The U.S. is defending freedom on the internet. Amid allegations of cyberattacks on an American company, Secretary of State Clinton gave a speech encouraging China to respect the free flow of information on the net:

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The full text can be found here and the full video here. China reacted angrily, denied participating in the attacks, and defended censorship and other restrictions they place on U.S. companies operating in China. Today, Bill Gates weighed in and added his voice to those assessing the situation. Meanwhile, in China, it appears that the issue has become sensationalized, with state media alleging an American conspiracy.

In my day job with an international academic association I’ve worked with Chinese scholars and assisted them in trying to gain access to academic information located on servers in the U.S., sites blocked on their end by the so-called “Great Firewall” of China. It was a frustrating experience for all involved and underscored for me the many ways in which censorship and internet control harms the long-term interests of China. It was, after all, their own scholars who were disadvantaged.

I’m proud of the U.S for defending internet freedom (and of Google for not being evil), and yet I remain skeptical of public diplomacy as a strategy for dealing with China. China would be far more flexible and responsive to quiet diplomacy, when matters are raised at the ministerial level in meetings and not made into a public spectacle. We tend to forget that it was not that long ago that China was a closed society and the transition to a more open and market oriented society is a relatively recent development. Are we expecting too much too soon?

We are witnessing a clash between a country that values freedom and a country that values order. If China can be persuaded that internet freedom can also promote social order, then perhaps they will, in time, lessen their restrictions.

Here’s an interesting news item that I came across while reading up on President Obama’s trip to China. Long an established academic powerhouse and home to many of the world’s top institutions of higher learning, is the U.S. still an attractive destination for international students? According to The Wall Street Journal blog The Wealth Report the answer is yes. Their report notes that wealthy Chinese families are sending their children to study at U.S. military schools:

Among wealthy U.S. families, military schools have a reputation for being antiquated forms of punishment. It was where the rich dumped their spoiled, uncontrollable kid when they had run out of other options. But for the new generation of rich Chinese, American military schools are seen as the disciplined training grounds for tomorrow’s economic warriors. An article in China Daily says more and more wealthy Chinese parents are turning away from pamper-parenting and opting for the tough-love of pre-college military academies in the U.S.

I think it’s probably safe to say that when you receive an education in another country, one can’t help but soak up some of the local values and mores. What will they learn at American military schools? While such an education is sure to feature a curriculum heavy on military discipline I wonder if it will also impart a healthy dose of Western liberal values that can be transplanted to China? Perhaps these students will become a new leadership cadre for the modern forward looking China they are building. Let a hundred toy soldiers lead the way.

Photo Credit: WSJ/Valley Forge Military Academy & College

President Obama’s visit to China has ended. As I reviewed the coverage of his visit I was looking to see how he would balance the traditional U.S. concern for human rights with trade and security concerns. Would he, as past presidents have done, sternly lecture the Chinese on human rights, or would he (as Secretary Clinton suggested) make it clear that human rights issues would not get in the way of more strategic concerns? It seems that he borrowed a tool from his campaign to strike a balance between the two, staging a town hall-style meeting with students in Shanghai and used the event to promote the values of free speech and free access to information. This report from CNN contrasts the feel and style of Obama’s town hall meetings in the U.S. with this one in China. Apparently the students were preselected to attend and their questions carefully vetted, but one question about the use of the Twitter service provided Obama an opportunity to discuss access to the internet and the politically touchy subject of internet censorship. China, as you know, as developed quite a reputation for heavy-handed internet censorship (just Google “firewall China“) in the name of fighting what they see as social ills (dissent) and preserving national harmony. His reply, which was respectful of both his hosts and American values, provided what to me was one of the highlights of the trip. If you are interested, here is the full video of the town hall:

President Obama has departed for a trip to Asia that will provide his first opportunity to put his stamp on U.S.-China relations. Security, the environment, and the economy will also be on his agenda as he visits Japan, Singapore, and South Korea. Our relationship with China has always been complex and even contradictory at times as U.S. commercial and strategic interests clash with human rights concerns. This overview from The Washington Post provides a timeline of presidential trips and major events from 1972 to the present. Critics of the president will no doubt claim this trip to Asia will be yet another “apology tour” in which Obama seeks to restore ties by admitting past mistakes. In When Obama Goes to Beijing, Brookings scholars Cheng Li and Jordan Lee note the fine line Obama will have to walk between demonstrating respect for China while strongly representing American ideals and interests.

