Will China Retaliate Against U.S. Because of Google Pullout?

I try to stay away from Google, and they keep pulling me right back in:

In a recent roundtable discussion hosted by Wallace Forbes, [Vahan] Janjigian [Forbes chief investment strategist] said, “I think we’re on the brink of a very serious trade war and that this Google exit from China is only the beginning of what we may see. There’s no question China’s going to retaliate for Google. And the way the Chinese view it is that, you know, Google is not some private company that’s making it’s own decisions. As far as they’re concerned, you know, this is a U.S. decision and they’re going to have to find some way to retaliate. Whether it’s a big way or a little way remains to be seen.” (Forbes)

Trade war? Maybe. More likely because of Google? Very doubtful. When we were in the middle of the Google media frenzy, a lot of crazy talk was thrown around. Some of the speculation was that Google was the proverbial ‘shot heard ’round the world’ that would spark a trade war with China, or alternatively, a global dawn of a new day in Internet liberalization.

I don’t buy in to the hype that the Google pullout was all that significant to China’s trade and investment policies. It seems that in order to bolster the argument that Beijing is lying in wait to retaliate, you have to make several assertions (or at least something similar) that are very difficult to support.1

1. Beijing sees the Google decision as a U.S. decision. I took this statement directly from the above quote. I can see how this might appeal to a nationalist world view, but it does not accurately reflect reality. What evidence is there that China saw the Google move as somehow connected with the U.S. government?

If anything, the Google decision was a distraction for the Obama Administration’s China efforts; it caused an uproar in Congress and forced the administration’s China group to spend time and energy dealing with the Google issue instead of other pressing bilateral matters (see below).

Even Secretary of State Clinton’s speech calling for Internet freedom seemed calculated to avoid any direct confrontation with China. According to at least one account, U.S. government officials in China actively dodged questions arising from Clinton’s speech in an attempt to minimize tensions. Whether Beijing understood this or not is unknown, but neither did the government here give any indication in public statements that they saw the Google decision as a government act.

2. Google embarrassed the Chinese government. It might have been touch and go there for a while in the media wars, but in the end, Google came out looking very good outside of China, and the Chinese government ended up with generally positive marks inside of China. Yes, there were many vociferous complaints from Chinese netizens about the Google decision, but I suspect that this was a very loud minority opinion. As long as Beijing’s treatment of Google met the general approval of its own people, the government is probably not all that upset.

3. Beijing equates Google with ‘foreign companies’ as a group. I have not seen any evidence of this. Although the foreign investment community has been having a tougher time of it than usual in China over the past year or so, not only did these problems pre-date Google’s decision, but most of those difficulties stem from the implementation of a more aggressive Chinese industrial policy as opposed to some sort of retaliatory effort.

4. Google’s pullout will shine a light on China Net censorship, leading to a domestic push to liberalize. This would certainly upset Beijing if it happened, but again, aside from a vocal minority that has always railed against the Great Firewall, I don’t see any huge up swell of anger post-Google.

If the above points are not true, there is nothing about the Google pullout that would motivate China to retaliate against the U.S. government or U.S. companies.

However, none of this means that further trade conflicts are not in the cards. Tensions between the U.S. and China in particular are still running high, and only some of the disagreements have to do with trade.

As Dr. Eliot Feldman, trade lawyer at U.S. law firm Baker Hostetler said in a recent column:

Difficulties with China are now on Page One of The New York Times and The Washington Post almost every day. There is consensus in Washington that relations between China and the United States will get worse before they get better. There are many issues, most related only marginally, if at all, to trade.

Feldman goes on to discuss several of these issues, including the nuclear threats posed by Iran and North Korea, multilateral climate change negotiations, and ongoing disagreements over Taiwan and the Dalai Lama.

On the economic and trade front, there is of course the currency issue, the related matter of China’s dollar reserves, intellectual property protection, and the ever-present charges on both sides of dumping and illegal subsidies. A discussion of most of the current trade problems can be found in the recent National Trade Estimate, and related reports, prepared by the U.S. Trade Representative and sent to Congress.

With all of these very complex and difficult bilateral issues on the table, Google seems like a very small bump in the road. Morever, if the Google decision was destined to spark U.S.-China tensions into a conflagration, that spark has been smoldering for a while now, and as more time goes on, attempts to blame bilateral friction on Google become less convincing.

