Hoover Institution Launches New Report On China’s Strategy For Global Data Dominance

Hoover Institution (Stanford, CA) – The Hoover Institution has launched a new report about China’s strategy to achieve a global edge in the accumulation and control of data with a presentation by its author, Matthew Johnson, Hoover visiting fellow and expert on the Chinese Communist Party’s politics, strategic thinking, and the power it exerts over its country’s financial sector and private economy.

The new report is a product of Hoover’s Global Sharp Power Project, chaired by Wiliam L. Clayton Senior Fellow Larry Diamond and research fellow Glenn Tiffert.

During his remarks, Johnson provided an overview of the report’s main arguments and recommendations. He explained that China’s strategy to accumulate and control data at a global scale starts at the very top of the Communist Party’s apparatus with its premier, Xi Jinping.

Johnson said that the origin of this strategy points to a 2013 speech Xi gave to the Chinese Academy of Sciences, shortly after assuming the post of president and party leader. Xi told his audience, “The vast ocean of data, just like oil resources during industrialization, contains immense productive power and opportunities. Who controls big data technologies will control the resources for development and have the upper hand.”

The key instruments of this strategy are commercial enterprises that operate and siphon data at a global scale, Johnson explained. Undergirding this activity is what Johnson referred to as an “accumulation espionage ecosystem,” that is, a network of internal data storage and processing facilities. From there, data is absorbed into military, technology, and surveillance projects in China and is potentially shared with like-minded international partners such as the Russian Federation or the Islamic Republic of Iran.

In sum, dominance over data flows helps the Chinese Communist Party (CCP) strengthen its grip on power domestically and gives it an advantage over competitors in global contests.

The harms resulting from China’s pursuit of data dominance are not hypothetical, Johnson asserted. Tangible effects of mass data collection have included mapping sensitive areas of other countries’ economies and borders; constructing databases of human genomes; mining of telecommunications for commercial secrets and intelligence; manipulating online information environments; profiling foreign citizens through social media; and targeting journalists who are critical of China.

Johnson explained that this capacity to store and analyze vast amounts of data enables Beijing to acquire intelligence about its foreign competitors, such as their information environments and patterns of activity. With this data edge, business enterprises operating under the CCP’s authority can breach networks in which signals are sent to autonomous vehicles, industrial equipment, and other deep infrastructure underpinning the economy. It can also breach data stored in digital form, including documents and other records that are national security-sensitive.

“The challenge is not just protecting data, but also networks, institutions, and economic sectors from integration with Chinese operators,” Johnson said.

Johnson described the report’s policy recommendations for countering this form of aggression from China:

1. Expand the Department of Commerce’s Information and Communications Technology and Services process to restrict risky data transactions involving Chinese businesses operating within the United States.
2. Reinvigorate the Committee on Foreign Investment in the United States and update the Foreign Investment Risk Review Modernization Act to restrict Chinese-linked companies’ ability to operate in critical supply chain areas.
3. Strengthen multilateral frameworks of data security involving like-minded countries.
4. Pressure Beijing to commit to a reciprocal attitude toward data and transparency by limiting US firms from investing in Chinese enterprises in unauthorized data transfers and by supporting corporations seeking to relocate their operations from China.

 

In his remarks, Johnson offered additional observations in studying this specific challenge. He argued that open-source materials—such as speeches by government officials, Chinese Communist Party documents, and the CCP’s version of its own history—help researchers better understand Beijing’s objectives in its strategy for digital domination.

Johnson said that when reading the public remarks of Chinese officials, it is easy to dismiss them as ideological and opaque rhetoric. Nevertheless, he maintained, these officials’ words are purposeful and should be forensically reconstructed and compared with the policies that they are implementing.

What Xi says, Johnson added, is particularly authoritative. Even today, the party retains the Leninist principles of governance on which it was founded a century ago. Xi’s decisions are enforced from the top down and communicated to all levels of political authority and throughout the economy and social life in China.

Moreover, Johnson maintains that a strategy for data dominance has breathed new life into the Communist ideal of the state perfectly controlling and coordinating society through central planning. Although central planning had disastrous economic and social consequences for the Soviet Union and Maoist China, Xi believes that the execution of this model of governance can be better informed through the analysis of data that is global in scope.

Johnson told his audience that the CCP is by its very nature an organization mired in secrecy. As a result of this norm, it is difficult to identify the levers of party control in business enterprises.

From its roots as underground organization, the CCP has prided itself in using asymmetric strategies to achieve victory over its adversaries. This process began playing out during its fight against Japanese forces during World War II and the ensuing war against Kuomintang nationalists, and it helped force the United States into a stalemate with the Democratic People’s Republic of Korea in the mid-twentieth century. From the CCP’s perspective, a similar process is taking place in its current competition to supplant the United States as the principal stakeholder in the international system. The strategy of global data dominance, as well as other surreptitious activities that exploit the free and open nature of American society, are directed toward this main objective.

“This complex challenge requires a revival of specialized research and analysis techniques to defend national security and principles of democracy in a competition that has already started,” Johnson concluded. “In this sense, China’s grand strategy for data is a case study which highlights the current gap that exists between the complexity of the challenge and the current response.”

Click here to read the report, “China’s Grand Strategy for Global Data Dominance.”