AI Facial-Recognition Software in China: Ethical Implications beyond Political Economy

By the 2020s, the Chinese government had made significant advances in applying computer technology to garden-variety surveillance. To do so, that government relied to a significant extent on Chinese companies, and this in turn encouraged innovation at those companies even for non-governmental applications. I contend that treating this as a case study in business and government, without bringing in the ethical and political implications is a mistake. The ostensive “objectivity” of empirical social science may seem like an objective for scholars, but I submit that bringing in political and ethical theory renders the analysis superior to that which political economy alone can provide.

The full essay is at "On the Ethics of China's Use of AI Facial-Recognition."

A Strong State vs. The Market Mechanism in China

Under Marxist ideology, the Chinese economy was a command-and-control economy eschewing the market mechanism. Mao's collective farms provide us with a good example. The economy of the U.S.S.R., also Marxist, was based on production quotas and fixed prices. They changed by fiat rather than by changes in demand. State owned, or socialist, productive enterprises were given quotas based on the prior year's production (plus more). This push replaced that of producing more to sell more. Any hint of a market brought with it the stench of Capitalism. So one would suppose that China marked a significant departure when the government announced in 2013 that it would expand the range in which the yuan currency would float. Yet in 2019 in the midst of a trade tussle with the United States, the Chinese state demonstrated just how dominant the state still was relative to any market system.  

The full essay is at "Strong State vs. The Market Mechanism."

Hong Kong’s Chief Executive Caves in on a Proposed Extradition Law: Yielded to the Street, Business, or Beijing?

Facing huge violent protests, Carrie Lam, the chief executive of Hong Kong, a semi-autonomous region of China, decided on June 15, to indefinitely suspend her proposal to open extradition to mainland China and Taiwan. As the Chinese government demonstrated during the protests at Tiananmen Square decades earlier, holding a mass protest in China was not among the ways to impeded proposed legislation. Why, then, did Lam seem to cave into the popular protests in Hong Kong?

The full essay is at "Hong Kong's Chief Executive."

China or USA: Which Will Rule Trade?

The Association of Southeast Asian Nations (ASEAN) announced at its meeting in November 2012 that it would host negotiations among its members on “a sweeping trade pact that,” according to the New York Times, “would include China.” The trade agreement would include not only the ten countries that are in the association, but also six other countries that have free-trade agreements with the association. In addition to China, those countries include Australia, India, Japan, New Zealand and South Korea. Half of the world’s population would be included in the pact. Notably absent is the United States. This is no accident, as the Obama administration’s own proposal for an eleven-nation Trans-Pacific Partnership excludes China. In other words, the contending proposals may be more about a “control battle” between two contending empires—the United States and China—than anything else. Moreover, which proposal succeeds could say something about whether China succeeds the United States as the hegemonic super-power of the twenty-first century.

Barack Obama and Wen Jiabao: A contest of wills at the East Asia Summit in 2012.   Jason Reed/Reuters

The full essay is at "Global Trade Dominance: China or The USA?"

China and Russia Protect Syria’s Assad on Chemical Weapons: A Matter of Priorities

All bets are off when it comes to regulating war. Such a condition is virtually by definition beyond the confines of law. Even international law is but an impotent dwarf next to the raw force of a governmental regime at war—whether with its own citizens or another country. To be sure, the International Criminal Court had by 2017 made a dent in holding some perpetrators of atrocities such as genocide accountable for their deeds. Such efforts were still the exception, unfortunately, when Russia, China, and Bolivia vetoes a resolution in the U.N. Security Council that would have penalize Syria’s Issad regime for having used chemical weapons on Syrians. The reasons for the vetoes—and the fact that Egypt, Ethiopia, and Kazakhstan all obstained—implies that holding perpetrators accountable by international means had not yet become a priority at the international level.

The full essay is at "China and Russia Protect Syria's Assad."

Global Warming: Has China Done Enough?

Whereas the Montreal Protocol in 1985 created a fund to reimburse countries for the incremental costs of banning ozone-depleting chemicals, later international agreements, such as the Kyoto Protocol, oriented to reducing global warming have not given countries, including developing nations such as China, a financial incentive to reduce carbon emissions. In fact, the U.S. Government rejected the Kyoto Protocol because the reductions only applied to developed countries. Even though China reduced its carbon emissions per unit of GNP by half from 1990 to 2010 by investing in alternative energy sources and mandating that polluting companies publicly disclose their respective emissions, the amount of emissions continued to increase dramatically through the period. How do we discern whether the Chinese government has done enough? Furthermore, are other countries enabling China and thus indirectly responsible and thus culpable too?

The steep rise in carbon emissions in China from 2003 demonstrate just how misleading incremental, or marginal, changes can be. Even China's goal of a 20% reduction in emissions by 2020 may not mean much in terms of the total amounts emitted. 

Because CO2 is a “stock” pollutant—meaning that global warming is a function of the total amount of accumulated CO2 in the planet’s atmosphere (regardless of when added)—a country’s total emissions figure is key (total accumulated as well as annual amounts). As the following graph shows, China would have to do much more than it had accomplished during the first decade of the twenty-first century.