  1. I am not setting these assertions up as straw men. In order to prove that China is likely to retaliate against the Google decision, there have to be motivating factors. []


Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

  • Some HTML can be used to format your comment.
  • Add a picture to your comments with Gravatar.
  • Please be civil. Comments may be moderated.
  1. In this great country….

    the powers that be, feed with one hand
    and SMACK! with the other,

    I keep hearing talk that facebook might be “un harmonized” in the next few months,

    therefore, one hands says “hello welcome FB”
    the other hands says…. “Fuck Off! Google”

    and I say, 五毛党万岁!

  2. My take on it.

    “1. Beijing sees the Google decision as a U.S. decision”. BS. That’s the propaganda line that some used. The Chinese government is far more sophisticated than to believe in their own propaganda.

    “2. Google embarrassed the Chinese government. ” Yes it did. And the government has been uncharacteristically mature about not reacting further.

    “3. Beijing equates Google with ‘foreign companies’ as a group.” Again, the government here are not all idiots. In fact, large sections of the government depend on foreign investment. If one believes the above point, then they believe that Chinese government lacks sophistication. That would be a very stupid assumption.

    “4. Google’s pullout will shine a light on China Net censorship, leading to a domestic push to liberalize.”

    As you and Kai Pan pointed out in other posts, (and in the blog post about the Huffington Report post), Chinese netziens are keenly aware of censorship. Anyone who believe that this issue “shines a light” on censorship has no idea what they are talking about. However, I would not say that it is only a vocal minority who is against censorship. I don’t think you know that. I personally believe that most if not ALL Chinese people are against censorship of their own opinions and media intake. I believe that many Chinese people are in favor of censorship “for others”, for various reasons. And I believe that most people do not feel this is such a big issue in their lives.

    Now is my turn to say something negative about Chinese people. I believe that the number 1 problem with Chinese people is that they are not brave enough to say “I’m not taking this shit anymore”. Instead, everyone says either 没办法,or 中国人太多了. (no way to handle it, or “Chinese people are to many”). No one really likes censorship, just as few, if any, Chinese people like their education system. But so few feel they have the power (and/or responsibility) to bring about change.

    What China needs is a Barak Obama…as we though Obama was going to be when he campaigned. China needs someone who can convince people that change is good, necessary, and won’t lead to Redguards marching in the streets or masses of peasants invading the cities.

  3. B-real

    Bravo Steve for pointing that out. Google was a bag of peanuts or better yet the peanuts you find at the bottom of a bag that you don’t really care to eat. If anything I think it benefits China more on another level. It was a loss they can live without and help its local resources at the same time. Don’t get me wrong Google did put a dent in the market and could have excelled past their last recorded bench mark levels but the odds were against them.

    The way I see it China is playing its own game of trade protectionism, and I can attest to that running a business in Beijing. Foreign owned companies are placed in separate orders of treatment when its comes to making a profit. Lets say for instance there is a low level of Apples in china but there is also a high demand for apples. I foreign apple farmer (not really) would like to contribute to the shortage of apples in China . The initial profit was okay in the beginning resulting in almost non-existent GOV interference. As time flies by I expand and would like to sell to the rest of the hosting country. This is where problems for me began.

    I get the green light to expand and made huge profits. I gained some ground on the local apple farmers. That is where the GOV starts metering the output of my farm. Rules and laws the on call lawyer was never aware of before and later finds out that all companies are not created equal. To continue business as usual the new rules and laws are complied with. The efficient nature of my self, restrictions are just speed bumps for how quickly money can be made but not how much. Then the slander of tax evasion, improper paper work, or what ever false accusations they could came up with to have the train slow down or completely stop. Once the smoke was clear I was able to start over again.

    Later I get the word from other foreign farmers that you have to have a Chinese partner with a large chunk of the share to really go anywhere. With that said, the brand name changes with 2 to 3 names on the ticket profits are lower and the risk becomes higher for me. Yet again the farmer was back at excelling past his chinese counterparts in profit and again the restrictions came back 10 fold.

    Realizing I can’t win by excelling I can still make plenty of money with out interference by not being noticed running half speed. China gets their taxes made off my profit, my bank account stays full and no one loses but from time to time can be a bit annoying when ready to make some serious moves in the back of my mind I have to waive the risks vs benefits. Sometimes I do wanna say fuck it and shut the shit down after 6 years.

    Not saying google’s issue was identical to mine but when it comes to services china can provide on their own these measures are put into action. Microsoft, GM, VW, Boeing, Airbus or any non-chinese business that ever operated with any desire to compete in China is limited.