This post is not about foreign policy, it’s about business, but it’s still about the U.S. role in the world. My question today is: Do American companies have a responsibility to be representatives of American values when they operate internationally? This question has often been posed in relation to pollution and environmental protection, labor practices, corruption and the rule of law. I’m thinking about this question today in the general context of promoting the basic values of freedom and liberty, and specifically in terms of this report in The New York Times today about China requiring new computers sold in that country to have censorship technology pre-installed. Of course, they don’t call it that, they call it an ant-pornography initiative, and who can argue against that, until one realizes that the same software that blocks pornography can also block other, more politically sensitive sites as well. As this news report puts it:

Although porn sites are initially targeted, the software could be used to block other Web sites, too, including those based on keywords rather than specific Web addresses [...] China, which has the world’s largest population of Internet users at more than 250 million, also has one of the world’s tightest controls over the Internet. Through such mechanisms as network-level filters installed at the nation’s Internet service providers, the government routinely blocks political sites, especially ones it considers socially destabilizing such as sites that challenge the ruling Communist Party, promote democratic reform or advocate independence for Tibet.

Last week marked the 20th anniversary of the Tiananmen Square democracy protests that ended violently in 1989. Students in China today can’t read about the democracy movement in their textbooks, nor can they study this event on the internet, it has been effectively removed from history by Chinese censors. Perhaps I should note here that the Chinese government has good reasons for doing this, they are making difficult choices and balancing a desire for social order and stability with competing desires for increasing political and economic freedom. While we may hope that the long term trend is in favor of greater freedom, my concern is the role that U.S. companies take today in promoting or undermining freedom and liberty and thus influencing those long term trends.

How far should computer-makers Dell, of Round Rock, Texas, and Apple, of Cupertino, CA, go in promoting censorship in another country? How far should Cisco, of San Jose, CA, go in providing the network technology that allows for an almost totalitarian control of the internet in another country? How far should Google, of Mountain View, CA, go in removing certain words (like democracy) from searches in another country? When American companies say that they strive to be good corporate citizens, should we then ask, citizens of what country? Should U.S. companies birthed in freedom trade in the tools of repression?

I’m reading another review of President Obama’s trip to Europe, this one by Michael Shear and Kevin Sullivan writing in The Washington Post. I would recommend it for the casual reader, it’s balanced (noting comments from the both sides of the political spectrum) and it summarizes the highlights of the trip, allowing the reader to gain a quick recap of what happened on the way from London to Baghdad.

I’m starting to get the sense that the trip was a great success for Obama personally and for the image of the U.S. abroad, but it was something of a draw in terms of the substance of the trip. In the win column I would note that the U.S. was able to reboot the Bretton Woods-era financial institutions to deal with the global economic crisis rather than creating a new international financial regulatory system as France and Germany wanted; deflected talk of creating a new international reserve currency to replace the dollar, as suggested by Russia and China; announced plans with Russia to renegotiate key arms control treaties and then announced the lofty goal of working towards a world free of nuclear weapons (though, to be fair, other presidents have set this as an aspirational goal, the logical endpoint of the arms control treaties); announced new initiatives aimed at fostering closer ties with China; and, finally, continued to leverage Obama’s indecision on European missile defense to gain goodwill from both Russia and Eastern European countries (particularly impressed with the diplomatic finesse demonstrated here).

In the loss column I’d have to note that the U.S. failed to gain support from the G20 for a additional stimulus spending; and, at the NATO summit, the U.S. failed to gain allied support for additional combat troops for Afghanistan. I see that last item as the most glaring failure. I can’t help wonder how future historians will characterize this first presidential trip. If we call it a success are we being blinded by all the outstanding photo ops and demonstrations of Obama’s great personal popularity? If we note the failure to gain more combat troops from NATO and say this signaled a watershed for both NATO and the war in Afghanistan, are we being too pessimistic? Perhaps it is enough to say that the trip went well, there were  no major mistakes and the U.S. scored a few wins and a few losses, but on balance it was a good trip for the new president.

The London G20 Summit is now history and by many accounts, it was a success for the U.S., with new initiatives made with Russia, China, and a new collaborative style of U.S. diplomacy on display by President Obama and his team of advisors. The summit’s concluding statement has been archived on the G20 website here and the AP has posted the highlights here, while Bloomberg has a great recap of the new finance regulations. The leaders agreed to expand the funds available to the IMF to help struggling economies, to crack down on tax havens and hedge funds, and to reject protectionism. The leaders failed to agree on a coordinated global stimulus plan to boost the world economy, with rifts appearing between those countries who wanted more stimulus spending and those that felt current efforts were adequate. The G20 countries will meet again at the U.N. in September to review the progress they have made on ending the global financial crisis.

President Obama held his second prime-time news conference last night, the White House transcript can be found here. The President fielded questions on a wide variety of topics, including his budget and economic recovery plan, health care, race in American politics, and foreign policy. On the topic of foreign policy, I was glad to see that one reporter, Major Garrett of Fox News, specifically asked the President to comment on his view of the U.S. role in the world:

And last point I would make in terms of changing America’s image in the world, Garrett, I — you know, I haven’t looked at the latest polling around the world, but I think — I think it’s fair to say that the response that people have had to our administration and the steps that we’ve taken are ones that are restoring a sense of confidence and the ability of the United States to assert global leadership. That will just strengthen.

