Chinese State Influence on American Companies
U.S.-China relations are in a period of high tension, with the outbreak of SARS-CoV-2 being the most recent in a litany of flashpoints. The spread of the lethal coronavirus from Wuhan comes amid an ongoing trade dispute and increased U.S. attention on repression in the province of Xinjiang and the semi-autonomous region of Hong Kong. As these problems have emerged, they have revealed to the public an insidious aspect of U.S.-China relations: Chinese state influence on American companies.
40 Years of U.S.-China Engagement
Under the leadership of Deng Xiaoping in the 1980s, the Chinese Communist Party (CCP) shed its remaining commitment to Maoist economics. It opted instead for what it deemed the Four Modernizations, focusing its still centrally-directed economy on adopting practices from the West in agriculture, industry, science and technology, and national defense. The CCP accepted that China’s economic policies had failed to generate wealth and that it would benefit from the acceptance of some capitalist practices and integration with the global flow of goods and services. It not only welcomed in foreign innovations but also sent students abroad by the tens of thousands to develop their skills in Western institutions, like American and Australian universities. Thus began an era of renewed cultural relations between China and the world’s liberal democracies.
In the intervening four decades, China has become a magnet for global capital, transforming itself from a dormant to active power. Initially seen by the U.S. and other Western businesses as the world’s deepest reservoir of affordable labor, China in the early 2020s is the second-largest market for consumer goods—and closing the gap on the top spot each year.
As China opened and communist regimes fell elsewhere, Western political analysts forecast that the integration of China into the world’s market and educational systems would entice its population to demand liberal reform. Some considered the 1989 wave of activism to be such a development. In the decades that have followed, China has become a fulcrum of global trade, but the CCP has maintained its vice-like grip on the country’s 1.4 billion people. Worrisomely, its political influence no longer stops at the water’s edge.
Instead of exchange with the countries of the liberal order softening the CCP, the softening has shown signs of going the other direction. Western companies, many of which are institutions unto themselves, have been so lured by China’s affordable labor and, later, its consumer base that they have slipped into a pattern of submission to the party line. As the entity with ultimate decision-making authority over which companies operate in China and if and how its population accesses their products and content, the CCP uses control of that access as a key prong in its strategy of “sharp power.”
Western companies in valuable, visible, and culturally significant fields—the fields considered central to America’s “soft power”—find themselves in a dilemma. Directly and indirectly, the CCP pressures the entertainment, fashion, tech, and travel industries to yield independence to party censors in order to reach Chinese markets. Sometimes the party itself makes contact with companies to exert pressure; other times it allows outrage from public only exposed to the ideas the party lets it see to do the job. The result is the same: the party is in control. This repetitive sequence of pressure and acquiescence ought to give pause to any observer who still thinks influence is a one-way street.
Twenty Examples of How U.S. Companies Bend to China’s Sharp Power
Below is a catalog of 20 examples in which companies based in liberal, democratic countries have changed course, reprimanded personnel, or otherwise kowtowed to Beijing. Most of these examples involve demands upon content and company policy in reference to China’s projection of prestige and to its many disputed territorial claims, such as to Taiwan, Hong Kong, Tibet, and the islands of the South China Sea.
Many Western companies, ostensible emissaries of liberal progress, have shown deference to an authoritarian regime that they would never show to their home governments. Some will argue that that is simply the cost of doing business—respecting the customs of a host is a practice as old as time. Indeed, some cases are benign. But there is a difference between respecting norms and complying with authoritarians. It is worth considering that this augurs a future in which the Chinese Communist Party is no longer one we think we can change, but one that will be changing us. Deeply as our economies are intertwined, this expression of sharp power does not have a simple remedy.
Hollywood has been America’s most influential cultural export over the past century, but Hollywood has become dependent on revenue from China’s movie-going population and has begun catering to its official tastes. As explained by China Film Insider, in its guide to moviemakers who want to break into the market,
“China and its one-party government currently lack a film law (though as Part 5 of this guide outlines, one is coming) that would set clear guidelines and standards. As such, it’s difficult to know whether or not a proposed project may fall afoul of the censors, whose whimsy seems to be determined in large part by the higher ranks of the Chinese Communist Party (CCP)—an organization for which projecting the image of a stable society is considered paramount to preserving its hold on power.” The following six examples show just how decisive CCP influence has become to filmmaking.
China Film Insider, in its guide to moviemakers who want to break into the market, “China and its one-party government currently lack a film law (though as Part 5 of this guide outlines, one is coming) that would set clear guidelines and standards. As such, it’s difficult to know whether or not a proposed project may fall afoul of the censors, whose whimsy seems to be determined in large part by the higher ranks of the Chinese Communist Party (CCP)—an organization for which projecting the image of a stable society is considered paramount to preserving its hold on power.” The following six examples show just how decisive CCP influence has become to filmmaking.
