Why the US has little to fear from Chinese leaders meeting with tech titans

Later this week, President Xi Jinping will pay his first state visit to the US. Shortly before the visit, Chinese leaders will meet with US tech executives in a high-profile industry forum at the Microsoft campus in Redmond, Washington.

Given the lucrative Chinese market and the possibility of meeting President Xi in person, tech executives – whether from Apple, Facebook or Google – will have a difficult time turning down China’s invitation. This tech forum has therefore alarmed US policymakers.

Although it is not uncommon for Chinese leaders to meet with the US tech community, the timing is particularly sensitive in light of the ongoing US-China cybersecurity talks. Only a couple of weeks ago, the US government announced its plan to impose sanctions on Chinese tech companies having involvement in industrial espionage and online trade secret theft.

Thus far, nothing indicates that China set up this tech forum as a response to the proposed sanctions. Nevertheless, policymakers and commentators have expressed concern about China’s eagerness to flex its ever-strengthening political muscles. They have also wondered whether the meeting will benefit the US tech community.

Former Chinese President Hu Jintao met with Bill Gates and Steve Ballmer of Microsoft in 2006.Reuters

Pressing policy concerns

Policymakers and commentators have lamented how the upcoming tech forum could undermine President Barack Obama’s tough stand against China on cyberespionage. However, there are four other pressing policy concerns that are largely unrelated to cybersecurity.

First, some policymakers understandably may worry that US tech companies will place market opportunities before national interests. The Chinese market has never been more attractive to these companies. Earlier this year, China surpassed the US to become the largest market for Apple’s iPhone.

Although many people once assumed what was good for General Motors was also good for America, by now it is quite clear that multinational corporations – be they General Motors or Apple – do not always advance national interests. Among the common complaints are outsourcing, job cuts and tax avoidance.

Second, US tech companies continue to face stiff competition from their Chinese counterparts. Although increased cooperation with the Chinese government will provide short-term benefits, compliance with Chinese security standards may make US tech products less attractive in the long run.

Commentators have already expressed concern about US tech companies succumbing to China’s surveillance demands. Greater tailoring to a single national market – no matter how large it is – could also make it difficult for these companies to take advantage of the economy of scale generated by the global market.

Third, Washington has to juggle a wide variety of industry interests, which range from tech to automobile to agriculture. The bargain that a specific industry finds attractive may not always reflect the country’s aggregated business interests.

Finally, the Beltway politics concerning China have always been highly polarized. With only a year away from the presidential election, politicians understandably want to maximize their control of how China is to be engaged. The tech forum has therefore created an unpredictable variant that few politicians want.

Benefits of the tech forum

Notwithstanding these pressing policy concerns, the upcoming tech forum will provide several important benefits.

First, it will make clear the line between what is acceptable in cyberspace and what is not. Thus far, both China and the US recognize the inevitability of government-sponsored intelligence gathering and surveillance – both online and offline. However, they disagree on how to draw the line between government and industrial espionage.

Thus, instead of having two governments trying to achieve a virtually impossible consensus, it may be more useful for US tech companies to persuade Chinese leaders to steer away from activities that they consider blatantly unacceptable.

After all, the most urgent task for these companies is not to identify the culprits behind recent hacking activities. Rather, it is to convince the Chinese government to do as much as it can to stop this type of activity.

Second, the industry forum will enable US tech executives to identify the challenges in doing business in China. Whether these challenges concern regulatory barriers or software piracy or trade secret theft, it is essential that these executives have a direct opportunity to address Chinese leaders.

It is also important that these leaders can directly relate their own concerns to US tech companies. Although these companies insist that greater internet freedom can only benefit China, it is not irrational for Chinese leaders to believe that such freedom can destabilize the country.

After all, much of the US-China disagreement over internet freedom is not about whether such freedom should exist. Rather, it is about how quickly internet regulation should be relaxed and what content should remain banned behind the Great Firewall.

Third, from a negotiation standpoint, the US government will greatly benefit from the discussions between Chinese leaders and the US tech community. If these discussions can be effectively integrated into the cyberespionage discussions during the later state visit, the forum can provide the much-needed preparations to gauge China’s positions. These discussions will also give US officials a preview of the Chinese leaders’ reactions to their various proposals.

Finally, meeting with US business leaders has been a longstanding tradition of US-China engagement. It can be traced back to Deng Xiaoping’s path-breaking visit to the US shortly after China’s reopening to foreign trade in the late 1970s.

Given China’s current focus on innovation and technological development, it is only logical that Chinese leaders actively engage US tech leaders. Viewed from this perspective, the upcoming industry forum can have the same function as President Hu Jintao’s meeting with Bill Gates shortly before the 2006 state visit.

In sum, the timing of this week’s meeting between Chinese leaders and US tech executives is not ideal, especially when invitations were issued amid rising US-China tensions over cyberespionage. Nevertheless, this industry forum can benefit not only the US tech community but also US-China relations.

Peter K Yu does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.