The Great Chinese Netizen Slogan Contest

Originally posted on Net Politics.

A million homes the Net together ties,
Cyber civilization on all of us relies.

Pretty catchy, no? These two lines could be awarded a prize by the Cyberspace Administration of China (CAC) in a contest they’ve just launched to identify the best slogans and stories of what it means to be a “good Chinese netizen.”

China has been gearing up its online propaganda machine for weeks as the country prepares for today’s military parade in Beijing commemorating the seventieth anniversary of Japan’s defeat in World War II.  Internet regulatory offices around the country have beenorganizing events to celebrate the nearly three-quarters of a century old victory. On Tuesday, for example, the Beijing Internet and Information Office launched a signing contest to promote the “War of Resistance”.

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Here’s What the Chinese Media Is Saying About a U.S. Response to the OPM Hack

Originally posted on Net Politics.

Last Saturday, the New York Times reported that the Obama administration has decided to retaliate for the theft of millions of personnel records from the databases of the Office of Personnel Management. While administration officials are still debating what measures can be taken without risking escalation, one response reportedly being considered is breaching the Great Firewall.

Adam’s post earlier this week explained in detail why this wouldn’t work. Regardless of how ineffectual such efforts might be, that hasn’t stopped the Chinese press from responding with outrage that the United States might respond at all to the OPM breach. Below, I’ve collected some of the articles to give a sense of the Chinese perspective on the situation.

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The Bumpy Road to Regulating China’s Internet Finance Industry

Originally published at The Diplomat.

On Friday, the People’s Bank of China released a draft plan to regulate the country’s rapidly growing Internet finance industry. The plan has already become the target of harsh criticism from the tech industry and the public and is also the latest salvo in a showdown between the People’s Bank of China and China’s Internet regulators.

Internet finance—a catch-all term for a wide range of services including mobile device money transfers, online credit, QR code-enabled payments, and online wealth management tools—is a booming industry in China. Alibaba, China’s largest e-commerce company, has over 300 million registered Chinese users on its online payment platform, Alipay. Alipay Wallet, the mobile version of the service, has 190 million active users; compare that to Paypal, which only has 169 million. The country’s largest online money market fund, Yu’ebao, has more than 185 million users and assets worth around $93 billion. And while there’s no available data on how widespread usage of QR codes for mobile payment are, the little patches of squares are ubiquitous in China.

The growth of this industry has been driven by a number of factors. Chinese Internet users prefer to access the web on mobile devices, which explains the mobile tilt of Chinese online payment platforms. Online wealth management tools make it easy to save without leaving the comfort of your home and generate returns twice as high as traditional banks. The makeup of China’s economy has also undoubtedly played a role: migrant workers in the coastal regions use the online platforms to send money back home to their families.

It’s no surprise, then, that the Chinese tech industry and many members of the public responded in outrage when the People’s Bank of China (PBOC) proposed regulations for the online payments industry on Friday. They say that the new rules will hurt Chinese consumers and stifle technological innovation in a web of red tape. The rules cap payments made through an online payment platform at 5,000 RMB ($800) per day and limit QR code-enabled payments to 200 RMB per day; prohibit peer-to-peer payments (think Venmo); and require users of online payment platforms to register their real name and provide identification to verify it. Instead of using third-party platforms, the PBOC expects Chinese citizens to go through a state-owned bank, saying that this will guarantee the security of payments and guard against fraud.

Earlier this year, Chinese premier Li Keqiang called on Chinese citizens to follow the lead of the tech industry and be entrepreneurial and innovative. Last month, the State Council released a plan for “Internet Plus”—an effort to integrate the Internet into traditional manufacturing, stimulate the domestic tech industry, and spur the next stage of economic development. The PBOC’s proposed regulations are in direct opposition to that goal.

“With these new rules, instead of lowering the barriers to innovation, they’ve raised them,” author of the book “The Internet Finance Revolution” Yu Fenghui told the Wall Street Journal earlier this week. “The implementers of these rules are looking at this from the perspective of protecting the banks.”

Not surprising, considering China’s central bank is the agency promulgating the regulations. Chinese state-owned banks stand to make a substantial profit if they can take over the entire Chinese online payments industry, which processed $1.28 trillion in transactions last year. The draft regulations are open for public comment for the next several months; online payment platforms have already said they plan to communicate their concerns to regulators. Luckily for Chinese consumers, online payment platforms, and ecommerce startups, they may have a powerful ally on their side: the Cyberspace Administration of China (CAC).

