[EAI Commentary] Cyber Security and US-China Tech Hegemony Competition: The Complex Geopolitics of Its Evolution - Technology

Editor's Note

Beginning with the trade dispute in 2018, the competition between the United States and China has gradually expanded beyond trade into the technology and energy sectors. To provide an outlook on the future of US-China relations, EAI published a special issue briefing series titled "The Future of US-China Competition: Four Stages of Competitive Dynamics" in July 2019. As a follow-up, EAI has planned a special commentary series, "Transformation of the Global Political and Economic Order Amidst US-China Competition," to analyze the current US-China competition in depth. The publication schedule is as follows:

1) Lee Seung-ju, Dynamics of the US-China Trade War: Expansion of Scope and the Counterattack of Interdependence (Published August 23)

2) Kim Sang-bae, Cyber Security and US-China Tech Hegemony Competition: The Complex Geopolitics of Its Evolution (Published August 27)

3) Shin Bum-sik, Energy Issues and US-China Strategic Competition (Scheduled for Publication August 29)

As the second report in this series, we are publishing a commentary on the US-China tech hegemony war, authored by Professor Kim Sang-bae of Seoul National University. The US-China hegemony war is not limited to trade disputes but is also unfolding in cutting-edge technology sectors. Drawing on over 20 years of history of US-China conflict, Professor Kim Sang-bae discusses the cyber security conflict that has emerged since 2018. The US targeting of Chinese network equipment, including the 'Huawei incident,' demonstrates that the US government views China as a 'threat to technological hegemony.' China, in turn, is expanding its conflict with the US government, which advocates 'America First,' by regulating internet services of foreign companies. The author suggests that at this juncture, where the US-China trade war has extended to issues of technology, cyber domains, national security, and legal systems, a response utilizing a 'complex geopolitical perspective' is necessary.

US-China Tech Hegemony Competition and the Complex Geopolitics of Cyber Security

The recent sparks of US-China conflict are not confined to a single domain but are spreading across the entire spectrum of US-China relations. The US-China competition is akin to a hegemonic struggle for future power. A prime example of this is the technological hegemony competition between the two nations in the 'Fourth Industrial Revolution,' a leading sector. Historically, the trajectory of technological hegemony competition in the leading sector of a given era has determined the victory or defeat of the hegemonic and challenger powers and has altered the structure of the international order. Today's US-China competition in the leading sector carries similar significance. However, a distinguishing feature compared to previous instances is that the current competition is taking place in a networked environment mediated by cyberspace, with cyber security emerging as a critical issue in this process. Indeed, by the early to mid-2010s, cyber security had firmly established itself as an agenda item in international politics.

Cyber security has now evolved beyond mere hacking aimed at system disruption or intellectual property theft into a complex array of issues encompassing technology, industry, trade, data, politics, military affairs, legal systems, and international norms in the competition for future hegemony. Even seemingly minor security issues, when they multiply and become interconnected with other issues, exhibit the typical characteristics of emerging security phenomena that emerge as geopolitical crises at the macro level. Cyber attacks are no longer just the playthings of hackers or the means of resistance for terrorist groups. It is an open secret that systematic state-level support lies behind the hacking of other countries' critical infrastructure. Regulations on the import and export of IT security products deemed threats to cyber security are imposed, and the transnational flow of data is controlled under the guise of national security. Internationally, cyber security serves as a justification for rallying allied forces and a pretext for advanced arms races.

As cyber security issues increasingly have the potential to cause conflict between nations, the tendency to view these issues through the lens of traditional geopolitics is also gaining traction. Indeed, cyber attacks are considered from the perspective of military strategy for warfare, and the acquisition of material and human resources to support them is emphasized. Actions aimed at deterring cyber attacks on a nation's critical infrastructure, even through counter-attacks, are gaining momentum. Nevertheless, the world politics of cyber security have evolved into such complex dynamics that they cannot be adequately understood by simply applying the traditional geopolitical perspectives derived from past realities. Based on this critical perspective, this paper proposes 'Complex Geopolitics' as a new framework that comprehensively considers various variables that transcend the boundaries of traditional geopolitics.

Evolution of US-China Cyber Security Conflict: From 'Threat of Chinese Hackers' to 'Threat of Chinese IT Security Products'

In the long view, the history of the US-China conflict surrounding cyber security dates back over 20 years. In May 1999, after US forces mistakenly bombed the Chinese embassy in Yugoslavia, Chinese hackers retaliated with attacks on US websites. In April 2001, following the crash of a Chinese fighter jet and a US reconnaissance plane over Hainan, China, Chinese hackers launched cyber attacks. At that time, the term 'US-China cyber war' was first used in the media. In 2003, the Welchia virus, presumed to be of Chinese origin, attacked the US government's computer network, temporarily halting visa issuance services. In the same year, the 'Titan Rain' attack, which hacked into military research institutes, NASA, and the World Bank within the US, signaled the full-scale cyber confrontation between the US and China. In 2009, there was a large-scale attack by Chinese hackers on over 30 US IT companies, including Google, Adobe, and Cisco, known as the 'Aurora attack.' The 'Shady RAT' attack in 2011 involved Chinese hacking of 72 organizations, including US government agencies, international organizations, corporations, and research institutes.

