Why Snowden’s Revelations Were A Win For China
From: The Diplomat
Snowden’s revelations about U.S. cyber-espionage have benefited China economically and politically.
With Edward Snowden back in the news again (not that the attention ever really dissipated), it seems like a good time to explore how last year’s explosive revelations have affected China. As Robert Garrett pointed out, in some ways the Snowden revelations could potentially threaten Chinese leaders, should the files contain incriminating information on corruption within the Party’s upper echelon. However, I would argue that this potential risk is more than outweighed by the gains that have already been realized.
First, there is the economic impact on both the U.S. and China. An opinion piece by Dr. Cheng Li and Ryan McElveen at Brookings’ John L. Thornton China Center argues that “U.S. technology firms conducting business in China … will never fully recover from the irreparable damage left by the devastating NSA revelations of 2013.” China Economic Weekly named eight U.S. technology companies that have “infiltrated” the Chinese market: Apple, Cisco, Google, IBM, Intel, Microsoft, Oracle and Qualcomm. Since this list was published, Li writes, “the sales of those companies have fallen precipitously.” Cisco’s China orders fell by 18 percent; IBM’s China revenue dropped 22 percent, and Microsoft has acknowledged that China growth was weak in 2013.
U.S. companies from Cisco to AT&T have also expressed their concerns directly to President Obama. The Washington Post reported that late last year leaders of large U.S. technology firms told President Obama that the NSA surveillance programs are costing them customers. The article further notes that “Silicon Valley has been a critical driver of the economic recovery” —hinting at wider economic consequences should the decline in U.S. tech firms continue.
Meanwhile, Chinese technology firms such as ZTE and Huawei stand directly to benefit from an increasing distrust (and corresponding decline in market share) of U.S. firms. The Chinese government had already toyed with “indigenous innovation” policies that essentially required government offices to favor products invented and patented in China. The U.S.-China Business Council complained that this policy “encourage[d] discriminatory practices” and the Treasury Department made relaxing these restrictions a priority. In part due to U.S. pressure, the Chinese government agreed to revise its policy in 2011.
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