February 7, 2006 | FrontPageMagazine

Aiding the Policenet

Frontpage Interview’s guest today is Ethan Gutmann, author of Losing the New China: a Story of American Commerce, Desire and Betrayal. A former Beijing business consultant and former visiting Fellow at PNAC, he is the winner of “Spirit of Tiananmen” and “Chan's Journalism” awards in 2005. He has written for Weekly Standard, Asian WSJ, Investor's Business Daily and other publications.

FP: Ethan Gutmann, welcome to Frontpage Interview.

Gutmann: Thanks Jamie. It’s an honor.


FP: Google has just recently agreed to formally censor its China operations to Chinese Communist Party specifications. According to your book, this sort of corporate behavior has been taking place since 1998 — at the least. Tell us what this is about. We thought the net would free the world, right?


Gutmann: In the Nineties Internet companies presented the net as a “neutral¨ technology, but there was always an implicit wink. The Chinese Communist Party
saw that wink, saw that the net was far more powerful than the fax machines of the Tiananmen era, saw the net correctly – as the communication infrastructure for a new Chinese revolution. But these are Marxists. And as my former colleague Peter Lovelock explained, that means that you must above all embrace the means of communication. Then, control it. Fill it with Chinese voices. Block the outside. And block relationships between Chinese forces.

Blocking the outside was relatively easy. Cisco Systems developed a special firewall box in the late Nineties to sniff, examine, and ultimately throw forbidden information into the electronic trash. They received 80% of China’s router market. By 2000, Yahoo began censoring their search engine and patrolling chatrooms to preserve their position as the top portal in China. So in 2005, when Microsoft began suppressing words such as “democracy¨ in Chinese blogger headings, they were just following a well-beaten path.
But that last challenge to blocking relationships between Chinese forces and between alternate sources of political power is far more technically demanding. And that’s why, in an attempt to preserve their market position, Cisco developed “Policenet¨ for the Chinese Public Security Bureau in 2002. Until very recently Cisco denied the existence of the program, but its essence is wraparound surveillance. The police use it to access data on any citizen in China: work history, family background, political tendencies, imaging, surfing history, and e-mail for at least sixty days. It’s portable: policemen carry handheld devices that can access this treasure trove simply by scanning an ID card. The US press was outraged when Yahoo assisted the arrest of the Chinese journalist Shi Tao, but Cisco’s “Policenet¨ is assisting Chinese state security in hunting down dissidents and Falun Gong practitioners every day. However, Cisco’s ongoing service and upgrades of the system isn’t likely to come up in the court records.   

FP: Is Google the worst offender?

Gutmann: In terms of arrests or crude censorship, certainly not. But Google’s decision still takes my breath away. There’ something deeply insidious about the Matrix-like world of the “New China.¨ It looks like a real Internet. Chinese ministry websites are well-designed. They look transparent and accountable. But they are neither. Discussion boards look real, even impassioned. But because people are aware of State Security’s capabilities, most of the censorship is done by the participants themselves.

The Chinese government loves that, loves self-censorship. It makes everyone a participant in a collective sense of shame and impotence – injured pride that resurfaces as rage against the US, and more recently, the Japanese. Now, for all the utilitarian rhetoric, Google is a participant too. The Chinese Communist Party must be ecstatic that they have forced such a new economy icon to its knees. They should be: in China, face matters. But, more to the point, hypocrisy matters. You won’t see the Goddess of Democracy reappear on Chinese soil, and I just had the sickening, fleeting thought that perhaps it shouldn't. Let’s put it this way: Google’s justifications almost makes me nostalgic for Cisco’s lies.

FP: In your book, you discuss the tendency of businessmen to acquiesce to Chinese Communist Party objectives, financial losses, bribery and corruption, technology transfer to the People's Liberation Army, and most prominently, American business cooperation in creating China's big brother: the Internet. You paint a landscape that appears somewhat immutable. Since the book came out in 1994, how have the trends that you identified played out?

Gutmann:  The shelf-life of China books is expected to be very short because China is developing very rapidly. So in a world of change, of upward mobility, of a rising Chinese middle class, I focused on the tribal behavior of two groups that appeared much more immutable, much more constant: the Chinese Communist Party and foreign businessmen, particularly Americans. These two groups perform a kind of marathon dance with each other: there is no real affection, but each partner is dependent on the dance continuing. The moves that Americans favor — kowtowing, technology transfer, and lobbying for Chinese objectives – are so familiar that theoretically I could go back to my particular dance-hall in Beijing and pick up where I left off.

Yet that dance, that relationship, is hardly the whole story of China. And the rate of disturbances, or riots, throughout the provinces of China doubled last year. That indicates a new trend, one that I only hinted at while discussing the contradictions in China’s growth rate. But the short answer to your question? Every trend that I identified has intensified: Chinese nationalism, increasingly sophisticated counterfeiting, high-tech research and development transfer to the PLA, and of course, the flowering of the Big Brother Internet.

FP: In your book, you say that you caught “the China bug” and that was why you went to Beijing. Yet some of the American expats you describe — some of them with powerful positions in Beijing society — come across as insufferable defenders of the Communist regime, sneering at American democracy, even choosing to decorate their clubs and apartments with the kitsch of Chinese totalitarian art. How did these Americans
progress from the “China bug” to what appears to be the “China virus.” Why didn't you?

