THE United States lost an important early skirmish this week over whether American companies must comply with the Chinese government’s political demands. But the greater conflict is just beginning, which means the Trump administration must now prepare to help US corporations fight Chinese coercion in future rounds.

After months of behind-the-scenes discussion, the three major US air carriers — United, American and Delta — all partially caved to Beijing’s order that they change their websites to portray Taiwan as part of the People’s Republic of China. After the government of Xi Jinping threatened severe punishment, the White House called the demands “Orwellian nonsense”. Yet many international airlines folded quickly. The US airlines eventually devised a compromise: they removed the word “Taiwan” from their websites but didn’t agree to describe Taiwan as part of China.

The dispute was a test case for Beijing’s effort to export political repression and the international community’s ability to resist. The partial US capitulation constitutes a win for Beijing. But it ought to prove a pyrrhic victory.

Why does it matter? The Chinese Communist Party has been steadily increasing pressure on foreign companies to do its political bidding inside China and around the world. China punished Marriott after an employee liked a tweet from a pro-Tibet group; Marriott apologised profusely and fired the employee. Mercedes-Benzalso acquiesced after Beijing complained about an Instagram post that quoted the Dalai Lama.

The Xi regime claims that any public speech criticising Communist Party propaganda is a grave offense to 1.3 billion Chinese people. Never mind that Twitter and Instagram are blocked in China: Beijing is trying to enforce its political censorship outside its borders and online. That can’t be tolerated. The whole world cannot become a “safe space” for Chinese sensitivities.

By accommodating China’s political demands, even partially, airlines are abetting a false depiction of US policy on Taiwan and playing into China’s game, said Samantha Hoffman, visiting fellow at the Mercator Institute for China Studies.

“The Chinese Communist Party intends to shape how people and entities are willing to talk about China and Taiwan,” she said. “The more unclear Taiwan’s status becomes, the more the party’s goal is incrementally achieved.”

The Chinese government is also trying to expand its domestic “social credit system” to apply to foreign firms. It’s Beijing’s way of shaping international norms according to its criteria, Hoffman explained in a report for the Australian Strategic Policy Institute.

“As businesses continue to comply, the acceptance of the CCP’s claims will eventually become an automatic decision and hence a norm that interferes with the sovereignty of other nations,” she wrote.

Quietly, US airlines, their trade association and the administration heavily debated their response to the Taiwan edict. The administration attempted to raise the issue with the Xi government, but it refused to discuss it, two administration officials said. “They basically put their fingers in their ears,” one said.

Several airline representatives privately said the administration never offered any tangible protection, so they were obligated to defend shareholders’ interests. Administration officials said the US government wasn’t prepared to escalate against Beijing, so they tacitly endorsed the compromise.

But the half-concession seems to have only emboldened Beijing. China’s civil aviation authority called the US airlines’ actions incomplete and demanded total capitulation. Chinese officials are threatening to damage the airlines’ business in China, in violation of international trade laws.

Publicly, the airlines said they were simply complying with the laws of countries in which they operate. That explanation would make sense if they changed their websites inside China only. United, which operates in Taiwan, is certainly violating Taiwan’s laws. “Taiwan is Taiwan. It does not fall under the jurisdiction of China’s government,” the Taiwanese foreign ministry said in a statement.

The reality is American corporations can’t be expected to be guided by purely moral considerations. And the US government can’t tell American companies what to do. That’s an asymmetric advantage for Beijing.

So how can Western governments defend their private sectors from Chinese political pressure? That’s the discussion Beijing has forced upon us. Governments should develop countermeasures that impose serious costs for coercive acts. Reciprocity for Chinese companies that want to operate abroad can be one tool.

There were some positive takeaways from this incident. The US airlines and US government eventually worked together. That’s a model that other industries facing Chinese pressure can replicate. Beijing wants to divide and conquer. By uniting, setting clear principles and coordinating responses, foreign firms have greater power to fight back.

The Trump administration has properly called out China for its “Orwellian nonsense”. Now we all must figure out how to prevent the world from succumbing to Beijing’s Orwellian design.

By arrangement with The Washington Post

Published in Dawn, July 28th, 2018