Google, (GOOG) Yahoo!, (YHOO) and Microsoft (MSFT) endured a wave of public disapproval earlier this year over their compliance with Chinese censorship of their Web sites. But another striking form of tech commerce with China is taking place below the radar of the U.S. public: Major American manufacturers are rushing to supply China's police with the latest information technology.
Oracle Corp. (ORCL) has sold software to the Chinese Ministry of Public Security, which oversees both criminal and ideological investigations. The ministry uses the software to manage digital identity cards that are replacing the paper ID that Chinese citizens must carry. Meanwhile, regional Chinese police departments are modernizing their computer networks with routers and switches purchased from Cisco Systems Inc. (CSCO) And Motorola Inc. (MOT) has sold the Chinese authorities handheld devices that will allow street cops to tap into the sorts of sophisticated data repositories that EMC Corp. (EMC) markets to the Ministry of Public Security.
"It's a booming market," says Simon Zhou, the top executive in Beijing for EMC, which is based in Hopkinton, Mass. "We can expect big revenue from public security" agencies in China.
The scramble to sell technology to Chinese law enforcers seems, for starters, to be at odds with the intent of an American export law enacted after the massacre of hundreds of pro-democracy demonstrators in Tiananmen Square in 1989. The Tiananmen sanctions prohibited the export "of any crime control or detection instruments or equipment" to China. "We wanted to undermine the effectiveness of the police in rounding up, imprisoning, and torturing political dissidents, not only those involved in the Tiananmen Square movement, but for years to come," explains Representative Tom Lantos (D-Calif.), who helped draft the law.
But that message has been muffled. The Commerce Dept., which enforces the sanctions, has applied them primarily to such low-tech items as handcuffs, helmets, and shotguns. Little of the modern information technology now sold to Chinese police appears on the banned list. Reliable revenue figures for the IT sales aren't available, but industry analysts estimate they total tens of millions of dollars a year and are growing.
American manufacturers say they have no obligation or ability to determine whether Chinese security forces use the technology for political repression. On the contrary, American capitalism improves the lot of ordinary Chinese, some executives contend. "Anything that helps China to modernize will help China to improve its human rights situation," says John S. Chen, chief executive of Sybase Inc., a Dublin (Calif.) company that sells database programs to the Shanghai police. "The more accurate information the police have about an individual target, the more accurate and sensible they can be."
But the same technology that helps track down drug dealers or murderers can also be deployed to trace and arrest dissidents, says Eric Harwit, a China scholar at the University of Hawaii. "It's a double-edged sword."
Despite the improvement of its image on the world stage, China still has a dismal human rights record. The U.S. State Dept. says that the Communist government is holding at least 260,000 people in ideological "reeducation" camps. Among those detained are pro-democracy activists and members of the Falun Gong spiritual movement, which the government considers an illegal cult. U.S. technology has been used at least indirectly to improve the government's ability to identify Falun Gong adherents, according to Hao Fengjun, a former security official who has fled China for Australia.
Some American companies have gone out of their way to appeal to the Chinese government's pronounced concern about avoiding unrest. In Chinese-language brochures distributed at a police-technology trade show in Shanghai in 2002, Cisco repeatedly referred to its gear with such phrases as "strengthening police control" and "increasing social stability." Cisco, based in San Jose, Calif., says there's nothing unusual about its marketing in China. "We sell to police organizations in many countries," says Rick Justice, senior vice-president for worldwide operations. "We do business [in China] the way we do business anywhere."
Cisco and other companies emphasize that, as required by law, they obtain licenses from the Commerce Dept. for tech sales to China. "We follow very closely and ethically all the laws the U.S. government has in place," says Cisco's Justice. But Richard C. Bush, a former congressional aide who worked on the Tiananmen sanctions, expresses surprise when told of the types of contracts U.S. companies are signing with the Chinese. Bush, a fellow at the Brookings Institution, a Washington think tank, adds: "[Are the contracts] antithetical to what core members of the legislative effort wanted? Yes."
Some outside analysts attribute Commerce's lenient approach to its enthusiasm in recent years for expanding exports to China. Matthew S. Borman, Assistant Commerce Secretary for export, counters that the agency merely follows the law: "Items controlled under this authority are those exclusively or primarily used for crime control and detection." Databases or computers that can be used in an ordinary office aren't covered, he says. But Lantos, the California congressman, says the sanctions have been undermined. "The Commerce Dept.'s decision to interpret the law narrowly is absolutely unconscionable," he argues. "By allowing American companies to sell high-tech computer and communications devices to the Chinese police, our nation is directly aiding in the suppression of political dissent in China."
The upshot is that "manufacturers of handcuffs aren't allowed to sell their products to China's police, but Cisco and other companies are selling Chinese authorities much more useful technology," Harry Wu, a former Chinese political prisoner living in the U.S., told a House subcommittee on human rights in February. His testimony was eclipsed by the panel's heavily covered excoriation of Google, Yahoo, and Microsoft for their agreement to block parts of their Chinese Web sites as a condition of operating in the country.
