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ID: 245489
ORIGIN: XXXXXXXXXXXX
DATE: XXXXXXXXXXXX
SOURCE: Embassy Beijing
CLASSIFICATION: SECRET
MISC: XXXXXXXXXXXX
DESTINATION: XXXXXXXXXXXX
XXXXXXXXXXXX

XXXXXXXXXXXX

SIPDIS

NSC FOR BADER, MEDEIROS, AND LOI

E.O. 12958: DECL: 01/26/2030
TAGS: ECON PGOV PHUM PREL EINV CH
SUBJECT: GOOGLE UPDATE: PRC ROLE IN ATTACKS AND RESPONSE
STRATEGY

REF: XXXXXXXXXXXX

XXXXXXXXXXXX

Classified By: DCM Robert Goldberg.  Reasons 1.4 (b), (d).

¶1. (S) Summary:  A well-placed contact claims that the
Chinese government coordinated the recent intrusions of
Google systems.  According to our contact, the closely held
operations were directed at the Politburo Standing Committee
level.

-- Another contact claimed a top PRC leader was actively
working with Google competitor Baidu against Google.

-- Chinese concerns over the recent Google threat to take
down the company's Chinese-language search engine google.cn
over censorship and hacking allegations were focused on the
service's growing popularity among Chinese Internet users and
a perception that the USG and Google were working in concert.

-- An appeal to nationalism seems to be the Chinese
government's chosen option to counter Google's demand to
provide unfiltered web content.

-- Contacts in the technology industry tell us that Chinese
interference in the operations of foreign businesses is
widespread and often underreported to U.S. parent companies.
End Summary.

Attacks Directed at High Level
------------------------------

¶2. (S) XXXXXXXXXXXX
XXXXXXXXXXXX

PRC Sees USG and Google Working Together
----------------------------------------

¶3. (C) XXXXXXXXXXXX
XXXXXXXXXXXX told PolOff XXXXXXXXXXXX that
Google's recent move presented a major dilemma (maodun) for
the Chinese government, not because of the cyber-security
aspect but because of Google's direct challenge to China's
legal restrictions on Internet content.  The immediate
strategy, XXXXXXXXXXXX said, seemed to be to appeal to Chinese
nationalism by accusing Google and the U.S. government of
working together to force China to accept "Western values"
and undermine China's rule of law.  The problem the censors
were facing, however, was that Google's demand to deliver
uncensored search results was very difficult to spin as an
attack on China, and the entire episode had made Google more
interesting and attractive to Chinese Internet users.  All of
a sudden, XXXXXXXXXXXX continued, Baidu looked like a boring
state-owned enterprise while Google "seems very attractive,
like the forbidden fruit."  He said it "seems clear" to the
Chinese people that Google and the U.S. government were
working together on Internet freedom and to undermine Chinese
government controls on the Internet.  That made some
intellectuals happy, XXXXXXXXXXXX said, but "some others" regarded it
as interference in China's internal affairs.

Industry: Interference Common, Paranoia Driving PRC Policy
--------------------------------------------- -------------

XXXXXXXXXXXX  002 OF 002

¶4. (C) XXXXXXXXXXXX
XXXXXXXXXXXX (please protect) noted the
pronounced disconnect between views of U.S. parent companies
and local subsidiaries.  PRC-based company officials often
downplayed the extent of PRC government interference in their
operations for fear of consequences for their local markets.
Our contact emphasized that Google and other U.S. companies
in China were struggling with the stated Chinese goal of
technology transfer for the purpose of excluding foreign
competition.  This consultant noted the Chinese were
exploiting the global economic downturn to enact increasingly
draconian product certification and government procurement
regulations to force foreign-invested enterprises (FIEs) to
transfer intellectual property and to carve away the market
share of foreign companies.

Chinese Media:  American Hypocrisy and Cultural Hegemony
--------------------------------------------- -----------

¶5. (U) The Secretary's speech continued to dominate headlines
January 25-26, with the official People's Daily (circ 2.2
million) alleging collusion between U.S. officials and the
business community as evidenced by the propinquity of
Google's rethink of its China business and the Secretary's
speech.  Chinese media again accused the U.S. of "cultural
hegemony" for setting the standards for "so-called Internet
freedom8 and of hypocrisy for calling for the free flow of
information while using the Internet as a political and
military tool.  People's Daily-affiliated Global Times
English (circ 150,000) called the speech a "milestone"
showing that U.S. and Western political interests were
"taking over every dimension" of cyberspace.

¶6. (U) The Party-affiliated Beijing News (circ 530,000)
opined that the speech showed "a huge gap between Chinese and
American information industries, which may lead to a trade
war strategy."  In an article headlined "China Intensifies
Counterattack on Internet Accusation," Global Times Chinese
(circ 1.3 million) quoted Chinese scholar Niu Xinchun as
rejecting the theory that U.S.-China conflict would replace
the "G2" cooperation model, noting that U.S. attacks usually
ended "poorly" when the U.S. considered its practical
interests.  Many papers quoted statements from the State
Council Information Office and Ministry of Industry and
Information Technology calling Chinese Internet controls
"legitimate" and saying they should not be subject to
"unjustifiable interference."  Papers continued to conflate
Google's China business strategy with the Secretary's speech.

Blogging Circumscribed
----------------------

¶7. (SBU) Anecdotally, censors appear to have cracked down on
blogging about the Secretary's speech.  XXXXXXXXXXXX
XXXXXXXXXXXX  Secretary Clinton's speech is currently blocked
in Chinese on state.gov but remains accessible on the U.S.
Embassy website in both English and Chinese.
HUNTSMAN