- Red Dawn: In the 1984 film Red Dawn,plucky American teens fight off Soviet troops in the Colorado wilderness. In the 2012 remake, with the Soviet Union no longer a viable candidate for hostilities, screenwriters cast China as the invader. The film was in post-production when MGM decided to edit China out of the film and insert North Korea as the new adversary. According to a U.S.-China Economic and Security Review Commission Staff Research Report, Chinese diplomats reportedly asked an intermediary to arrange a meeting with the producers to express disapproval over the film’s depiction of an antagonistic China. It is unclear whether the implicit threat from the CCP instigated the change or if this was a display of equally-concerning self-censorship, but, regardless, by the time the film was released digital editors had scrubbed all references to China. Still, though, the film was never released in the People’s Republic.
- Skyfall: In the 2012 James Bond film Skyfall audiences in Great Britain, the United States, and elsewhere saw a scene in which an assassin murders a Shanghai security guard in cold blood. The film’s version played in China however featured no such scene, presumably because the CCP could not tolerate the presentation of Chinese as defenseless victims.
- Iron Man 3: In the third installment of the popular Iron Man saga, Chinese audiences were served a version four minutes longer than audiences elsewhere in which Chinese doctors perform a heroic surgery on Tony Stark. But as reviews for this film indicated, audiences in China do not necessarily accept this sort of production manipulation uncritically.
- Top Gun: Tom Cruise will reprise his role as Pete Mitchell in this year’s upcoming sequel Top Gun: Maverick, but his iconic jacket patch, based on trailers, will be left in the 1980s. Cruise’s original jacket was festooned with the flags of Japan and Taiwan. Those visual references have been replaced with similarly-colored, but unidentifiable insignia.
- The Great Wall: The 2016 film starring Matt Damon was a collaboration between American and Chinese production studios. Writing for The Atlantic, Martha Bayles described the picture as the apotheosis of Hollywood-CCP quiescence. “The Great Wall,” Bayles wrote, “was the third stage in a process by which Hollywood went from exporting U.S.-made films into China, to co-producing films with China in America, to co-producing films with China in China. At each stage, the American producers received a greater share of the revenue—and submitted to a greater degree of control by the Chinese authorities.”
- Mulan: Disney and the CCP have decades-worth of enmity, but with the soon-to-be-released live-action version of Mulan Disney looks to be paying tribute. Writing for The Guardian, Jingan Young expressed last year, “I can’t help wonder why Disney is remaking Mulan at all if they are simply going to pander to the nationalistic values espoused by the mainland Chinese government – especially as it looks exactly like the kind of ‘Imperial dramas’ that the state media are currently taking aim at.”
- Once Upon a Time in Hollywood: There are, however, instances in which filmmakers have resisted China’s sharp power. In an encouraging counterexample, Quentin Tarantino reportedly refused to cede his final edit privileges for the 2019 blockbuster Once Upon a Time in Hollywood. The script featured a humorous scene in which Brad Pitt’s character Cliff Booth gets the better of Bruce Lee in a sparring match. Ever sensitive about the image of people from whom China gains prestige, party censors pulled the film from its scheduled-theater slots just a week before its debut.
Sports have played a visible role in the U.S.-China relationship since “ping-pong diplomacy” served as a catalyst for the normalization of relations. Today, basketball is the sport that most closely binds the two countries. Yao Ming, first pick in the 2002 NBA by the Houston Rockets, became China’s first international basketball icon and was selected to carry the country’s flag at the 2008 Olympic Games in Beijing. Interestingly, the very franchise for whom Yao played his entire NBA career is now a lightning rod for U.S.-China relations.
- NBA: In a widely-covered episode last fall, CCP authorities and the Chinese public responded with fury to an image shared on Twitter by the Houston Rockets’ general manager, Daryl Morey. The simple image said, “Fight for freedom. Stand with Hong Kong.” Despite its brevity and the fact that Twitter is unavailable in China, the reaction from Beijing was swift. China announced no Rockets games would be played on television in the country. With hundreds of millions of revenue dollars on the line, the owner of the Rockets, Tillman Fertitta, quickly distanced himself from Morey, as did several NBA stars including the Rockets’ own James Harden. LeBron James, one of the game’s premier international figures, told the media that Morey “was either misinformed or not really educated” on the issue—mouthing the very narrative pushed from Beijing. In an effort to placate both Chinese offended by the tweet and Americans bothered by the response, the NBA released two different statements to quell the uproar: one in English that paid lip service to free speech and a harsher Chinese version that said Morey’s tweet was “inappropriate” and that the league was “extremely disappointed.” To the NBA’s credit, it did not fire Morey as the party reportedly requested. However, the political maelstrom ricocheted back to the U.S. during the early stages of the 2019-2020 season when arena security in Philadelphia removed fans from the stands for holding signs in support of Hong Kong’s 2019 protest movement.
- ESPN: In its coverage of the NBA’s China flap, ESPN, the worldwide sports broadcaster and subsidiary of Disney, displayed the CCP’s preferred map of China. In the “nine-dash line” map China subsumes Taiwan and dozens of islands in the South China Sea that are claimed by the Philippines, Vietnam, Taiwan, Malaysia, and Brunei. The map is rejected by international legal norms.
Tech firms in Silicon Valley and Seattle are driving their local economies and drawing talented people from all over the globe to their campuses. With their success has come attention from the CCP, both in terms of content moderation and product collaboration.