Chinese hackers' attacks on critical US infrastructure prompted the Obama administration to consider countermeasures, including military options, as the 2010s progressed. The so-called 'threat of Chinese hackers' was one of the hot issues that heated up US-China relations in the early to mid-2010s. In 2013, a report by the US cybersecurity firm Mandiant exposed that Unit 61398, a Chinese hacker unit established in 1997, had been stealing intellectual property by hacking into US corporations and public institutions. This led to the US Department of Justice indicting five officers from Unit 61398 in May 2014. Around this time, the Obama administration 'securitized' hacking of critical national infrastructure as a national security issue and elevated cyber security to a core component of national security strategy, advocating a logic of 'militarization' that included responding with missile launches if necessary. Ultimately, cyber security became an official agenda item at the US-China summit in June 2013.

Since the inauguration of the Trump administration in 2017, the US-China cyber conflict has unfolded in a more complex manner. Contrary to expectations, the US-China cyber confrontation has not escalated into military conflict but has instead become closely intertwined with industrial and trade issues. The Trump administration, under the banner of the 'threat of Chinese IT security products,' strengthened regulations on IT security products from Chinese companies. In particular, the US has exerted pressure on Chinese companies gaining technological competitiveness in areas of the Fourth Industrial Revolution, such as 5G mobile communications. Indeed, Chinese IT companies like Huawei (华为), ZTE (中兴通讯), China Mobile (中国移动), DJI (大疆创新), Hikvision (海康威视), and JHICC (福建晉華) have faced various obstacles and setbacks in their attempts to enter the US market. These issues, outwardly appearing as technological competition and trade friction, have become more complex by intertwining with issues of cyber security and data sovereignty.

The Huawei Incident and US Containment of China's '5G Technological Rise'

The most critical issue in the US-China cyber security conflict has been the controversy surrounding Huawei, a Chinese telecommunications equipment manufacturer. While there had been conflicts between the US government and Huawei before, they began to escalate to the extent that they could be understood within the context of US-China technological hegemony competition when US intelligence agencies, including the CIA, FBI, and NSA, issued warnings against using Huawei products in February 2018. In August 2018, the US passed the National Defense Authorization Act, prohibiting the use of Chinese network equipment in US public institutions. In December 2018, Meng Wanzhou, Huawei's Chief Financial Officer and Vice Chair, and the eldest daughter of Huawei's founder, was arrested on charges of violating sanctions against Iran, bringing the US-China conflict over the adoption of Huawei equipment to a climax.

In the process of this cyber security controversy, known as the 'Huawei incident,' Huawei's network equipment, a leader in 5G mobile communication technology, became the target. The argument was that Huawei equipment could leak information that could significantly impact US national security through 'backdoors,' and therefore, not only US government agencies but also private companies should refrain from adopting it. It was emphasized that the danger of Huawei equipment in the hyper-connected society of the Fourth Industrial Revolution era was not merely a technological issue but a matter of national security. During this process, claims that Huawei backdoors posed a real security threat and claims that they were merely threats constructed by the US through the process of securitization clashed fiercely.

If the US government's claims are to be believed, the adoption of Chinese network equipment could indeed pose a security threat. Particularly given Huawei's trajectory, supported by the Chinese government, and its lack of transparency, these claims can be considered reasonable suspicions. However, the complexity of the issue is amplified by the fact that the US government has not presented objective evidence of security threats. Nor has Huawei presented clear evidence that its equipment does not pose a security threat. Huawei's stance has been that no security issues have arisen with its equipment, and if any problems occur, the company would shut down. It was akin to a verbal dispute over a 'black box,' asking each side to believe their claims.

While the extent to which Huawei's telecommunications equipment poses an actual threat to US national security may be debatable, it is clear that the technological pursuit of Chinese companies, represented by Huawei, poses a threat to US technological hegemony in the 5G era. Huawei's products are not only price-competitive but also boast world-class technological capabilities, and as of 2018, Huawei held a 28% market share in the global mobile communication equipment market, ranking first worldwide. This suggests that strong US concerns about China's '5G technological rise' lie behind the Huawei incident. The US is particularly dissatisfied with China's growth through practices such as stealing technological secrets or forcing technology transfers. This is why the US government expresses dissatisfaction with China's government-led policies, such as 'Made in China 2025.'