  4. I’m not sure exactly what Jesse Covner was trying to get at with the idea of these savvy netizens. While some people who go online are aware of censorship, many are in the grip of some pretty smart doublethink. As Jesse says: censorship is good – for other people. It’s certain that the vast majority of Chinese people/internet users have no idea about the scale and subtlety of the media controls, and how that affects the media they consume.
    The Google thing may well shine a light on the situation (fingers crossed). But I don’t think there’ll be a trade war. The current leadership are pretty steady, they’re not fenqing.

    • Phil, I do not know if the majority know about the “scale or subtlety of media controls”. And as I wrote on my site recently, one really needs to define “which China” your talking about. If we talk about urban China and regular “netzeins”, then they probably have some idea. After all, the existence of 五毛党 (5-mao / 50 cent Party) is common. If we are talking about 3rd tier cities and rural populations, well I don’t know at all.

      I base my observation on what I read and what I see. I read that the existence of paid government promoters is so well known that there is a common internet slang for this. I know that Chinese General Managers I talk to (who are 40+ years old and many of them were involved in events that happened 2 years before 1991) know of “river crabs” and “alpaca”. I know my coworker who rides the bus with me in the morning. And I know her husband who works in the Public Security Bureau as one of a hundred specialists in Suzhou city dedicated to managing “internet harmonization” tools and programs. Her husband’s job is in no way secret.

      Now, Chinese people may not know of the exact details of how the GFW works. They may not be aware that Baidu is paid to promote pro-government links (and links of any sponsor really).

      As far as the “double-speak”… many Chinese people support censorship…for “others”… because they believe there are too many stupid Chinese people (most of which, in their view, are countryside people), who cannot be trusted with the responsibility to voice their opinion. I agree BTW… there are a lot of stupid Chinese people. But I fight for the right of FOX news to report criminally inane misinformation and propaganda to the 50% of Americans who are r-tards.

      • And so…my point is that since censorship is so well known, Google’s pull-out does not shine a light on anything which is not already somewhat illuminated.

      • Bin Wang

        Let me ask the 64 dollar question then, Jesse. At what point do the ends justify the means? The fact is that many “stupid” Americans have, in fact, been duped into voting against their own best interests (the BBC called it “Turkeys Voting for Christmas,” although Thanksgiving would be more appropriate, or a reverse French Revolution where the people march down the streets chanting for more power to the aristocracy) based on biased media (at best, at worst, down-right misinformation), over-emphasis on emotional hot-button or even religious issues, etc.

        Studies have proved that while the dems spew numbers and statistics that make people glaze over, the repubs’ mass appeal to the average American enables them to get votes from the very people their fiscal policies harm the most. So there you have it, our democracy at work.

        My point is, if you defend FOX’s right to help perpetuate that, sure First Amendment and all, where does it stop? Would you defend the KKK in spewing hate speech? As a matter of law, even the First Amendment has boundaries, albeit far from being clearly defined. You can’t incite imminent violence, for example, etc.

        My opinion is that the reason the Chinese don’t/won’t all of a sudden say “we won’t take this crap no more” with regard to internet censorship, even though it is an acknowledged pain in the rear, is that on a whole, it’s a small price to pay for all the good stuff that’s happened in recent years to the lives of the Chinese people and the nation in general. There’s a sense of “well, they know what they’re doing in Beijing,” so to speak, and unless it seriously puts someone out, people deal with the censorship. The question is, is this something worth pushing back on Beijing about if you’re the average Chinese person? Probably not …

        The double-speak is the idea of, well, I may know better, but I know there’s a lot of other people out there who don’t. In that regard, I frankly, wouldn’t be so against quashing FOX misinformation. Maybe I’m more pragmatic and not pro-First Amendment enough, and of course the question is asked also, if you quash that, where do you stop quashing? All fair issues, right?

        I’m just saying, maybe, just maybe, the U.S. would be better off if people had incrementally fewer “fundamental rights.” But we have a tradition and a history of the bill of rights, and that weighs a heck of a lot. You and I might both know that the 2nd Amendment was for militias and extending it to concealed carry of hand-guns is INSANE … but the Constitution, well, it’s there, and it has a TON of inertia. I’m not counting on seeing any Amendments in my lifetime!

        But when China, without that tradition and history of protecting individual “fundamental rights,” mandates that porn on the internet is wholly off limits, well, people aren’t in such an uproar about it. Frankly, maybe the U.S. would be better off if they quashing porn on the internet, ha! Sure, extending the quashing in China to political issues and Tiananmen Square, is, IMHO, crossing the line from an American point of view, I think to the Chinese, it’s still far less of a “we ain’t gonna take it no more” sort of thing than it would be for Americans.