When new policy initiatives related to cyberspace are released, the CAC typically features triumphal news coverage of the government announcement on its site. After the National People’s Congress announced a new Cybersecurity Law, the CAC called it “important historical progress.” Coverage of the new “Internet Plus” plansaid it would “bring new opportunities to tell the ‘China story’” and introduce a “digital revolution” to traditional industries.

By contrast, the coverage of the online finance regulations was rather muted. “Online payments may be restricted,” read one headline. “Strict third-party payments oversight raises controversy; the ‘free lunch’ of inter-bank transfers is going away,” another lamented. Another featured article declared that 60 percent of netizens believe that the regulations will hurt ecommerce and online money transfers. Featured right next to these articles was an interactive feature celebrating ecommerce and encouraging recent college graduates to consider starting their own online stores.

The siloed nature of the Chinese bureaucracy has long fed turf wars between different arms of the Chinese state; such conflict is nothing new, particularly for the PBOC. Last year, the CCP created the Central Leading Group for Internet Security and Informatization to overcome this very problem by getting top-level policymakers together to coordinate decisions. Both PBOC governor Zhou Xiaochuan and CAC head Lu Wei are members of the group. While both Zhou and Lu are political heavyweights, the CAC has enjoyed elevated prominence since it was created last year, due largely to the importance the Xi-Li administration has placed on cyber policy. In the coming months, we can expect to see further back-and-forth over Internet finance. For the sake of China’s tech giants and a Chinese public that is relying on Internet finance platforms that are more diffuse and democratic than traditional banks, let’s hope the PBOC doesn’t get its way.

Lincoln E. Davidson is a Research Associate in Asia Studies at the Council on Foreign Relations. His research interests include rural China, Chinese cyber policy, and cross-Strait relations.

‘Internet Plus’ and the Salvation of China’s Rural Economy

Originally published at The Diplomat.

Earlier this month, China’s State Council released an implementation plan for “Internet Plus,” an initiative aimed at using the Internet and related technologies to spur the next stage of economic development. First announced in March by Premier Li Keqiang as part of his annual government work report, Internet Plus focuses on deepening the integration of the Internet, cloud computing, and big data into traditional manufacturing. In the process, the government hopes to also stimulate the growth of China’s domestic tech industry.

The State Council’s action plan (in Chinese) identifies four primary goals. China’s leaders hope to upgrade and strengthen the security of Internet infrastructure, expand access to the Internet and related technologies, make social services more convenient and effective, and, most importantly, increase both “quality and effectiveness” of economic development—in other words, move away from labor-intensive manufacturing to a higher point on the value chain. By 2025, the plan says, Internet Plus should be an “important driving force of innovative economic and social development.” Think of it as state planning meets the Internet of Things.

The plan outlines eleven areas for government work to achieve these goals by 2025, all of which are linked to other key initiatives of Xi Jinping and Li Keqiang. Fearing that wage increases will push China out of low-end manufacturing, causing already-slowing growth rates to drop even further, the country’s leadership is taking steps to develop a domestic innovation capacity with a “Made in China 2025” roadmap (in Chinese). Concerns about NSA snooping have led to a push for technology to be “secure and controllable.” To streamline administration and social service provision, the government has drafted a comprehensive government big data strategy. A proposed “social credit system” would upgrade the government’s social monitoring to Orwellian levels.

Such plans, and the Internet Plus initiative to integrate modern communications technology into them while maintaining strict social control, have been criticized as ineffectual and overly optimistic. Taking the skeptical view, George Chen writes that “if Beijing misses the point and continues to censor access to information, Premier Li’s new Internet Plus strategy will probably just get more Chinese to shop online rather than have any significant and long-term impact on the country’s long-awaited economic transformation.”

This prediction may come true when it comes to innovation, but one area where Internet Plus has a better chance of success is in modernizing China’s agricultural sector and improving the standard of living in rural areas. The item in the Internet Plus plan that focuses on modernizing agriculture identifies four areas for government work:

  • Encouraging Internet firms to create platforms to support new forms of agricultural production—such as large-scale farming and peasant cooperatives—strengthen marketing channels, and orient agricultural production towards consumer demand,
  • Connecting all aspects of agricultural production to the Internet—for example, promoting environmental monitoring systems that are connected to the Internet, automatic, and provide real-time data,
  • Creating pilot programs aimed at connecting more villages and rural enterprises to the Internet,
  • Using the Internet to more effectively and safely trace agricultural products “from farm to table,” an attempt to combat China’s frequent food scandals.