US Cyber Alliance Diplomacy and Its Cracks

By early 2019, the dispute between the US government and Huawei began to expand its front internationally. In late 2018, the Trump administration urged its key intelligence allies, represented by the 'Five Eyes,' to join the Huawei boycott. The US pursued a hardline approach, seemingly aiming to completely eliminate Huawei equipment from the global market. In response, Australia, New Zealand, and the United Kingdom showed moves to exclude Huawei from their 5G supply chains in late 2018. Canada, despite its conflict with China, arrested Meng Wanzhou at the request of the US. Japan also decided to exclude Huawei from government procurement bids.

However, as late February 2019 approached, US allies, who had appeared to join the US pressure to avoid Huawei equipment, began to show signs of withdrawing from the international cooperation front. The UK's National Cyber Security Centre (NCSC) concluded that the security risks of Huawei equipment could be mitigated, and Germany also stated that it had no plans to exclude Huawei equipment. New Zealand, which had excluded Huawei at the US's request in 2018, saw its Prime Minister hint at a possible change in stance. France also stated that it would not boycott specific companies.

These countries' withdrawal was influenced not only by the practical burden of building 5G networks without Huawei, a leading company in the 5G sector, but also by resentment towards the US's attempt to 'gather allies' in the US-China competition under the banner of 'America First.' Facing a situation that could lead to a breakdown, President Trump took a step to somewhat soften his hardline stance on February 21, 2019, tweeting, 'I want to win through competition rather than blocking more advanced technology.' This was seen by many as an indication that the US's anti-Huawei front was effectively collapsing.

However, the Huawei incident entered a new phase on May 14, 2019, with President Trump's executive order. US authorities placed Huawei on the Entity List, citing national security threats, and demanded that major private IT companies cease business with it. The Trump administration granted a 180-day grace period for these sanctions to minimize the damage to US companies doing business with Huawei, but measures to tighten the noose around Huawei are expected to continue. Indeed, major companies such as Google, Microsoft, Intel, Qualcomm, Broadcom, Micron, and ARM have suspended product supply contracts and terminated technology agreements with Huawei.

From 5G Mobile Communications to Drones and CCTV?

The recent developments suggest that the issue is extending beyond the security concerns of Huawei equipment related to the commercialization of 5G mobile communications in the private sector to other technological and industrial fields with more military and political implications. Entering the second half of 2019, the US has once again brought up sanctions against DJI, a civilian drone manufacturer, and Hikvision, a CCTV manufacturer, following Huawei. Looking back, DJI faced controversy in September 2018 over alleged patent infringement of US companies, leading to discussions of sanctions. Hikvision had raised concerns from US authorities regarding its market entry into the US as early as November 2017.

On May 20, 2019, the US Department of Homeland Security (DHS), through its Cybersecurity and Infrastructure Security Agency (CISA), revealed that Chinese drones transmit sensitive flight information to China, which the Chinese government can access. CISA warned this as a 'potential threat' to the information of national agencies. Although CISA did not name specific drones, the announcement was effectively aimed at China's DJI. In response, DJI immediately retorted, 'Our technology is safe.' However, CISA advised its consumers to exercise caution when purchasing Chinese drones and to separate internet equipment. This measure was reminiscent of the technological security disputes raised regarding Huawei's backdoors.

Meanwhile, on May 22, 2019, reports indicated that the US government was considering placing China's CCTV manufacturer Hikvision on the Commerce Department's export control list. Hikvision is not only a global leader in CCTV manufacturing technology but is also renowned for its facial recognition and other identification technologies that can pinpoint individuals based on their habits and physical characteristics. The Chinese government actively utilizes these technologies as surveillance tools to control ethnic minorities and dissidents. The pressure on Hikvision for CCTV was interpreted not only as the US containing China's technological rise and criticizing the collusion between the Chinese government and IT companies but also as targeting China's human rights issues on the 30th anniversary of the Tiananmen Square incident.

Data Sovereignty and International Norms in Cyberspace

The US-China cyber conflict, as examined above, is also intertwined with interests related to data security. Since the Edward Snowden incident in 2013, personal information protection and data security have become issues of US-China national security. Concerns about data leakage by US multinational corporations led to the enactment of China's Cybersecurity Law. This law mandates that foreign companies handling personal information collected in China must establish data servers within China and obtain security clearance from Chinese public security authorities to transfer data overseas for business reasons. This was interpreted as an attempt to censor and control internet services of US companies and prohibit the transfer of data containing personal information abroad under the guise of data sovereignty. Although the law was to be fully implemented from July 2018, its enforcement was postponed to early 2019 due to opposition from foreign companies.