        I guess my point is, as Americans, we have such a history of and are so good at saying “we ain’t gonna take it no more” to our government that, frankly, it probably keeps Washington from doing a lot of stuff, which is good, but at least some of which, argubly, ought to be done for our own good. Arguably, right? China has the other problem, Beijing probably does end up doing a bunch of stuff that’s for the own good of the Chinese people, generally, but often it also crosses the line into some uncalled for stuff. The question is, on what side of the line does internet censorship fall. Well, that depends on how much you value speech and freedom of information. Objectively, the Chinese probably value it less than 3 square meals, a place to live, a job, and improved standards of living. So they say it is what it is, and that’s that.

        My 2 cents.

        • “Objectively, the Chinese probably value [speech and freedom of information] less than 3 square meals, a place to live, a job, and improved standards of living. So they say it is what it is, and that’s that.”

          There’s no reason why they can’t have both, except that the Chinese government is paranoid about information control. And the whole porn argument is a smokescreen for the real reasons CCP HQ want to dictate what the individual has a right to see and read.

          Besides, what the hell qualifies party officials to call the shots on how much leg gets shown on our monitors?

        • Hi Bin Wang,

          I don’t see your comment as refuting anything I say about the knowledge of the existence of censorship. Your comment is more about the fundamental utility of censorship, both in China and the US. Plus the historical and cultural angle to this. And why Chinese people don’t say “I’m not going to take it no more”.

          There are several un-stated assumptions that you are making here, and these assumptions are similar to what Chinese say (and BTW I’m not assuming your nationality nor cultural background here). I would like to point out these assumptions.

          1. Without the control, China would fall into chaos. By controls I am expanding this beyond censorship. You have heard this and you hear the reasons for it. Some of the reasons make sense…but many do not. The historical events which support this assumption are…historical events…which bare no similarity with today’s environment. However, China’s leadership only thinks in terms of the past (in MBTI language, this is called ISTJ thinking).

          2. China’s development would not have been possible if not for the CCP. Really? What has the CCP done that any other government would not have done? True, a more democratic government would respect people more, and thus develop some things slower. However, the fuel for the development has been Western investment. One could argue that the investment would have come in quicker and better if China was a Western Democracy.

          Your making the point you stated…”The end justifies the means”. I say… prove it. We cannot of course, because we cannot go back in time. If you were able to convince me that a powerful authoritarian technocratic Party (at the provincial level as well) is important for the safety and continuous development of China, then I would agree that the end really justifies the means in this case. And hence, censorship is needed. But I don’t see it. I see the opposite. I think more freedom of speech is important for the continued economic development of China.

        • Bin Wang

          stuart — Sure having both would be ideal and, yeah, Beijing is paranoid. But I don’t know if the Chinese are ready for the same scope of freedoms, say, Americans enjoy. Heck, Europeans aren’t ready for the same scope of freedoms Americans enjoy. That said, sure, how about some incremental increases in freedoms, of course, but I think that’s already been happening. Perhaps not fast enough or in the key areas important to you or me, but I think it’s been happening nevertheless. People draw their lines differently I guess. So yeah, I don’t necessarily disagree with you, but I question whether a dramatic expansion of both the rate and extent of “expanding the horizons” of the Chinese people is necessarily, per se, a slam-dunk, sure-fire great idea. I see some unexpected negative consequences hiding back there. Maybe they’re acceptable, who’s to say?

          Jesse — Also don’t necessarily disagree with you, but you’re right, we’ll never know what a China under Chiang Kai-Shek would look like today. I probably agree with you more on your point 2 than your point 1. Without central control China has always been chaos, and yeah, it’s a historical view of things, but I don’t know if that can be under-estimated too much. I doubt China’s current rise is possible without the unity and stability generated by Beijing within the country. People don’t like to invest in unstable situations. Could others have done the same, with fewer negative tactics? Again, maybe, we won’t know. But for now, the general approach is, the negatives are stomach-able, and the positives are going well, and we don’t know what the alternative(s) is/are, so we’ll stick with the hand we got, good and bad.

  5. China has invested significant amounts of money in the US; a trade war would only damage that investment.
    The whole Google/China thing is a sideshow of very little importance.

  6. pug_ster

    Google is just a company which is friendly with the US and its allies.


    Go to their site and China got a big red ?. I am willing to bet that China gives alot of removal and data requests and got nothing.

    • B-real

      The explanation says that the removal request are state secrets so Google can’t display what the request were. But that means Google is helping China by not showing us that information. Sux

  7. Carnivore’s “Retaliation” will be the perfect soundtrack for this brawl :D