiting flows to China. A plan was presented by former Japanese Prime Minister Shinzo Abe. This idea, called Data Free Flow With Trust, should become an allied policy.

For more than a generation, Beijing has been coldly efficient in devising a strategy of global data mercantilism: hoarding data for me, ditching data for you.

If Washington and its allies do not organize a strong response, Xi will succeed in dominating the summits of the future world power.

Matt Pottinger, former Deputy National Security Advisor to the United States, is a Distinguished Visiting Fellow at the Hoover Institution. David Feith, U.S. Assistant Secretary of State for East Asia and Pacific Affairs until early 2021, is an Associate Principal Researcher at the Center for a New American Security.

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