Indeed, based on this law, the Chinese government has regulated internet services of foreign companies such as Google, Facebook, YouTube, Instagram, and WhatsApp. On July 31, 2017, Apple had to remove about 60 applications related to Virtual Private Networks (VPNs) that bypassed internet censorship systems from its App Store in China. Amazon Web Services (AWS) also sold its Chinese operations assets in November 2017. In early 2018, Microsoft and Amazon moved their data to data centers in Beijing and Ningxia, respectively. Furthermore, immediately after the implementation of the Cybersecurity Law, Apple had to transfer all personal information and management rights of its Chinese users to the provincial government of Guizhou, China, and announced plans to build a second data center in the Inner Mongolia Autonomous Region in February 2018.

If these actions by China reflect the differences in internet policies and ideologies between the US and China, then the 'World Internet Conference,' held annually in Wuzhen, Zhejiang Province, since 2014 (with the 5th edition in 2018), serves as an example showcasing the divergence in their positions on the formation of international norms in cyberspace. China's hosting of the World Internet Conference aims to counter the US's leadership in global internet governance. From its inception, the World Internet Conference has been characterized by its opposition to the Western bloc's initiatives, represented by the 'Internet Governance Forum.' Particularly after the Snowden incident in 2013, China sought to counter the US leading global internet governance and to rally non-Western international blocs led by China. This was a challenging move based on the perception that China's cyber sovereignty would be constrained under the current US-led system.

Behind this stance lies not only the nature of China's domestic system but also China's vision for the future order of cyberspace. This vision aligns with the political vision of the World Internet Conference, which seeks to establish an independent jurisdiction in cyberspace in opposition to the Western bloc. China's underlying intention is likely to build a new order centered around China, rather than simply being incorporated into the US-led system. In the process of constructing the future order of cyberspace, it likely seeks to use the 'Chinese Dream' as a blueprint, replacing the 'American Dream.' This process may well be an attempt to transpose and recreate China's glorious historical 'Tianxia Order' (天下秩序) into the digital age.

Korea Amidst US-China Complex Geopolitical Competition?

Viewed from the perspective of complex geopolitics, the US-China cyber security conflict is evolving across various domains. The most conspicuous aspect is the geopolitical competition conducted under the guise of technological hegemony competition. This is not only evident in cyber security controversies like the Huawei incident but also shows signs of intertwining with political and military security issues related to other dual-use technologies. On the surface, this conflict manifests as trade friction between the two countries stemming from a decline in US technological competitiveness, accompanied by friction over protectionist laws and regulations. Furthermore, at the forefront of these complex US-China cyber conflicts, a competition in security discourse is unfolding, where advanced technology issues are 'securitized' as national security matters. Through this security discourse competition, both the US and China are vying to rally their allies and establish international norms in cyberspace favorable to themselves.

How should Korea respond to this US-China competition, which is unfolding on a complex geopolitical stage? As seen in the recent controversy surrounding a domestic company's adoption of Huawei equipment, the US-China cyber security conflict has the potential to emerge not merely as an issue of technology and industry but as a matter of security and politics. There is a risk that the US-China technological hegemony competition could create a geopolitical crisis for Korea caught in the middle. In other words, the US-China cyber competition may compel Korea to make more complex geopolitical choices, extending beyond simple technological decisions to encompass traditional alliance and diplomatic considerations. In conclusion, it is a critical time when wisdom is urgently needed to properly read the evolutionary process of US-China technological hegemony competition from the perspective of complex geopolitics and to formulate appropriate responses.

■ Author: Kim Sang-bae, Professor, Department of Political Science and International Relations, Seoul National University. He graduated from the Department of Diplomacy at Seoul National University and obtained a Ph.D. in Political Science from Indiana University, USA. His main research areas include information, telecommunications, and networks in international relations. His major works include "Virtual Windows and Net Shields: World Politics of Cyber Security and Korea" (2018), "Arachne's International Politics: Challenges of Networked World Politics Theory" (2014), "Information Revolution and Power Transformation: A Networked Political Science Perspective" (2010), and "Standard Competition in the Information Age: Wintelism and Japan's Computer Industry" (2007).

■ Managed and Edited by: Kim Seyoung, EAI Research Fellow

Inquiries: 02 2277 1683 (ext. 208) I sykim@eai.or.kr

[EAI Commentary] is a commentary series planned to provide a platform for discourse where experts from various fields can offer in-depth analyses and policy recommendations on major domestic and international issues. Please cite the source when quoting. EAI is an independent research institution independent of any partisan interests. The claims and opinions presented in reports, journals, and books published by EAI are not those of EAI and solely represent the views of the respective authors.