Chinese big tech companies are amongst the largest and most innovative companies in the world, the steep growth of which has amazed many across the globe. Their penetration into the emerging markets has helped developing nations acquire cutting-edge technology and improved connectivity with the world, but it has come at a cost. The close working relationship between Chinese big tech and the Chinese Communist Party (CCP) is perceived as a national security threat by many countries. These tech giants are more than capable of serving the party’s strategic and geopolitical interests. The extent to which CCP wants to dictate control in the cyberspace domain is evident from the official statements from Cyber Administration of China (CAC). According to CAC, the CCP’s ideas should always become the strongest voice in cyberspace, and China’s proposition of internet governance should be an international consensus. This can be achieved through enhancing the “global influence of internet companies like Alibaba, Tencent, Baidu, Huawei.”
Chinese Quid pro quo
As per the CCP’s Constitution, it is mandatory for any enterprise, with more than three or more full party workers, to form a party’s organisation and provide for party activities. Big tech firms are not an exception to this rule; in fact, they have the highest number of internal CCP Party committees, which aim to promote party loyalty. Huawei has over 300 party branches, Alibaba has around 200, and Tencent has around 100. Additionally, Jack Ma of Alibaba, Robin Lo of Baidu, Pony Ma of Tencent and Lei Jun of Xiaomi are members of CCP.
This relationship between Chinese big tech and CCP seems to be symbiotic. The CCP provided the capital, gave government contracts to these companies in their initial stages, eliminated the foreign competition by banning or regulating foreign companies, helped them grow and now, therefore, is the time for the Chinese companies to pay back by aligning themselves to the party’s strategic goals. This intermingling of big tech and CCP share its roots in the flagship program of “Military Civil-Fusion” (MCF) pioneered by President Xi Jinping. The purpose of the MCF is to develop China into a technologically advanced military might by 2049, by helping break barriers between Chinese civilian research, commercial companies, and its military and industrial defence sectors. The implementation of the MCF strategy relies not only on indigenous technology but also on acquiring critical dual-use technologies outside China through licit or illicit ways including cyber theft, espionage, and predatory acquisition. Thus, the role of these big tech companies become further critical in the acquisition of data, technology, and start-ups.
As per Article 7 of China’s National Intelligence law, 2017, Chinese companies are required by law to share data with the State. The law also states that the “State protects individuals and organisations that support, assist, and cooperate with national intelligence work”.
There have been multiple reports about the use of Huawei’s surveillance and face detection system by CCP on Uighurs Muslims in the “re-education” camps. In fact, Huawei has developed a face detection software which will give an “Uighur alarm” to authorities if it identifies members of the oppressed minority group based on their ethnicity.
The CCP is using its big tech for surveillance not only in its own country but even outside. There have been reports of surveillance and data theft at the African Union’s headquarter in Ethiopia through Huawei. These and other malicious activities by Huawei have already led to the blacklisting of its 5G instruments in US and multiple other states.
Similarly, the messages of WeChat, owned by Tencent, are subject to surveillance and are often deleted if they do not conform to the Party’s standards even if they originate outside China. The Canada Wenzhou Friendship Society has already been accused of meddling in Canadian election using the WeChat app.
China monitors the world not just by using these big tech firms but also by using surveillance hardware. A classic example is using a microchip to infiltrate many US companies, some of which were involved in government defence contracts. Super Micro Computers Inc. is a San Jose-based company that assembles server’s motherboard which are further used by many companies including Amazon, Apple, Elemental, etc. Super Micro Computers subcontracts the manufacturing to various companies in China. While auditing the motherboard servers, it was found that they were sabotaged with a microchip most probably designed and manufactured by the Chinese military unit and were roughly the size of the tip of a pencil. The microchip had network capability, memory and processing power for an attack and were embedded in the servers during their manufacturing in China and then shipped to the US. This insidious attack by China on the US companies was one of the most sophisticated hardware attacks.
India erring on the side of caution
India has also not been immune to cyber attacks, data theft, and industrial espionage by State-sponsored Chinese hackers and big techs. According to a recent intelligence report, in a systematic plan by Chinese authorities, at least 72 Alibaba cloud servers were sending Indian data to China. This comes amidst China’s super surveillance report on around 10,000 prominent Indian personalities, including PM Narendra Modi. Just last month, Chinese state-backed hackers infiltrated the servers of Bharat Biotech and Serum Institute of India to steal the intellectual property of the Indian COVID-19 vaccine makers. There have also been reports of Chinese PLA unit 61938, APT22 group targeting critical Indian infrastructure, including nuclear power plants, financial institutions, railways, and banking. The list is long, but one thing remains the same, one cannot trust digi-tech that has its origin in China or is substantially controlled by Chinese companies. The Chinese companies are constantly in sync with the CCP and PLA and provide them with information as and when requested.
As it is said, these days, data is the new oil and Chinese companies at the behest of the State are engaged in enhanced oil exploration and recovery. Commendably, the Indian government banned 267 Chinese apps including WeChat and PUBG (Tencent), UC Browser (Alibaba), TikTok (Bytedance) that were involved in data acquisition and were a threat to the sovereignty and integrity of India. India also recently banned Huawei from participating in its 5G trials. However, these companies are trying to return to India in indirect ways. Recently, the relaunch of PUBG Mobile was announced by the name Battlegrounds Mobile India. The company that is bringing it to India, Krafton, has Tencent as its second biggest shareholder.
The digital threat from China is not only in the form of these apps, but the threat looms large based on the extent of Chinese investments in Indian start-ups. Chinese investment in Indian start-ups account for up to US $4 billion and 18 of the 30 Indian unicorns have Chinese investment. The heavy presence of Chinese investors in the India start-up market is a threat to the financial independence of Indian companies. Recently, India banned the automatic route of investment from countries sharing its borders and further, the Security and Exchange Board of India (SEBI) is checking whether the Ant group (Alibaba financial arm) has any ‘control’ over Paytm. This is a welcome step since Chinese predatory acquisition of start-ups is out in the open.
A gentle nudge forward
Since then, Indian start-ups have diversified their investment options and are getting investments from Japan, the US, Australia, and other like-minded nations. Similarly, Indian investors have risen to the occasion and are now funding various Indian start-ups. We need ‘Atmanirbharta’, especially in start-ups that are working in the field of critical dual-use technology. Grooming Indian start-ups by providing them funding and easing the regulations and tax structure will help in creating a strong base for the start-ups to flourish. A conducive environment for innovation, more research and development grants from the government, a long-term national policy for new and emerging technologies such as Artificial Intelligence, quantum computing, etc. are required from the government to shield against the threat emanating from Chinese big tech and the CCP in the digital foray. We need to understand that strategic, critical technologies will emerge from the open market, unlike in the past, where military technologies were the domain of ordinance factories and the Defence Research and Development Organisation (DRDO). We, as a nation, must be intelligent and foresighted enough to tap these technologies in their nascent stage and nurture them so that we can protect ‘Atmanirbharta’ from any adversaries.
Written by Dr. Gaurav Tyagi is Assistant Professor at the Special Centre for National Security Studies, Jawaharlal Nehru University. The article is published originally in www.orfonline.org and being reproduced with due permission from Observer Research Foundation, Delhi duly acknowledging their copy rights.