By 2010, industrialized countries had become large net-importers of products such as steel whose manufacture involves sizable CO2 emissions. 

Developed countries have enabled China’s emissions to the extent that they are “contained” in products exported. The increase for China from 1990 to 2010 (blue and red bars in the bar-graph below) is astonishing. So too is the increase in carbon emissions “embodied” in products imported by developed countries. Interestingly, the E.U. imported more product-emissions than did the U.S. both in 1990 and 2010. The larger manufacturing output of the U.S. may explain much of the difference in the respective nets. Europeans critical of the U.S. for walking away from the Kyoto Protocol may be surprised to learn that their country has been enabling foreign carbon-emissions more.  

The thick black lines heading to China from Australia and Indonesia stand out in this map, suggesting just how much carbon China emitted in 2011. 

Coal exports to China can be understood as another instance of enabling. As global shipping costs for bulk commodities such as coal dropped significantly, the amount of the commodity traded increased significantly. Obviously, major exporters have a financial incentive to oppose global carbon-emissions limits being written into multilateral treaties. In 2011, Australian companies extracted a lot of coal, a majority of which went to China. Indeed, the sheer magnitude of coal imported into China can tell us a lot about just how much carbon China continued to emit in spite of the government’s forays into alternative energy sources. Even though parts of Australia had been burned by the hole in the ozone layer decades before 2011, the continent’s government and mining companies have had a financial incentive to keep China from shifting to wind and solar energy sources sufficiently even to level-off China’s annual carbon emissions.

Had the Kyoto Protocol included carbon limits for developing countries, complete with “self-enforcing” financial incentives (e.g., an international fund to cover incremental costs of compliance) and disincentives (e.g., other countries in the treaty can boycott trade with non-compliers), in spite of opposition from major coal-exporters, perhaps China would have curtailed the upward trend in the country’s total carbon-emissions even by 2010.  Lest it be thought that the dictatorship in China has far outpaced the world’s largest democracy (i.e., India) as a “global citizen” enabling our species to have a future, keeping global warming to within 2 degrees (C) will require much more from China, and indeed the world.

SEC Goes After Chinese CPA Firms: Beyond Diplomacy

The Securities and Exchange Commission brought an administrative proceeding against the Chinese affiliates of five major CPA firms, including the “Big Four,” in 2012. Chinese companies had raised billions of dollars on American (and Canadian) exchanges only for the share prices of the companies to plummet due to questions about bookkeeping and disclosures. The SEC alleged that the CPA firms in China refused to hand over documents in connection with the investigation of alleged accounting frauds at nine Chinese companies. The SEC maintained that firms that audit U.S.-traded companies must follow U.S. law, and the Sarbanes-Oxley Act requires foreign audit firms to hand over documents about U.S.-listed clients at the SEC’s request. SEC Commissioner Luis Aguilar said that the investigations “have been hampered by the lack of access to relevant documents.” For their part, the CPA firms in China (affiliates of American-based CPA firms) pointed out that their audit papers are treated like state secrets in mercantilist China, and that the auditors could therefore be imprisoned for handing the material over a foreign government without permission from the Chinese state. 

The full essay is in Cases of Unethical Business, available at Amazon.com.  

The Internet Escapes China's Grasp

The “surprising escape” of Chen Guangcheng, a blind legal activist, from house arrest to the presumed custody of U.S. diplomats was “buoying China's embattled dissident community” even as the government lashed out, “detaining those who helped him and squelching mention of his name on the Internet.”[1] Two points bear further scrutiny.

The full essay is at "The Internet Escapes China's Grasp."

1. Alexa Olesen, “Chen Guangcheng Escape: China Activists Inspired by Blind Dissident Lawyer,” The Huffington Post, April 29, 2012. 

Hollywood Bribes China

The Foreign Corrupt Practices Act, known as F.C.P.A., “forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.”[1] The practical difficulty facing American companies doing business around the world is that in some cultures bribes are so ubiquitous they are simply a part of doing business.  For American companies to refuse to participate in what is generally expected can be a competitive disadvantage, particularly if substitutes exist and the practice is widespread.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Edward Wyatt, Michael Cieply, and Brooks Barnes, “S.E.C. Asks if Hollywood Paid Bribes in China,” The New York Times, April 25, 2012.

Wen and Obama: Breaking Up the Banks

Chinese Premier Wen Jiabao told a radio audience on April 3, 2012 “that China’s state-controlled banks are a ‘monopoly’ that must be broken up.”[1] He also urged other businesses to get into the financial sector. “Let me be frank,” he said. “Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly. To break the monopoly, we must allow private capital to flow into the financial sector.”[2] This included raising the total amount foreigners can bring into China under the Qualified Foreign Institutional Investor program to $80 billion.

The full essay is at "Wen and Obama: Breaking Up the Banks."

1. Dinny McMahon, Lingling Wei, and Andrew Galbraith, “Chinese Premier Blasts Banks,” The Wall Street Journal, April 4, 2012.

2. Ibid.