Report: How democracies can push back on China's growing tech dominance

A group of researchers from Europe, the U.S. and Japan are proposing a "tech alliance" of democratic countries in response to the Chinese government's use of technology standards and its tech sector as instruments of state power abroad, according to a version of the proposal viewed by Axios.

Why it matters: Technological rivalry may dominate the 21st century world. But so far, democratic nations have not yet acted in concert to shape standards and secure their infrastructure in the face of a strong authoritarian challenge.

What's happening: Analysts from the Center for a New American Security, the Mercator Institute for China Studies in Germany, and the Asia Pacific Initiative in Japan have come up with a blueprint to establish digital privacy guidelines, secure supply chains and conduct joint research development.

• The proposal, called "Common Code: An Alliance Framework for Democratic Technology Policy" to be published next month, recommends that founding members of the new tech alliance include Australia, Canada, France, Germany, Italy, Japan, South Korea, Netherlands, United Kingdom and the U.S., as well as the European Union.
• It includes 14 specific recommendations, intended to serve as a "shovel-ready" how-to guide for setting up the new body.

What they're saying: "The status quo of uncoordinated and reactive technology policymaking for the major democratic technology powers in Asia, Europe and North America means growing risk of ceding their technological leadership," the authors write.

• "Having China’s government dictate the terms of the global economy is in no one’s interest but Beijing’s. It would erode the economic and national security of most countries."

Driving the news: In August, President Trump cited national security concerns when he issued executive orders banning transactions with popular Chinese apps TikTok and WeChat, to take effect 45 days later.

• But numerous experts have argued that ad hoc measures such as bans don't address the larger structural issues arising from rapid technological innovation, such as the need for a data privacy law to protect Americans from many different kinds of intrusive or abusive uses of their data.

The problem, according to the report: China's industrial policy, such as massive subsidies and preferential loans for Chinese tech companies combined with extensive economic espionage, has created an unfair advantage for Chinese national champions in global markets.

• This, combined with China's growing emphasis on mass data collection and surveillance, threatens not just the health of tech industries in democratic nations but also privacy and national security.

• But the lack of a coordinated response from democratic countries has left policymakers with few immediate options.

The result: The U.S. response so far has been to "prop up an inefficient industry" through "focusing on sanctions and tariffs," Martijn Rasser of the Center for a New American Security, the lead author of the report, told Axios.

The solution: To lay the groundwork for "proactive and innovative solutions so that you can proactively outcompete, rather than focusing so much energy on blocking and putting down your competitors," said Rasser.

The specifics: The report hashes out specific details that a new international body would entail, such as membership, structure and decision-making processes.

• It also includes several major goals, including securing and diversifying supply chains, protecting critical technologies, preserving research integrity, proactively shaping standards in ways that align with democratic values, and beefing up tech investment.

What to watch: In May, British Prime Minister Boris Johnson urged the U.S. and other countries to join Britain in a "Democracy 10" summit aimed at shutting out Huawei. But for this or any other proposal to be effective, it will need input and buy-in from the tech industries it aims to govern.