These are important efforts. The digital divide between rural and urban China, much like the income gapbetween the two, is growing. Internet penetration in rural areas hovers around 30 percent; in urban areas, it’s twice that. In recent years, rural residents have overcome the challenge of Internet infrastructure that’s weaker than in urban areas by migrating to mobile. Internet Plus initiatives that support mobile Internet access, loosen restrictions on mobile financial service apps, and boost e-commerce will be critical for continued economic growth in rural China. At the same time, e-commerce, and e-commerce apps, continue to grow: the total value of e-commerce in China in 2014 was $2.1 trillion. Government support could make a big difference in helping rural enterprises and farmers get their products to urban consumers with disposable income. Working in tandem with a recently announced initiative to provide support to migrant workers who choose to return to their rural homes and start small businesses, Internet Plus could create a lot of opportunities for rural areas in China’s central and western regions that have too often been left behind in the rush to profit from the glut of investment on the coast.

One major challenge will be navigating through the alphabet soup of central agencies tasked with overseeing Internet Plus efforts in the agricultural sector. Agencies responsible for implementation include the Ministry of Agriculture, National Development and Reform Commission, Ministry of Science and Technology, Ministry of Commerce, General Administration of Quality Supervision, Inspection, and Quarantine, China Food and Drug Administration, and State Forestry Administration. A failure to coordinate efforts between these central agencies and the respective local authorities could result in misallocation of state resources, redundant or contradictory policies, or opportunities for local officials to exploit policy overlap for their own profit—all problems we’ve seen resulting from ineffective policy coordination in China in the past. However, effective leadership at the very top levels of government could overcome some of these challenges, potentially resulting in meaningful increases in the livelihoods of China’s rural citizens.

Lincoln E. Davidson is a Research Associate in Asia Studies at the Council on Foreign Relations. His research interests include rural China, Chinese cyber policy, and cross-Strait relations.

China, tech trade and developing closed systems

In the last few months, Chinese authorities have made a number of moves to restrict firms providing tech products and services in the PRC. A draft counterterrorism law recently reviewed by the National People’s Congress would require foreign firms operating in China to store all information on Chinese users in servers physically located in China and adopt protocols for monitoring content for “terrorist” activity. Chinese internet regulators recently issued new rules requiring tech firms providing products or services to Chinese banks to undergo a security review by state regulators; to pass review, firms may be required to reveal source code or encryption keys to regulators or create software “backdoors” so that regulators could monitor user data. Meanwhile, an increasing number of foreign tech products are being removed from PRC government procurement lists. The new restrictions on tech firms are part of a comprehensive “Cyber Security Review Regime” which China’s top decision-making body for cyber policy says will be implemented by the end of 2015.

Chinese concerns over the security risks of foreign – particularly U.S. – technology have heightened in the wake of revelations by former NSA contractor Edward Snowden that the U.S. government conducts large-scale cyber surveillance of U.S. citizens, allies and others, through both personal computers and mobile devices. Those concerns have only escalated in recent weeks, after a report by information security firm Kaspersky Lab that a group of hackers, which Kaspersky labeled the “Equation Group,” has successfully infected hundreds of computers in at least 42 countries with incredibly sophisticated malware that has the ability rewrite the hard-drive firmware of infected computers, making it exceedingly difficult to detect or remove. While the Kaspersky report doesn’t directly equate the “Equation Group” with the NSA, it provides strong evidence that they are one and the same.

However, attempts to impose restrictions on foreign technology firms are nothing new for China, and seem to reflect a decades-long attempt by Zhongnanhai to promote domestic development of strategic technological capabilities. Chinese government officials have even highlighted the importance of China’s closed internet regime for the successful development of domestic tech firms. This suggests that the new regulations are not just a response to the Snowden revelations, but part of a larger movement towards a protectionist policy on information technology.

At the very least, that seems to be the analysis of the U.S. government. In an interview with Reuters last week, President Barack Obama said he was concerned about the restrictive environment U.S. tech companies are facing in China. Obama said the regulations “have to change” if China wants to continue doing business with the U.S.

Of course, China is not alone in expecting technology companies to comply with regulators’ wishes to be able to access tech products. The U.S. government is in the midst of a dispute with Apple over encryption keys for the iPhone 6, which Apple says it isn’t able to turn over to the government. The phone encrypts data using an algorithm that creates a code unique to each phone, making it impossible for Apple to comply with a potential court order to turn over data stored on an iPhone 6 to law enforcement or intelligence agencies. And like China, the U.S. Congress has also restricted the access of Chinese firms such as Huawei Technologies and ZTE Inc. to the U.S. market on basis of national security concerns.

