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Is Data the Next Front in the Trade Wars?

The question has been asked, “Is data the next front in the Trade Wars? Will our data threaten Global Commerce? What will become of data in this simmering conflict?” These, indeed, are vital questions — for all of us in the world.

What are the ramifications of the tit-for-tat tariff strategy?

Every week a new headline emerges concerning the state of US-Chinese trade negotiations, reflecting either the optimism or pessimism of a deal being concluded between two of the globe’s largest economies.  The ramifications of the tit-for-tat tariffs strategy has been nothing short of disastrous for a range of industries awaiting an expedient resolution from this conflict. From agriculture to industrial equipment and technology, the trade war has taken its toll on bilateral commerce and threatens to capsize the global economy as well.

Even though recent progress has satisfied global investors to an extent, the optimism belies the next brewing conflict front.  Just like the fact that most of a floating iceberg lies below the surface, the extent to which our personal data is prized still feels distant for many people. Personal data has long been a battlefront for the dominant technology powerhouses eager to refine their offerings — but now the battle is moving from the purview of the private sector to the public sector. 

With the US government increasingly emboldened in its efforts to thwart Chinese acquisitions of American companies and blocking technology deals under the guise of national security concerns, the unambiguous importance of our data is undeniable. The question that eventually arises is who you trust with your data, and to what extent?

Data Mining Takes an Orwellian Turn

China has made many advances over the last few decades, transforming the entire country and its role within the global economy.  On a domestic level, standards of living have improved drastically and the post-2009 crisis focus on building a more balanced economy that promotes consumption instead of strictly exports has helped fuel growth to an extent.  Yet, all these advances have been carefully overseen, approved, and reviewed by the state itself.

This state-sponsored hierarchy has extended well past the economy and into the social purview.  Nowhere has the intrusion into personal matters become more evident than the recent introduction of the “social credit” system.  Calling it Orwellian is putting it mildly at best. The social credit system basically ranks individuals based on several data points and is designed in large part to observe and eventually influence people’s behavior. 

With the state as the ultimate purveyor and consumer of this data, mining it for insights that they can use to determine someone’s social credit, the issue then becomes one of how these state apparatuses mine the personal data of individuals who don’t live within the country’s boundaries. Could this data — conceivably — be used as leverage or blackmail material against foreign government officials? Would it be employed to spy? Might it be abused for the purpose of corporate espionage and other nefarious activities? The answer quite possibly lies in recent US policy decisions.

Concerns Extend To China’s Overseas Ambitions

Large Chinese companies spent many of the post-crisis years on an acquisition spending spree across the globe.  Between buying up fancy real estate to stakes in some of the globe’s most famous companies, the extent of their investment reach is noteworthy.  Furthermore, local companies competing in global markets has been wholly supported by the Chinese state, much to the chagrin of market-economies that do not provide the same sort of interwoven economic support structures as China.  Over the last few years, the backlash against these companies’s has grown tremendously.

Take, for example, the recent Committee on Foreign Investment in the United States (CFIUS) decision to force Chinese company Beijing Kunlun Tech to divest from dating app Grindr which they acquired in full back in 2018.  Despite CFIUS initial mandate to avoid politicization of foreign investment in the US, lately the government body has been used as a cudgel to fight foreign acquisitions of American companies on the grounds of national security risks.  The biggest risk according to CFIUS? The national security threat arising from compromised data privacy.

The line in the sand has clearly been drawn after steps were taken to prevent Huawei from implementing wireless 5G hardware in the US. The ban stems from concerns that the 5G network could be used to and spy on citizens and farm their data.  Considering the coziness of Chinese telecom companies with Chinese state intelligence apparatuses, this is not too far a stretch of the imagination.

Although the Equifax blunder has shown that personal data integrity may not be highly prized by the private sector, the US government is taking a much harder line, with CFIUS blocking more transactions over the last seven years than the previous 37 years combined.  This is also evident from the body’s decision to block Ant Financial from acquiring US-based MoneyGram International over fears that it would misuse personally identifiable data of US customers. 

To CFIUS’s credit, China does not have a sterling reputation when it comes to lawful acquisition and use of data.  Yet, not all countries have exhibited the same degree of wariness towards Chinese acquisitions.  For instance, despite recent criticisms of Huawei technology and its flaws, the UK has not formally banned the Chinese company from operating within its borders. 

However, for the tens or hundreds of thousands of clients from UK-based money transfer company WorldFirst who was recently acquired by a Chinese conglomerate, the misuse of their personal data remains a distinct possibility considering the deep connections between the Chinese state and private sector.

Data as The Next Battlefront

While tariffs may be the focal point of the ongoing trade war, a brand-new front focused on data is opening amid growing concerns about the reach of the Chinese state and its accompanying private sector companions.  Whether for security, espionage, or social credit, the Chinese state has shown very little inclination to respect the privacy of personal or commercial data.

Although the US is at the vanguard of this new privacy-oriented anti-China front, whether under the guise of national security or otherwise, the issue of data is one of global importance.  As individuals truly begin to recognize the value and power of their own personal data and how it can be used against them, data is emerging as the new commodity at the heart of a global battle for economic and social domination.

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Ruben is a blockchain security consultant currently living in New York City. He helps organizations fundamentally redesign experiences to create new sources of value also digitally reinventing company's operations for greater efficiency.

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