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AMAZON AND THE CCP’S COMMON DESTINY Horizon Index | Company Report

Horizon Index www.horizonindex.com info@horizonadvisory.org

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A new global order is taking shape. Macro-economic and geopolitical pressures create corporate social responsibility challenges. The Horizon Index delivers a rigorous ratings methodology and granular, fundamental research to monitor social risks across sectors driving the fourth industrial revolution.

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Table of Contents

Executive Summary

Page - 01

Introduction

Page - 03

Amazon and China’s Information Architecture

Page - 07

Conclusion

Page - 15

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Executive Summary In April 2019, Amazon announced that it was closing its e-commerce business in China.1 Faced with Chinese domestic challengers – in many cases supported by Chinese government industrial policy – Amazon had seen its market share in China fall to about 6 percent from 15 percent ten years earlier.2 However, Amazon did not leave China entirely. For its e-commerce business, Amazon sources goods from hundreds of Chinese producers and manufacturers. In November 2019, Amazon released a list of the 1,050 suppliers who make its Amazon Basics-branded products. Almost half (487) were based in China. Just 101 were US suppliers.3 The skew toward Chinese suppliers takes on additional significance in light of recent findings about Amazon’s information practices. In April 2020, it was reported that Amazon accessed the proprietary information of its own sellers – many based in the US – in a way that may have informed Amazon’s approach to competing with products through its private label brand.4 The revelations suggest that Amazon’s information practices could support the gathering of data on US suppliers to launch competing products manufactured by private label suppliers in China. Amazon also develops information technology (IT) infrastructure in China and in partnership with Chinese players. Amazon Web Services (AWS) has contributed to the development of at least two data centers in China and has five innovation centers launched in partnership with Chinese government and government-backed entities. These bring Amazon into direct interaction with Chinese government, military, and domestic surveillance entities. Amazon’s close engagement in and with China should raise concerns for US policymakers about the company’s entanglement with China’s authoritarian regime; complicity with that regime’s industrial, technological, and security policy; and implications for US economic and military competitiveness. Amazon’s case should not be assessed in isolation: This engagement in and with China is reflective of a larger pattern among US “Big Tech” players – and one that threatens the public-private partnerships, technological and economic strength, and standard-setting influence necessary for a competitive US response to China’s technoauthoritarian global offensive.

Karen Weise, “Amazon Gives up on Chinese Domestic Shopping Business,” The New York Times, April 18, 2019. 2 Saibal Dasgupta, “Amazon Curtailing Business Operations in China,” Voice of America, April 22, 2019. 3 “Amazon Supplier List,” https://d39w7f4ix9f5s9.cloudfront.net/cb/19/77dfc5b441c892cd6e2be166ba70/final-amazon-supplierlist-2019-11-14-updated-1005am.pdf 4 Dana Mattioli, “Amazon Scooped Up Data from Its Own Sellers to Launch Competing Products,” