"China's extensive use of digital trade barriers ... have reshaped the production and sales of many global tech sectors as they've been forced to either adapt to China's restrictive and costly requirements or avoid the market entirely," said Nigel Cory, trade policy analyst at the Information Technology & Innovation Foundation.
Unlike the flashpoint over aluminum foil, there has so far not been a single trade case against China for the blocking of websites, apps, or platforms by what is the world's biggest internet market. This digital protectionism has resulted in the creation of China's own tech superpowers -- Tencent, Alibaba, and Baidu -- which are now competing globally with their US counterparts. The new president has not yet shown any sign of taking on digital trade with China. Tech companies like Apple, Facebook, and Amazon either have been silent or are openly courting or complying with Chinese regulators.
As China's digital economic power grows, the question is whether that will change, as freedom-of-expression groups and, increasingly, the tech industry have been asking. The goal: ensure that digital trade and information flows as freely in and out of China as do lightbulbs, shoes, or any of the other Chinese-made consumer goods found in stores across the US. Otherwise, some fear that the Chinese model of the internet -- state control of information and access -- may be copied by other countries for censorship and protectionism purposes. At risk is nothing more than the future of the internet as a global public forum.
Not too long ago, many argued that the spread of the internet to authoritarian states like China would lead to greater democratization. In reaction, countries like North Korea and Cuba severely restricted their citizens' access to the web. China, however, was in the midst of opening its markets to global companies, and wanted to become a hub for manufacturing devices that would give internet access to the world. Blocking the web entirely was not an option.
The solution was called the Golden Shield Project, announced in 2000 by the Chinese Ministry of Public Security. Today, the project is more commonly known outside of China as the Great Firewall. It was an attempt to give China the best of both worlds: courting local innovation and foreign investment to make the country a hub for tech manufacturing without the pesky side effect of relinquishing too much of the Communist Party's near-monopoly on information.
What was initially the blocking of a few web pages that the Chinese government deemed sensitive, such as those about the Chinese occupation of Tibet or the Tiananmen Square Massacre, has turned into a massive filter between the Chinese web and the websites and apps of many foreign companies, news media, and NGOs. The Great Firewall has gotten progressively more sophisticated, and a major move came in 2009 when the growing social networks Facebook and Twitter were blocked, along with YouTube.
"Twitter and Facebook and other large social media apps, in the eyes of the authorities, simply cannot operate in China without censorship.
"Twitter and Facebook and other large social media apps, in the eyes of the authorities, simply cannot operate in China without censorship," said Charlie Smith, co-founder of GreatFire.org, a nonprofit that provides analysis and circumvention tools for the Great Firewall. "This has everything to do with protecting the party's grip on power ... Helping domestic companies may be an additional side benefit, but it is not the main reason."
Facebook and Twitter were blocked in June 2009, just days before the 20th anniversary of the crackdown on the pro-Democracy protests in Tiananmen Square, and alongside deadly riots in China's restive western province of Xinjiang.
Since then, the list of blocked sites and apps, as well as the number of restrictions on internet companies, has only grown, as has the Chinese digital market. Today, the vast majority of Chinese internet users are not just prohibited from searching about sensitive topics but can't share files via Google Drive, chat with overseas coworkers through Slack or post anything, sensitive or not, to Facebook or Twitter.
Yet according to Matthew Schruers, the vice president for law and policy at the Computer & Communications Industry Association, which counts Google, Facebook and Amazon as members, it is difficult to quantify how much China's trade barriers impact US companies.
"It's relatively easy to tell if a country is blocking bananas at the border and to calculate the scope of the banana market," said Schruers. "With digital trade, it is not always that straightforward. Sometimes services are not fully blocked, but they are throttled, and quality of service is diminished, or they are selectively filtered over time."
Still, the impact is real. In 2010, Google controlled 40 percent of the Chinese search market, but since it left the country (and was subsequently blocked), Chinese search traffic has gone to the local, censored alternative Baidu, which now controls a nearly 80 percent market share.
Since China joined the World Trade Organization (WTO) in 2001, the US has filed, and won, several trade cases against the world's second-largest economy. But these cases are focused entirely on physical products, like the December 2016 complaint about tariff rate quotes for wheat, rice, and corn. None, so far, address digital trade.
"Unfortunately, countries [like China] are able to enact barriers to digital trade, as there is a vacuum in terms of rules that deal with digital trade issues," said Cory.
This is a limitation in nearly all existing agreements governing trade, which mostly date from the pre-internet era. The WTO came into force in 1995, and its predecessor, the General Agreement on Tariffs and Trade (GATT), in 1947. Both focus on the trade of goods, not services.
"Existing rules at the WTO -- mostly agreed to in the mid-1990s, when the internet as we know it didn't exist -- have proven ineffective," said Cory.
That's why when the Chinese tried to block American-made auto parts from entering the country, the US quickly filed a complaint at the WTO and won. Yet when China blocks or throttles a US-based website or tool like Flickr, Pinterest or Instagram, there is little action.
"We're going to continue seeing countries restrict information access if they think there will be no trade consequences."
"We're going to continue seeing countries restrict information access if they think there will be no trade consequences," said Schruer. "Not until a trade case is brought will these practices disappear."
One of the few opportunities to rework global trade, at least for the US, may have been lost when Donald Trump won the 2016 US presidential election. He campaigned against the Trans-Pacific Partnership (TPP), which was officially abandoned shortly after his arrival at the White House. The TPP, for all its faults, could have provided a basis for regulating the trade of digital services, at least among the 11 countries meant to be its original members.
"The e-commerce chapter of the TPP ... represented a major step forward in developing new rules to support and protect digital trade," said Cory. ITIF is still hopeful that even a TPP without the US could provide at least a framework for future global policy.
"If enacted -- even without the United States -- these rules will still cover a large part of the global economy, thereby going a long way toward establishing a new global norm for China and others at the WTO to work towards."