David Drummond, Google’s chief legal officer, announced on its official blog last week, there is to be "a new approach to China". To some observers, China's government is so sensitive to negative reactions concerning censorship from outside its territories that it is almost certain to enrage them. Add this to President Barack Obama’s sharp slap on the wrist for his thinly-veiled criticism of Chinese internet censorship and that the US is to receive the Dalai Lama and sell arms to Taiwan, it should be seen as putting China in its place. But I doubt it.
Following a hack attempt on Google’s Gmail accounts, said to have originated in China, the company has taken a tough stance, declaring it can no longer accept China's draconian censorship laws. As the stand-off has progressed to date, it looks highly probable that Google will honour its threat and pull the plug on all its business interests there.
Allegedly, following a "highly sophisticated and targeted attack" last month on its corporate infrastructure, resulting in the theft of Google's intellectual property, it was ostensibly an attempt to gain access to the Gmail accounts of Chinese human rights activists; only two accounts were said to have been accessed though and no emails read.
According to Techcrunch, “Google has had more success in China than a lot of other big Valley names, but isn’t and will likely never be the market leader…Valley elites erupted into applause on Twitter and blogs saying Google was showing more backbone than the US government and was a model of integrity for the world.”
But let’s not get too hasty in the applause. There are other factors at play: Google was not making a lot of money in China and played second fiddle to Baidu; it was never going to make any "substantially increase its market share or beat Baidu”. Maybe the costs were too great against the revenue it earns there?
In fact, all foreign media companies, including Yahoo and Apple, have found it very difficult to penetrate the Chinese market and have made only modest returns. What the backlash may be within the country is hard to tell, but media censorship is deeply unpopular even with the Chinese people themselves, who may yet stage protests against the Chinese government in the future, with Google as its catalyst.
Google has now taken the position to cease the censoring of search results on Google.cn, which looks likely to be a red rag to a bull — it certainly suggests it doesn’t care any more what the Chinese authorities do, which will no doubt result in Google shutting down its operations in China.
Google originally justified its decision to set up a censored Google.cn in 2006, which drew much flak from the “free world”, but Google were no doubt undeterred due to the attraction of China’s rapidly expanding internet market and its sheer numbers.
But with China blocking its content, including Blogger, YouTube, Facebook, Twitter and millions of other “undesirable”
Let’s just hope that the Chinese people become more adept at circumventing these Orwellian blocks to foreign websites, with the wholesale installation of “virtual private network” software. Then, maybe, they can view images of the flowers that were laid outside Google’s office in Beijing.
But let’s take a look at the knock-on effects of Google’s actions and China’s perceived economic status. It’s an interesting exercise in that the press has recently taken up the mantle of China’s economic ascendancy on the world stage and of its future dominance as something to be feared. The writer thinks this is highly overblown and therefore Google’s retreat from the world’s most populous nation is not as significant as might be thought.
First, the intransigence that was China’s hallmark during the recent climate change talks in Copenhagen turned to condemnation;
So, rather than bring on the cheerleaders over China’s success in riding the storms of the recession, some say its heading for a great crash and that Google is well out of it. One described it as “Dubai times 1,000, or worse”.
According to the Economist, “China’s smooth ascent is exploding because its economic miracle has proved partly illusory…China is no Goldilocks economy. Bank lending is growing too fast, which may be fine if it is flowing into useful investments, but not if it is fuelling asset prices. The risk of bubbles and excess capacity will grow unless policy is tightened soon.
"Extraordinarily high saving and an undervalued exchange rate have fuelled rapid export-led growth and the world’s biggest current-account surplus. Chronic overinvestment has, it is argued, resulted in vast excess capacity and falling returns on capital. A flood of bank lending threatens a future surge in bad loans, while markets for shares and property look dangerously frothy.”
Analyses have drawn a mixed crowd: there are those that think Google is morally right to withdraw from repression; others view it as financially suicidal; others still see China’s ascendancy on the world stage as an entity it simply must engage with at whatever cost.
But let’s look at a few excerpts of Will Hutton’s “China, the West and the Credit Crunch”
“Hutton’s lecture turned on its head the usual expectations that the 21st century belongs to China’s ascendancy on the world stage much in the way the USA did in the 19th century.
“Hutton posits that China’s growth does not offer a new model for development, based as it is on high savings and low-tech manufacture...Growth has been brought about by the mobilisation of savings on a phenomenal scale alongside a flight to the land occasioned by the reversal of agricultural collectivisation.
“The high savings rates in China have come about as an unintended consequence of its population control policies. The One Child Policy effected a seismic change in peasant savings, as savings rather than children became the means by which to ensure support in old age...It is staggering to consider that the rapidly changing skyline of Beijing, its roads, rail, and docks, has all been financed by peasant savings.”
“…while on the surface these businesses appear to have been privatised, this masks pervasive state control. Of the 1,105 enterprises floated on the stock exchange 81% are actually state controlled...A telling statistic is that China currently accounts for only 0.1 per cent of international patents.”
The liberal wing of the so-called Communist Party talks of establishing a watered-down version of democracy by the end of this decade, but with this event it would risk fragmentation without the repressive central government it has today. As Mr Hutton points out, unlikely as it is, China would then revert to its ancien régime of “war lordism”. Hardly the environment for the internet’s pre-eminent corporations to operate in then, is it?
To conclude, I view Google’s decision to withdraw from this unacceptable level of illegal governmental corporate theft and control as a positive signal to the West that China should not be treated with kid gloves, especially if our view of the world is to continue in its role as “key enablers of a better-informed world”.
But imagine I'm wrong: that all your emails are read by the state, your company is nationalised, you have no freedom of speech, you can only read state propaganda in your online news and information cannot be shared — a dead, fetid, de-fecunded world, in other words. Let’s hope Will Hutton’s analysis is spot on and, for once, let’s bring on the cheerleaders for Google’s stand against it.
