Cyber Capitalism with Chinese Characteristics? Domestic Sources of China’s Digital Offensive

Since 1979 and through the 1980s and the 1990s, China’s overall security posture has been dictated by strategic cautiousness, characterized by the strategic guidelines of “Taoguang Yanghui” (or, “Bide time and build up capabilities”), and in the early 21st century peaceful development. This grand strategic stance, however, does not preclude Beijing from behaving assertively and even aggressively under certain circumstances. In the past decade, Beijing’s aggressiveness is particularly salient in its direct confrontation in cyberspace with countries like the United States. Some observers claim that China is shifting from the guidelines of “Taoguang Yanghui” to a more active diplomatic roadmap. In some way, this is probably a correct observation, especially after Xi Jinping's great power aspiration started to influence China's self-image. But China's seeming aggressiveness in cyberspace started to be salient long before Xi assumed power. Moreover, China's growing assertiveness still remains self-restrained when it comes to direct interactions with the US, the incumbent hegemonic power, in traditional security areas. What explains this seeming incoherence in China’s security strategy? This research examines possible answers by cutting across fields of comparative political economy and international security. I argue that domestic political and economic factors best explain China’s digital offensiveness. The existing studies have highlighted both external factors (such as international and regional security environment) and internal factors (such as nationalism, dominant strategic thinking, and People’s Liberation Army (PLA) doctrines of information warfare. Yet these explanations are not satisfactory. The explanations emphasizing external factors tend to mistakenly treat external shocks as both necessary and sufficient conditions for military expansion. The explanations focusing on internal factors often imply unidirectional relations between key domestic players, in which one actor (e.g., the state) lords it over the others (such as business establishments in defense and information industries). To develop an alternative explanation, this thesis looks at China’s digital defense-industrial expansion mainly through the lens of the interactions among domestic players and the consequences of institutional changes in China, especially changes in ownership structure, reconfiguration of business-military relations, and demand-supply relations between the military and the defense industry. The changes in these domestic political and economic factors have given rise to greater policy autonomy of PLA in the domain of national cyber security, which in turn contributed to China’s inconsistent aggressiveness in cyberspace. The political and economic transitions on both demand and supply sides of China’s defense-industrial system have facilitated the country’s digital offensive. In other words, China’s military expansion has been a product of the mutual reinforcement of strategic and business logics.At the current stage, my paper is more a deductive exploration. More empirical works will be conducted in the future to test the arguments. These works will include within-case analysis or process tracing and between-case comparisons based on archival and interview data.