The Internet Is U.S./China's New Dollar/Yuan

Story Stream
recent articles

If last decade's U.S.-China relationship was dominated by a dollar-yuan currency clash, this decade's disputes may center on Internet policy.

Google's decision last winter to leave the Chinese mainland for Hong Kong was the most conspicuous sign of tension. But in a successful effort to renew its mainland search license, Google last week moderated its stance, and Beijing smartly accepted the compromise.

Unfortunately, this may be only a preview of a longer, broader battle. Last month Beijing issued a major statement on "The Internet in China," summarizing the nation's impressive gains on the Web and its vision for the future.

Most attention has focused on Beijing's guffaw-inducing insistence that "Chinese citizens fully enjoy freedom of speech on the Internet." Although not remotely true by Western standards, China, thanks largely to the Net, does have more freewheeling speech than at any time since before Mao. China now has more Internet users (384 million) and twice as many mobile phone subscribers (795 million) as the U.S. has people. Which renders portentous this unheralded line from the new policy statement: "China holds that the role of the UN should be given full scope in international Internet administration."

Most Americans would instinctively reject the notion of the United Nations running the Internet. But they would also ask: Who does run the Internet? The glib answers are nobody - there is is no central authority - and everybody - it is a mass collaborative effort. To our three year-old, whose first act every morning is firing up the iPad, and to most everyone, the Net seems like magic. So simple, so easy. Maybe even something bureaucrats at the UN could "administer."

The scientists, engineers, construction workers, and investors who design, build, and fund the Internet know better. They would emphasize the deep technical expertise, massive investment, creative business plans, and global private-sector cooperation needed to deliver this magic. They would resist the calls by Hamadoun Touré, secretary general of the UN's International Telecommunications Union, for governments and his agency to exercise more "muscle" on the Internet. They would note the dramatic success of the current private sector-led model: in the last decade, global Web users have grown to over two billion from 300 million. Global Internet traffic has surged to 10 billion gigabytes per month from 10 million - a thousand fold leap. And to those who say the U.S. exerts too much control, they would reply that Web user growth in the rest of the world has been faster than in North America - 600% versus 150%. It doesn't seem the current cooperative governance efforts are discouraging the spread of the Net.

Courtesy of the existing, no-one-in charge regime, China will soon have its own native language character domain names like .中国 (.china), which it can define and manage. But will these domains be a fruitful expansion of the Net, bringing ever more Chinese onto the common global economic and cultural platform? Or will they be a wall to keep the Googles out and China's own people in?

Early last millennium China was the world's richest and most technologically advanced civilization. Gunpowder, iron casting, paper, porcelain, printing, and gigantic nine-masted sailing vessels - you know the history. But in the year 1500, the Ming emperor outlawed boats with more than two masts and in 1525 ordered the destruction of the world's largest fleet. The Silk Road closed, the nation turned inward, and 450 years of stagnation ensued.

The Chinese leaders know this history. They understand Internet technology. For the last 30 years, they have been open to the world. They know severing their global communication and trade links is more dangerous to their regime than is freer speech. Yet America's own dollar-yuan currency obsession proves that modern politicians everywhere have trouble resisting the protectionist temptation.

When the currency debate descended into politics, and thus demagoguery, the only beneficiaries were - guess who - politicians. American officials could scapegoat China as a job-stealer to deflect attention from their own anti-employment policy errors. A total Google boycott of China would similarly allow Chinese officials to play the nationalism card. And deprive the Chinese people of important, if limited, digital choices.

The worry is that the UN could become not a true forum for Internet advancement and cooperation but a murky bureaucracy that governments use to impose rules and taxes on others and to cloak their own illiberal regimes. The Internet is the true multilateral instrument of diversity, transparency, and cooperation, not the politicians groping for control in its name.

Washington's monetary mismanagement (see, the wild swings between inflation and deflation) may have finally "succeeded" in pushing China away from the entirely healthy world dollar standard that facilitated global trade and innovation. We should be careful not to similarly bungle our digital diplomacy, lest the U.S. Internet standard - one of freedom and openness - also fragment under the weight of geopolitics.

Bret Swanson, a visiting fellow at the American Enterprise Institute and a U.S. Chamber Foundation scholar, is president of Entropy Economics LLC. 

Show commentsHide Comments

Related Articles