Google's China Problem is Far From Over

February 17, 2010

As this article was being finished, the question of whether Google will leave China for good is still unresolved. But Google’s voice of opposition has already softened, and it could either stay in China, or go. Suspicions have been circulating that agents inside Google may have been connected to the recent attacks, and shortly after the announcement Chinese and American officials held meeting after meeting to air their views on the question of Internet freedom. Leaving aside the ostensible reason for this incident—cyber attacks—this article explores the particular challenges that Google and other Internet companies face in China.

Google’s China Problem Is Not Google’s Alone
The international community’s striking response and ethical acclaim for Google’s “moral awakening” reflects two realities that people have never really wanted to face: the first is that in the Chinese investment market, surrendering to the Chinese system (including corrupt and unprincipled practices) is extremely common for foreign enterprises. From this springs the second point: when everyone’s a dwarf, there’s a thirst for heroes. 

This is an era that desperately needs heroes, so within a short time of Google straightening its back, it became a hero in the eyes of the international community. Google and all the multinational corporations in China face two major restrictions and problems for survival.

Google’s plight actually reflects the unavoidable difficulties of any foreign enterprise in China: firstly, they must follow the Chinese system to enter the market; secondly, they are forced to abandon their political principles and moral guidelines. 

The recent storm over Google is related to the second principle of survival. Media companies have to make even harder decisions; their realm of operation is in the Chinese Communist Party’s traditional stomping ground, and the CCP has always seen the media as an important tool for maintaining political control.

Google, as a member of the IT community, has special technology and possesses two particular characteristics: firstly, it’s a company, and as a company simply does not act outside the profit motive; everything is for the pursuit of profit. Second, they are in the business of Internet technology, so to a certain extent they need to follow the professional conduct and ethical guidelines of media. 

For this simple reason they should not offer the Chinese government technology that violates the principles of freedom of the press. The law of survival for foreign capital in China means that from when it enters the Chinese market, ethical predicaments abound. Google’s motto is “Don’t be Evil,” but filtering information helps a totalitarian regime control the news, and this puts Google deep into an ethical quagmire—what I will tentatively term “Google’s China problem” (of course it is also the problem faced by many other internet companies). Americans, taking Google’s “Don’t be Evil” motto, mocked the company by saying “In China, it’s not Google.”

Google’s Difficult Decision
Google’s core business is providing a search engine service, and compared with Cisco and other companies, the degree of Google’s “Doing Evil” is much less. Other large IT companies had already been cooperating with China’s National Security Ministry and Ministry of Public Security since the 90s. They helped in the work of setting up the enormous telecommunication control and monitoring system “Golden Shield,” and provided much of the core technology for the monitoring, bugging and network and telecommunications control system that operates today. Among them, Cisco played a key role, developing a special firewall system for the CCP, especially used to sniff out, examine, and finally delete information censored by the regime. Cisco got 80 percent of the Chinese market in routers for its trouble. 

In 2000, Yahoo started monitoring its search engine and chat rooms, trying to guarantee that it would get the greatest market share in China. So in 2005 when Microsoft and Google started filtering all kinds of news prohibited by Chinese authorities, they were merely following in the footsteps of Cisco, Motorola etc. 

The problem for Google lies in the fact that the behavior of other companies is shrouded in darkness, and only those involved know the details of what they’ve done. But Google’s Internet filtering is something netizens see every day. 

Because of this, Google is easiest to criticize. Li Kaifu, ex-president of Google in China, and the one who made Google a household name in the country, used to repeat this [inspirational] dictum: “youth + freedom + equality + bottom-up innovation + user focus + don't be evil = The Miracle of Google.” It was passed around widely among the youth in China, but was regarded by U.S. media, the New York Times, for example, as an example of the company’s hypocrisy. By abandoning its moral restraint in the Chinese market, it would seem that Google should gain great market opportunities. 

For many multinationals investing in China, costs are high because of the political system and business environment. They’re forced to “burn money” for the first five years, until they get a foothold in the marketplace. Google China, however, actually turned a profit within its first five years. 

Citi Investment Research estimated that in 2010 the profit from Google China’s business would contribute to only one percent of its total; even though in China it had 36 percent of the market share. Its market development made it more difficult for Google to weigh up profit and ethics. 

Top levels of Google management were always of two minds in managing the Chinese market. The Wall Street Journal wrote on Jan. 14 that it was “an intensely personal decision.” Between Google founders Larry Page and Sergey Brin, China had always been a sensitive topic. People close to Brin said that he once told friends and Google staff that he had felt conflicted about the Chinese market. Because he had spent time as a child in the former Soviet Union, he had a feeling of moral shame for Google cooperating with a government to censor information. 

For years Brin has been the conscience of Google’s enterprise, and attempted to defend the “Don’t be Evil” tenet. Even so, Google’s greatest ethical pressure didn’t come from Brin’s personal disgust toward totalitarianism; it came from the pressure of American society. This is the case more so for other Internet companies.

American Society Puts Ethical Pressure on Internet Giants
The first person who revealed to the world the inglorious cooperation between the Chinese government and American high-tech companies was Greg Walton, a U.S. writer who focuses on the globalization of technology and its impact on human rights and democracy. 

As far back as 2001 Walton had published a piece called “China's Golden Shield: Corporations and the Development of Surveillance Technology in the People's Republic of China,” which, based on a arsenal of facts, exposed many high-tech multinationals competing for business in China, how they helped the Chinese government set up the Golden Shield, and how it was used to monitor network communications. 