Thomas Lam, president of Cisco's Chinese operations, says: "The networking hardware and software products that Cisco sells in China are exactly the same as we sell in every market in the world. It is our users, not Cisco, that determine the applications they deploy." American companies also argue that if they didn't sell to the Chinese authorities, competitors from other countries would provide similar products.
Until recently, most Chinese police operated with rudimentary technology, which, for example, made it difficult for local branches to share information. American companies regard their sales to law enforcement agencies as addressing this need and as part of a broader wooing of Chinese government customers. Oracle, provider of smart-card software to the Ministry of Public Security, does one-third of its business in China with the government, says Derek Williams, head of the company's Asia-Pacific Div. Selling to the government "is just part of our regular strategy," he adds. "I don't think any of these projects would be too controversial."
Although some U.S. tech companies have done business with China's police since the 1990s, the true coming-out party for the relationship occurred in December, 2002, at a conference in Shanghai billed as the China Information Infrastructure Expo and sponsored in part by the Ministry of Public Security. Companies from around the globe set up booths to promote their wares, according to documents prepared for the event. The Chinese hosts shopped for digital tools for projects with names such as Golden Customs and Golden Tax.
The campaign to upgrade police technology, which continues today, is called Golden Shield. At the conference, Cisco's booth was surrounded by video screens showing California police officers using Cisco mobile handsets linked to databases of surveillance footage from stores and other public places, according to author Ethan Gutmann, who attended the event and wrote the 2004 book Losing the New China. Hopes that Western technology would spark political reform in China have been unfulfilled, he argues.
On Dec. 5, 2002, company representatives took turns delivering 45-minute Golden Shield Solutions seminars. Promotional literature from the conference shows that among those making presentations were Cisco, EMC, Extreme Networks, IBM (IBM), Nortel Networks, (NT) and Sun Microsystems. (SUNW) This is where Cisco distributed its pledge to support the goal of "increasing social stability." An IBM handout stated that it would "use its advanced technology to accommodate the country's conditions."
Defending the company's marketing, Cisco spokesman Terry Alberstein says: "The brochures in question were aimed specifically toward local police, outlining how Cisco products can improve access to police IT resources by networking computing devices and extending access to resources, for example making additional information available to police in patrol cars." IBM, Nortel, Sun, and Extreme Networks declined to comment.
Companies use a variety of methods to appeal to Chinese authorities. Motorola and IBM take out ads in a Chinese-language trade publication called Police Daily. Motorola strives to serve the Chinese public's desire for capable law enforcement, says Balbir Singh, a senior company executive for Asia.
EMC has fostered key personal relationships, as when the maker of data-storage systems came to the aid of the Ministry of Public Security last September, EMC's Zhou says. The ministry was relocating to new headquarters in Beijing, and its chief information officer, Xie Yipin, realized that his staff was overwhelmed by the task of transferring extensive databases and computer equipment. So Xie called Zhou. Would EMC send over a few engineers, gratis?
A native Chinese who formerly worked for the government and considers Xie a friend, Zhou says he's eager to expand EMC's business with the ministry. "Because we have trust," he adds, "I could send the engineers first, and maybe we would get the money" later.
Just as he expected, EMC has since obtained several contracts with Chinese police agencies, bringing to a half-dozen the number of security-related projects the company has landed over the past two years, Zhou says. EMC won't discuss the revenue involved. Xie declined to comment.
It's difficult to pin down illustrations of Chinese police using American technology to squelch dissent. The Ministry of Public Security would not comment. Company executives stress that they typically don't work directly with security officials to customize hardware or software. Instead, the government employs local Chinese-owned "systems integrators" to do this fine-tuning. "We are just providing a database product," says Oracle's Williams. "A database is like a filing cabinet. Somebody has to provide solutions on top of that, and that's done by a Chinese company."
American software can be traced to modernization efforts supporting at least one arm of the Chinese ideological enforcement apparatus: the State Council Leadership Team for Preventing & Handling Cults. More commonly known as the 610 Office, a reference to the date in 1999 on which it was created, this body tracks followers of unauthorized religions, such as Falun Gong. Hao Fengjun worked in the 610 Office in the northern city of Tianjin until he fled China last year. From his new home in Australia, he has added his voice to Falun Gong's protests over being oppressed. Hao says the Tianjin branch has a database containing 30,000 practitioners of the banned sect as well as additional names of other unauthorized religious groups. Some of the data were drawn from China's elaborate hukou, the household registration system that helps the government monitor and control the population.
The digitization of hukou, an enormous task that is part of the Golden Shield project, has involved American technology, including software provided by EMC, according to EMC executives. "Aside from the public security bureau's use of technology for criminal cases, the most important [use] is the tracking and suppression of Falun Gong followers," says Hao. The American companies emphasize that they don't determine how the Chinese use their products.
While there has been relatively little objection to the tech sales overall, Cisco has encountered more scrutiny than other manufacturers, probably because it has long been active in China. Last year it faced a shareholder resolution demanding more openness about the company's dealings with the Chinese. The resolution was overwhelmingly defeated.
By Bruce Einhorn and Ben Elgin, with Peter Burrows in Silicon Valley