While China may be the only one talking about “internet sovereignty,” it doesn’t seem that it’s the only one practicing it. U.S. lawmakers have long been concerned about “dual-use” (commercial and military) technologies falling into the hands of the People’s Liberation Army and have sought to limit exports of such technologies, although these attempts have been stymied by failure to secure similar guarantees to not export to China from U.S. allies (pdf). As cyber capabilities grow in importance for espionage and warfare, policymakers will have to reevaluate the very concept of “dual-use.”

As the U.S. pursues a case against China at the WTO over protectionist policies and talks on eliminating tariffs for high-tech products break down, a new trade regime of closed systems seems to be shaping up in the information technology realm.

A future where U.S. and Chinese firms and government agencies purchase only domestically-sourced tech products and services does not seem so far off. And for consumers, the day may have already arrived where buying the newest device is not a matter of deciding which features you like best, but where the product was made and whether or not you’re comfortable with that country’s surveillance practices.

Obscuring the past with ethnicity

"This isn't just a confiscated untaxed cigarette." 228 Incident, Feb. 28, 1947.
“This isn’t a confiscated untaxed cigarette.” 228 Incident, Feb. 28, 1947.

On the evening of February 27, 1947, Taipei-based agents of the Monopoly Bureau of the Republic of China, which had taken control of Taiwan following the 1945 surrender of Japan, confiscated untaxed cigarettes from a 40-year old Taiwanese woman. When she demanded their return, one of the agents hit her over the head with his gun, prompting an angry response from a crowd that had gathered to see what was going on. As the Monopoly Bureau agents fled, one of them fired into the crowd, killing a bystander. Already angered by two years of corruption, repressive policies and an economy being dragged down in support of the Kuomintang’s (KMT) failing war effort against the Communist Party, the crowd began to protest. Anti-government protests soon sprung up all over Taiwan; in response, the KMT party-state declared martial law, called in thousands of troops from the Chinese mainland and initiated a bloody crackdown, rounding up leading members of Taiwanese society and executing them. Within a month, more than ten thousand Taiwanese had been massacred.

The incident, which came to be known as the “228 Incident” for the day it started (2/28), was a taboo topic in Taiwan for decades (until the 1990s). While the massacre has since been memorialized in a national holiday, a museum and public monuments and is now included in history textbooks published on the island, it remains an incredibly sensitive topic and is generally considered to be a key foundational moment for Taiwanese identity and history.

The following is a translation of an essay published on Facebook earlier this week by the independent Taipei media company BaconPress. It critiques authorities in Taiwan today for using the history of the 228 Incident to create ethnic divisions between native Taiwanese and recent immigrants from Mainland China. While the island democratized in the ’90s, the current ruling party (the KMT) is the same that conducted the 228 massacre. The author calls for restorative justice to recognize that the 228 incident was about the division between those with power and those without power, and that this division still exists today.

Every day as I walk to work from Taipei Main Station, there are two routes I can choose from. One route passes through 228 Peace Memorial Park, while the other passes the former Taipei office of the Monopoly Bureau (now the Changhua Bank on Chongqing South Road). Day after day I review this black history that, to this day, remains obscured by dark clouds.

Above the unavoidable entrance to the park hangs a perpetually changing series of garish red banners: “Celebrate the National Day of the Republic of China,” “Celebrate the Anniversary of Taiwan’s Liberation from Japan,” “Celebrate a New Year for the Republic of China.” I’m never sure who they’re trying to mock. The statues of Koxinga, Liu Mingchuan, Qiu Fengjia and Lian Heng that still stand within the park vow that Taiwan’s ex-ex-colonizers and ex-colonizers are united in Confucian orthodoxy to this day, and we must still look up at them.

To be honest, I’m not resigned to this; we use the 228 Peace Memorial Day, or Museum, or Park to recall those bloodstained days. The people who once strived suffered for it, they didn’t have peace and their effort to this day is not yet complete; how can we memorialize that? Remembering the past in this neutral, decontextualized, whitewashed “Peace Memorial,” we show lenience to the perpetrators and cruelty to the victims.

And why is it that, when it’s clearly “228,” we all just remember what happened on 2/27?