Part of the Golden Shield project was a database, part a monitoring network. It took care of: “Access Control, Anti-Hacker Intrusion, Communication Security, Computer Accessories & Software, Decryption & Encryption, E-commerce Security, Extranet & Intranet Security, Firewalls, Networking Communications, Network Security & Management, Operation Safety, Smartcard Security, System Security, Virus Detection, IT-related Services and Others.” 

Actually (It should be translated as “At that time”), across the world there are few people who know why the Chinese government has invested such enormous sums into setting up this system, and what it’s used for. In China, many high-tech companies even advertise their participation in the Golden Shield project to show how advanced they are. 

Not long after the report was published I happened to find it on the Internet, and made an abridged translation of its important points. Through writing articles and giving speeches, I hoped to make the Chinese and English speaking worlds understand that the Golden Shield was a criminal engineering project that seriously intruded on Chinese citizens’ rights. 

I once posted the essay to the online bulletin board of a university in Beijing; it was deleted within an hour. After that I could only use email to forward it and let more people know the truth about the criminal project. 

In August 2001 and June 2002 I went to testify at U.S. Congress. Though the topic was unrelated to freedom of the press, I asked for an extra three minutes to speak about the Golden Shield to the representatives and experts gathered, inviting them to read Greg Walton’s report. I hoped that legislation could prevent U.S. companies from collaborating in this criminal fashion. 

In 2001, congressional representatives and others at the hearing said they had never heard of the Golden Shield; in 2002 they said they were paying attention to the matter, but pointed out that the U.S. has no laws to prevent companies from carrying out these actions overseas. 

In 2002 I read Ethan Gutmann’s “Who Lost China's Internet?” in the Weekly Standard, which was similar to Greg Walton’s report on the Golden Shield, revealing the story of the many American companies who have developed censorship and information control technology for the Chinese government.The author warned the American government and technological community: “American technologies of surveillance, encryption, firewalls, and viruses have now been transferred to Chinese partners--and might even one day be turned against our own ludicrously open Internet. We funded, built, and pushed into China what we thought was a Trojan Horse, but we forgot to build the hatch.”

As the situation developed, Gutmann was proved right. In this recent case, Google and 20 other companies were intruded by hackers from China. These technologies were precisely what American companies had years before continuously supplied and supported, however. Gutmann also pointed out that as early as 2002 Cisco had developed Policenet, an administration system for the Communist Party’s Ministry of Public Security. 

With Policenet, public security officials can search out any Chinese citizen’s photograph, work history, family background, political leanings, Internet history, and at least 60 days of emails. Carrying it around is also convenient: police just scan an individual’s identification card and query the database on the spot, obtaining all the information about the individual they need. And in contrast to Yahoo, who was heavily criticized for disclosing information to the regime that led to the arrest of Chinese journalist Shi Tao, Cisco’s Policenet has been helping the CCP’s public security organs to ferret out political dissidents and Falun Gong practitioners for years. And their services and system upgrades aren’t the type of thing to leave a paper trail. 

Given all this, Ethan Gutmann bravely stood up and publicized Cisco’s Policenet manual, using hard facts to show how Cisco had sold this technology to the CCP, forcing the company to exercise some restraint. 

The Rand Corporation think tank also published a report on the same issue in 2002. At the beginning of 2003 I was finishing a study commissioned by the New York-based Human Rights in China, “Media Control in China,” and also covered the issue of Internet and information control. That was almost one year before China’s CCTV evening news made the announcement of the Golden Shield project in September 2003.

Refusing to Cooperate is Just the Beginning
On March 10, 2003, Greg Walton was invited by the U.S. Congress to give testimony on his research. He called his speech “Great Wall, Small World,” and reminded those gathered of the role U.S. companies were playing in Internet control in China. 

Some time later, Harvard University’s law school began subsidizing a yearly report called “Internet Filtering in China.” Each year they release a report of trends and developments. On April 14, 2005, the USCC called 10 experts to participate in a hearing. Though some of them held the belief that “Chinese democracy and freedom has made great progress,” John G. Palfrey and Derek Bambauer from Harvard, Murray Scot Tanner from the Rand corporation, and myself, argued that China’s Internet control is a grave impediment to freedom and dissemination of information, and that many U.S. corporations have played a key technological role in supporting it—and that the U.S. must pay more attention to the matter. 

It was through the work of the people above, along with that of several human rights organizations, that in January 2006 the U.S. Congress called another meeting, this time summoning the four tech giants Cisco, Microsoft, Yahoo and Google, intending to question them about their role in following China’s censorship laws. 

The four companies arrogantly rejected the January meeting, which infuriated many Americans. A tide of criticism came from congressmen, who compared the actions of the four giants in China to the Nazi’s use of IBM’s technology in the Holocaust. They were criticized by the public as “eagerly and voluntarily acting as censorship troops for the Chinese government.” 

With such societal pressure, the four companies were forced to take a defensive stance, saying that such issues are too big for them, that they can’t resolve it themselves, and that they need the U.S. government to take the lead. Whether Google leaves the Chinese market or not, one thing is certain: Google’s China problem is something IT companies around the world face in dealing with China. 

In an era after Golden Shield and ongoing government supported cyber attacks, how the Internet revolution will be spread, and how it will help the Chinese people, all depends on the awakening of the conscience of global IT corporations. 

But that process of awakening must not rely only on these corporations themselves; pressure from society is even more important.

He Qinglian is a well-known Chinese economist, author and commentator. This article was written for Hong Kong's Open Magazine.
The article, first appeared in English at, has been restructured for easy reading online.