Carice Witte is the founder and executive director of SIGNAL, a Sino-Israel think tank focused on researching Chinese foreign policy and China-Israel relations, as well as advising policymakers in Israel and abroad on strategy.
In the midst of this coronavirus pandemic, testing is central to bringing the virus under control to save lives and end the economic devastation. It may thus seem peculiar to hear that Clalit’s CEO, Johanan Locker, recently rejected the Israeli government’s $25 million deal with China’s state-owned conglomerate, BGI, to supply equipment for 10,000 tests a day. His decision is reminiscent of actions by Israel’s Commissioner of Capital Markets Dorit Salinger, who blocked numerous Chinese state-owned enterprises from purchasing Israel’s leading insurance companies Phoenix and Clal in 2016 and 2017 for similar reasons. Mr. Locker’s reasoning: protecting the data of his company’s 4.9 million patients.
Against the backdrop of increasing tensions between China and the US, the issue of data protection has taken center stage. The US has been warning governments around the world against implementing Huawei 5G because of potential back doors that provide access to sensitive information. Most US allies share these concerns and are not even considering implementing the full range of Huawei 5G equipment – despite it being the only company worldwide currently able to offer this end-to-end solution. Instead, they are conducting exhaustive review processes to decide if they will implement even the peripheral networks produced by Huawei. In most cases, the core networks are already off-limits.
In February this year, Angela Merkel’s CDU party backed a strategy paper that seems to have eliminated the distinction between core and peripheral, deeming all aspects of a network subject to breach. The German strategy paper focuses on the issue of trust. It essentially bars 5G rollout by ‘untrustworthy’ companies. Trust, in this case, is defined by whether the company is subject to state influence. To address the 5G issue more robustly, the paper recommends that Germany not put undue reliance on a single supplier; it should support the “building of an internationally competitive safe 5G network.”
Mr. Locker’s concerns reflect a broader awareness that China’s government is actively seeking to acquire people’s data through their business ventures. The CCP’s efforts to access sensitive information and personal data is no secret. Its recently passed cybersecurity law requires “network operators to store select data within China and allows Chinese authorities to conduct spot-checks on a company’s network operations.” Many have voiced concerns over these data controls and the increased risks of intellectual property theft.
America has been particularly worried about these developments. In 2019, the US government turned a lot of heads when it revoked the acquisition of dating site Grindr by Chinese firm Kunlun, after the Committee on Foreign Investment in the United States (CFIUS) assessed that access to the personal data of the users constituted a potential national security risk. Cybertheft of personal data was the focus of the February 2020 decision by the US Justice Department to charge four members of China’s People’s Liberation Army (PLA) with the 2017 Equifax breach that resulted in the theft of personal data of about 145 million Americans.
While corporate cyber theft is a serious problem, as seen in the case of the British firm Cambridge Analytica –which gained access to data of tens of millions of Facebook users – government access to private information is an entirely different story.
Of course, China is not the only country seeking to acquire private data. It is well known that governments have methods of gaining access to personal information, as exemplified by the Edward Snowden leaks. A 2014 investigation into whether the United States’ National Security Agency eavesdropped on German Chancellor Angela Merkel’s phone calls, serves as another compelling example.
Russia has long been suspected of repeatedly hacking American databases – with accusations ranging from interfering in the 2016 US elections to complaints by Bernie Sanders this year of Moscow helping his campaign.
And yet despite these truths, it seems that China is being singled out for privacy concerns when its state-owned enterprises seek to provide valuable goods and services.
Just as Huawei has the only end-to-end solution for 5G, BGI is one of the very few companies worldwide able to provide the necessary quantity and quality of testing for COVID-19. This is emblematic of the success of China’s long-time investment in research and development. Over the past decade, China has directed significant resources toward cultivating the skill and talent necessary to take the lead in advanced technologies. China’s 2001 and 2006 five-year plans emphasized the development of National Champions. These companies receive easier access to financing, preference in government contract bidding, and special status in protected industries. In return, they help advance China’s strategic aims.
As a China-based state-owned enterprise (SOE), BGI would certainly fail Germany’s “trust” test as defined by its new strategy paper; because under Chinese law, SOEs are fully subject to party/government scrutiny. All data stored on the BGI’s servers would thus be available to China’s leadership upon request.
The same system that produced these comprehensive solutions remains opaque and authoritarian – characteristics that do not inspire trust with friends in the international community, particularly in the West. It’s often said that trust is built over time, but China has virtually burst onto the international stage over the last few years of Xi Jinping’s presidency. The world is not used to China taking a leading role in global affairs. While many may criticize the US for its international relations practices and geopolitics, US actions do not generate many surprises. For the good and the bad, the international community mostly knows what to expect from American leadership.
China is an unknown quantity with a system and style of leadership very unfamiliar to the West. It has no track record of global leadership. There are those who question the degree to which China’s domestic policies are indicative of how a China-led system might look. Ultimately, these questions generate the very mistrust that caused Israel’s largest HMO to turn down the opportunity for thousands of tests rather than exposing 4.6 million Israeli medical profiles to China’s government.