Also noteworthy, the President dismissed the Chinese proposal for a new international reserve currency:

As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now. And the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world, with the most stable political system in the world. So you don’t have to take my word for it. I think that there is a great deal of confidence that ultimately, although we are going through a rough patch, that the prospects for the world economy are very, very strong.

[...]

Q And the need for a global –

THE PRESIDENT: Excuse me?

Q — the need for a global currency?

THE PRESIDENT: I don’t believe that there’s a need for a global currency.

Though I would have preferred to see a more collaborative tone in his reply (something along the lines of “we will carefully examine the proposal and consult with China and our other trade partners, but we are not enthusiastic about the idea”), I’m encouraged to see that the decline of the dollar as an international standard of trade will not be supported by this administration. In an ideal world, the logic and merits of the Chinese proposal might recommend a closer examination of the idea, but the sad truth is that the U.S. is not in the financial position to embrace that kind of idealism.

Photo: Reuters

U.S. leadership of the global financial system has been called into question by the global economic crisis. In the latest chapter of this ongoing story, China has proposed the creation of a new international reserve currency to replace the dollar. According to this report in The New York Times:

In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar. In a paper released Monday, Zhou Xiaochuan, governor of the People’s Bank of China, said a new currency reserve system controlled by the International Monetary Fund could prove more stable and economically viable. A new system is necessary, he said, because the global economic crisis has revealed the “inherent vulnerabilities and systemic risks in the existing international monetary system.” While few analysts believe that the dollar will be replaced as the world’s dominant foreign exchange reserve anytime soon, the proposal suggests that China is preparing to assume a more influential role in the world. Russia recently made a similar proposal.

Though the Chinese statement notes that any eventual creation of a new reserve currency would take some time, and China will continue to buy U.S. Treasuries in the meantime, it’s clear that the long-term viability of the U.S. dollar as the cornerstone of the international financial system is now in doubt. Although I’m not an alarmist, our role as a steward of the international trading system has been so much a part of the U.S. role since WWII that I find it difficult to see this proposal as anything less than a watershed event in world affairs. True, nothing has happened yet, but the proposal has been made, China has framed the terms of the debate and the upcoming G20 meeting has now been turned into a referendum on U.S. economic leadership. A confidence vote on the U.S. dollar has been called and it will take some stunning diplomacy and quick success for the economic recovery program for Team Obama to turn this around.

After a series of provocative incidents between U.S. and Chinese naval vessels in international waters, China released a statement denying a naval buildup in the South China Sea:

China has no plans to beef up its naval presence in the South China Sea following a confrontation earlier this month between Chinese boats and a U.S. Navy ship, an official newspaper reported Friday. The brief comment in the China Daily adds to apparent efforts by Beijing to tamp down the controversy surrounding the March 7 incident in which the USNS Impeccable was surrounded and harassed by Chinese boats. “Top commanders do not have plans to increase the military presence in the South China Sea following a confrontation earlier this month between a U.S. spy ship and five Chinese vessels,” the paper said, citing unidentified naval sources. The report gave no additional information, although it quoted government-backed Chinese academics as saying Beijing wanted to put the incident to rest. “It is time to call an end to it,” Li Jie, a senior researcher at the navy academy, was quoted as saying.

Gordon G. Chang, author of The Coming Collapse of China, is among those incredulous at the lackluster American response to what they seen as a brazen violation of maritime law and tradition by China. Ever since Mahan’s The Influence of Seapower Upon History it has been generally been accepted and expected that the great powers, and indeed the superpower, would maintain dominance of the seas and continue to guarantee safe passage in international waters. Is this U.S. on the verge of sacrificing naval dominance and the legal status of international waters for the sake of political (and economic) expediency? After all, we would not want to upset our trade partner and national debt holder, right? Though the Chinese desire to extend their power and influence seems clear enough, I think what we really have here is an old fashioned spy-vs-spy drama in which China has built some new military installations and is testing out some new hardware and the U.S. would like to get a look at it. I don’t think it’s anything more than that. Still, we must be very careful about how we handle future incidents of this type, we don’t want to establish (by default or inaction) a new maritime sphere of influence for China that endangers our friends and allies in Asia. How then should the U.S. respond? We should establish and communicate clear red lines: spy-vs-spy harassment of surveillance missions may be tolerated (to a point) as the price of doing business, but standard naval missions and commercial shipping in international waters will be protected by force if necessary. China, as a responsible stakeholder in the international system, should accept these red lines or risk being seen as no better than cheap Somali pirates.

Photo: USNS Impeccable, Wikipedia