Gutmann: They are a little insufferable, aren’t they? But, well, take the totalitarian kitsch — the Mao posters, the fetish of Edgar Snow – the display of this sort of paraphernalia was initially meant to be ironic, a collegiate satire of China and the expats’position within it. The problem is that as one begins to make real money in China, as one acquires friends and lovers and wives, there are consequences to not maintaining one’s status as a friend of China and thus as a friend of the Communist Party.

Most expats who really have the China virus comfort themselves with the thought that they can turn the irony switch off and on. And on the surface, they can, depending on whether they are talking to a Party member or a visiting Congressman.  The problem is that belief in America, belief in democracy – these things become the new object of irony and subtle ridicule. And that can’t be turned off.

As for me? I love China. And I found myself succumbing to the China virus at times. But my wife grew up in a police state before she moved to America, so she did not see the romance of it all. I love my wife much more.


FP: There was a lot of scepticism when you pinned Cisco and the others in your book. And there was a lot of hostility towards you from several quarters. The very people who are now shame-facedly admitting they sponsored the suppressed Chinese internet slammed you for saying the same thing a couple of years ago. Can you give us the particulars of what you encountered in this context and the fall-out now in terms of your vindication etc?
Gutmann: Reviewers from the other side of the Pacific Pond led the charge. To give you the flavor: while Cisco's “Policenet” was ignored, I was accused of being a “culture-shocked, head between his legs, waiting-for-the-siren, McCarthy-indoctrinated writer,” or perhaps I was just a “charmingly naïve” “public relations flack” who had left China “jaded and contemptuous” of the Chinese people.  

Fair enough. I exposed my flank by including large personal elements: sex in Beijing, expat character studies – even the word “betrayal” in the title obliquely refers to my own betrayal of my colleagues. So how could I take this stuff personally? And as a consultant to Cisco, I would have advised them to have a few hit-men make fun of the author, but carefully ignore the book's findings.
However, Cisco broke message discipline. Following Cisco's statement – “[Gutmann] has never produced one shred of evidence to support his claims” – Harry Wu and I released Cisco's “Policenet” brochures, irrefutable proof that Cisco was selling high-end surveillance to the Chinese police. Censorship may still be legal, but surveillance exports to China are actually forbidden under US law. Cisco has been backtracking ever since, even trying to take credit for advertising “in full public view at the Chinese equivalent of the annual U.S. convention of police chiefs.”

Look, this debate is productive when it's about a genuine difference in outlook. Many corporate representatives and their supporters sincerely believe that China will eventually have a government that is accountable to its people and American business will be seen as the vanguard in bringing that about. And that's still possible. But what if they are wrong? Or what if it takes a war to attain that outcome? All I'm saying is that the major trends in China are arcing in the wrong direction, and American business – and the US government, by its lack of oversight – is a contributing factor.

Vindication?  Well, Yahoo and Microsoft released a statement for the first round of Congressional hearings on the Chinese Internet: this is not “business as usual” and we need help from the government to negotiate our way out of this. It's late in the day – I personally urged the President of AmCham Beijing to make a similar statement back in 2002 – but in combination with a Congressional initiative such as the Global Internet Freedom act, this could be a baby step towards the kind of industry coalition that Microsoft successfully put together back in the winter of 2000. It's also heartening to see other journalists, commentators, and congressional investigators pick up the Chinese Internet issue, and make it their own. Personal vindication has come from the Chinese Diaspora, which recognized the value of a first-person account from behind the American business curtain, translated the book, and flew me around the world to talk about it.

But let's face it, Chinese political freedom continues to lose ground. And my relationship with the Chinese Diaspora – with Taiwanese, with Falun Gong practitioners, with exiled dissidents in Queens – has opened my eyes to the human cost. I wrote the book to escape from China, to move on. Now, I am not so sure I can. I'm looking at several projects – two potential films or another book – which could be upsetting to the Chinese Communist Party and their friends. As they say in the Godfather: they keep pulling me back in.

FP: What can be done to bring American corporations more in line with American foreign policy objectives of spreading democracy and human rights in China?

Gutmann: Back in the winter of 2000, Microsoft fought the Chinese State and won. The issue was Chinese government access to foreign source codes and control of foreign encryption. Microsoft built a coalition of the American Chamber of Commerce, the Japanese Chamber, and several European entities, and Microsoft let it be known that if the Chinese government did not back down they would pull out of China forever. Faced with this unified resolve, the Chinese government chose to “pre-interpret¨ their own laws, i.e., they surrendered.

I still carry that surrender document with me, because it shows that business has power. And it shows that as a business consultant, I did at least one thing that I’m proud of.

Now, in the winter of 2006, Congressman Smith, on behalf of the Sub-committee on Human Rights has requested representatives from Google, Yahoo, Cisco and Microsoft at a hearing on Chinese Internet censorship. As of now, the word is that they won’t show up. Do you think they would treat a Chinese ministry request in such a fashion? 

Reversing this equation, refusing to cooperate with CCP objectives is, as my document proves, possible. It just takes collective action on the corporate side. But at this point it will also take collective political will in Washington — possibly in Tokyo too — to make that happen. And I don’t see it yet. 


FP: Mr. Gutmann, thank you for joining us today.


Gutmann: Thank you Jamie.