Without exception, the information we’re told and that we’re permitted to know is what’s downplayed by history textbooks and newspapers, that “improper handling of a confiscation of untaxed cigarettes triggered a conflict between citizens and government officials,” all occurred on 2/27. They hardly even mention the military occupation and commandeering that came before 2/27, nor do they mention what started on 2/28: the weeks that followed in which thousands died in systematic, town-clearing executions, the bloody suppression by a large-scale military reinforcement from China.

Why should we continue to examine 228? When the writing and dissemination of history still cannot be carried out gracefully in a loud voice, this incident has not truly ended, and 228 still drags its long tobacco rhyme in winding circles around this country.

Today, can we not tell stories, but first talk about the age we’re in?

During the disturbance, massive numbers of young people, intellectuals, lawyers, doctors and journalists from all over Taiwan were executed by the government, beaten for confessions, paraded through the streets, sentenced, their corpses left out in the sun. The definition in the regulations for compensation because of 228 is, “People who, because of this incident, suffered encroachment by public officials or public authority upon their life, person, freedom or property.” These people, although referred to obscurely, are the people suffering from all the baseless greed and sin, visible or hidden, of public agencies.

Looking at it from the compensation regulations, this is a case of government agencies going way over the top because of officials’ conflicts, leading to an open massacre incident.

New Chinese immigrants are not a monolith; the retinue of enforcers burrowing in the Grand Hotel are one group of people, while those who come to Taiwan, whether voluntarily or because they were forced or tricked, destitute and with no one to rely on are another group of people. One kind is just like those officials, while another kind is the same as we the people. Oh, of course there’s also another group of Taiwanese who go the way the wind is blowing, acting as backers, patrons or other kinds of party-state compradors (for example, the Lien family), who’ve joined this apparatus of accomplices to share in the profits from on high, for whom birth, blood and fate have no absolute meaning.

Today, when we speak of restorative justice, we mean settling accounts with the party-state over high-level management of the repression, but they always take all the adversity encountered by common immigrants from China and paste it to their own faces, manufacturing a misconception that although they are the victimizers they’re actually the victimized. They say, “We Mainlanders were murdered too!” but aren’t they a different group of people? And then they explain it all away as ethnic conflict, and the impression left by the entirely unrestricted violence of the tremendous state machinery is watered down, bit by bit.

The grassroots immigrants don’t fall within the protective umbrella drawn by the big important elites. Instead, Taiwanese people today believe they’re part of the same enemy camp as the oppressors. Today, no one differentiates between you and I, while the people on top continue to dig into this dividing line, incorporating the life and death of the currently suffering Chinese immigrants into the same country as them on the basis of their ancestral home, using immigrants’ misfortune as their own fig leaf, lifting up contradictions between ethnic groups to misdirect attention from today’s oppression and tyranny.

All of the casualties are the result of repression by public agencies. The perpetrators who wielded power to direct the tragedy of 1947 and the government that grasps administrative investigation to offer compensation today are both you, and yet you exploit this situation to set both suffering parties in opposition to each other, and go on to appeal to ethnicity.

The object that restorative justice has consistently denounced is the state, the system, not where a person is from. It is you who has unceasingly and stubbornly grouped yourself in with the suffering “masses” as “Mainlanders.” This call to “not incite ethnic conflict” – please tell us, are you just calling upon yourself?

No one says that restorative justice aims to settle ethnic accounts or wants to carry off the Mainlanders and throw them into the sea. It aims to make you – this excessively immense public authority of yours – acknowledge to the people your past mistakes. It aims to make the state – this Kuomintang Republic of China of yours – confront and recognize this period of mistakes, closely examine the issue of responsibility, and then carve these scars deep into the textbooks and teach our children our real history. It’s not about paying out a few compensations, the president just bowing and making a speech, the textbooks just teaching 2/27 and then everything adds up.

In a free society, public authority is wielded at the authorization of the people. It is strictly constrained and regulated. When public authority adopts the absurd stance of abandoning the people and commits crimes of a magnitude that cannot be ignored, we must adopt a brazen, uncompromising stance to defend the value of liberty and buy back the dignity it has lost. If we do not implement restorative justice and truly study responsibility, admit mistakes and pass on the truth to the next generation, we have no way of preventing a repeat performance of the tragedy and our future has no way of treading on a firm foundation to proceed steadily forward.

We examine the issue of responsibility not to take revenge, but to display what couldn’t be public in the past without allowing anyone to conceal or distort the facts so that today we can make a resolute declaration of our carefully safeguarded freedom.

It is not about hating the past, but facing the future with beating hearts full of hope and love.