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Last Updated : Dec 04, 2018 08:34 AM IST | Source: Moneycontrol.com

Opinion | Why India must not take Jack Ma's Communist Party of China ties lightly

The data Chinese companies collect about Indian consumers allows them and the Chinese State to achieve big data applications on a scale unavailable to Western or Indian companies or to their governments

Moneycontrol Contributor @moneycontrolcom

Jabin T Jacob

That Jack Ma, founder and head of Chinese technology giant Alibaba, is a member of the Communist Party of China (CPC) does not surprise long-time observers of China.

Reports indicate that Ma was a member as early as his college days, which is exactly the sort of thing that smart, ambitious young Chinese would do in order to get ahead in life.

Not all the smarts in the world can help in China if you do not also have the right family connections, elite school or college network and just as, or perhaps more, importantly, a membership of the ruling party in the country.

Indians, including Indian entrepreneurs, should be able to understand this Chinese world of networks and connections easily. There are not many in the latter category who have succeeded without the benefit of family money or connections, belonging to an engineering college network, usually one of the IITs, or having done a degree in a top management school, say an IIM.

Despite the constant drumbeat of ‘merit’ in Indian social debates, the ‘meritorious’ do not usually succeed by ‘merit’ alone, if that, but because of the right connections — or ‘guanxi’ as the Chinese call it. Ma is no exception.

What are the implications of this ‘news’ about Ma and other Chinese entrepreneurs like him for India?

There has been a rising trend of Chinese stakes in Indian startups in e-commerce and fintech — in 2017, they received three times as much Chinese investment from the previous year at Rs 129 billion ($2 billion). Companies like digital payments provider Paytm — where Ma’s Alibaba Group has a nearly 40 percent stake — advertising technology company Media.net, online travel sites MakeMyTrip and iXigo, online marketplaces Snapdeal and Flipkart, and even food and beverage, gaming and health startups all have Chinese investors.

The significance of this spate of Chinese investments in these Indian tech startups is in terms of the access Chinese companies — and by extension, the Chinese State — potentially have, to the data of Indian consumers on everything from their spending habits, medical records and travel history, among other things.

The data Chinese companies collect allows both them, and the Chinese State, to achieve big data applications on a scale unavailable to individual Western or Indian companies themselves or to their governments. This allows China to put still greater distance in terms of technological capabilities between itself and the rest of the world.

The nature of the Chinese State is particularly germane in this context. Note for instance, that electric vehicles in China, including Teslas, send real-time information about the precise location of cars to the government in compliance with ‘local laws’ but often without the car owners’ knowledge.

In fact, earlier this year, Rajya Sabha Member of Parliament (MP) Narendra Jadhav, also a former Reserve Bank of India (RBI) Chief Economist, was on the record highlighting the ‘grave danger to India’s national security on account of the influx of Chinese multinationals into India’s financial technology space’.

Indeed, how robust are security measures around the data of consumers that any number of online apps and even retail stores now routinely collect about Indian consumers?

For Chinese entrepreneurs operating abroad, such as Ma and others of his ilk, other national and international law and norms will always be secondary to the interests of the CPC. Among these interests is access to cutting-edge technologies around the world.

In fact, Xiao Yaqing, head of the Chinese government commission that oversees all of the 100-plus Chinese State-owned enterprises admitted as much in a speech in Beijing on November 30, when he called for Chinese control over key technologies and equipment in order to ensure the development of the country’s enterprises.

At the same time, the CPC by its very nature also intends technology for political uses. This is evident from its blocking of foreign online search engines, stringent data localisation rules for foreign companies, its launch of facial recognition software across the country and a ‘social credit’ system that deducts points for apparent bad behaviour — read anti-CPC or as we say in India, ‘anti-national’ behaviour — leading to loss of access to public services including even education for one’s children.

The ongoing massive internment in multiple prison-like camps — ‘re-education’ centres in the Chinese parlance — of up to a million Uyghur in the restive Xinjiang province is another example of the employment of cutting-edge technology in the service of modern political authoritarianism.

The Government of India and India’s entrepreneurs must, therefore, think long and hard about the implications of Chinese capital not just for the country’s future entrepreneurial growth but also for its political system. Hopefully, both capital and technology are used to strengthen and fortify the Indian democratic political system, not to undermine it.

Jabin T Jacob is a China analyst at the National Maritime Foundation, New Delhi. Twitter: @jabinjacobt. Views are personal.

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First Published on Dec 4, 2018 08:33 am
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