- Microsoft: In 2014 netizens accused Microsoft of censoring the results of Bing’s Chinese language queries outside of China to mirror the preferences of the CCP on topics it considers sensitive, such as the Tiananmen Square massacre and the Dalai Lama. Microsoft blamed the issue on a system error, denying a deliberate effort at party appeasement. The denial notwithstanding, the 2014 episode was not the first time Microsoft was called out for the practice. In 2009 New York Times columnist Nicolas Kristof lambasted Bing’s Chinese language service for delivering “sanitized pro-communist results. This is especially true of image searches. Magic! No Tiananmen Square massacre. The Dalai Lama becomes an oppressor. Falun Gong believers are villains, not victims.”
- LinkedIn: In 2019 LinkedIn blocked the account of Zhou Fengsuo, an activist who participated in the 1989 freedom demonstrations, from users in China. Zhou inquired and LinkedIn responded, "While we strongly support freedom of expression, we recognized when we launched that we would need to adhere to the requirements of the Chinese government in order to operate in China. We also aim to be transparent about our actions and their impact on our members; if you want to learn more about how you can ensure that your profile and activity is viewable within China, please contact Customer Support."
- Apple: As the Hong Kong protests of 2019 became more intense, Hongkongers began to use an iOS app called HKMap.live, a real-time, crowdsourced map to help people avoid (or find) hot spots. Just a few days after its initial approval, Apple deleted the HKMap.live from its App Store.
- Blizzard: Blizzard, the gaming company, banned Chung Ng Wai for yelling “Liberate Hong Kong, revolution of our time,” in a live postgame interview. Blizzard banned Chung for a year, rescinded his title and prize money, fired the interviewers for good measure. Following a public backlash against its treatment of Chung, Blizzard shorted the ban and returned the prize money.
Fashion may not have the same potential for harm as tech, but its transcendent appeal has brought it too into the crosshairs of CCP censors.
- Vans: In another Hong Kong-related imbroglio, Vans disrupted its own sneaker design competition when in became clear in October 2019 that a Hong Kong protest-themed shoe would be voted the champion in overwhelming fashion. Vans removed the sneaker designed by an artist called Naomiso as the submission had garnered over 140,000 votes; the next closest competitor had around 10,000 at the time.
- Gap: The San Francisco-based clothier came under pressure in 2018 when it released a shirt featuring a map of China that did not include Taiwan and other territorial claims. Gap offered the following official apology, reminiscent of the “struggle sessions” that typified China’s bloody Cultural Revolution of the 1960s: “Gap Inc. respects the sovereignty and territorial integrity of China. We’ve learned that a Gap brand T-shirt sold in some overseas markets failed to reflect the correct map of China. We sincerely apologize for this unintentional error,” It also pulled the product from Chinese markets and destroyed its remaining stock.
- Dior: In 2019 fashion house Christian Dior apologized for an employee's use of a "misrepresentation" of China on a map during a presentation at Zhejiang Gongshang University in the eastern Chinese city of Hangzhou. In an official statement, the company said, “Dior always respects and upholds the one-China principle, strictly safeguards China’s sovereignty and territorial integrity, and treasures the feelings of the Chinese people.”
- Zara: In 2018 the Shanghai Internet Information Office issued Zara an "Internet site rectification notice.” The problem in need of rectification according to the censors was that Zara listed Taiwan as a country for shoppers on its site. Unsurprisingly, Zara complied with the party demand
- Nike: Following the Chinese backlash in response to Daryl Morey’s Hong Kong-related tweet, Nike removed all Houston Rockets apparel from its China stores.
Airlines and hotels are on the front lines of face-to-face cultural intercourse. Conrad Hilton, the founder of the eponymous hotel chain, saw this potential in the 1960s when he set out to make his hotels “little Americas” in foreign locales. Mr. Hilton would likely find today’s trends in his industry, and his own hotels, vis-à-vis China disturbing.
- Hilton Hotels: Rather than honoring Conrad Hilton's vision of his hotels providing the people of the Communist world a window on the West, Hilton now provides its guests with propaganda each morning at its Madison Hotel property, just three blocks from the White House, in the form of China Daily, an English-language newspaper so entwined with the CCP that the U.S. Department of State designated its distributor as a “Foreign Mission” in February 2020.
- Marriott Hotels: In March of 2018, Marriott fired hourly social media account worker Roy Jones, who unwittingly enraged CCP monitors and Chinese nationalists by “liking” a tweet that referred to Tibet as a country.
- American, Delta, and United Airlines: America’s three premier airlines complied with a July 2018 edict from Beijing to remove references to Taipei, Taiwan from their websites, opting instead for the CCP-approved destination of Taipei.
The coronavirus outbreak has initiated an economic dip that may reverberate for years to come. But through this time of epidemiological and economic strife may be found a silver lining. Manufacturers, already changing their business plans in response to the trade dispute, have further reason to question supply chain reliance on China. As that process unfolds, businesses in the industries that constitute America’s soft power have an opportunity to rethink their relationships with China as well.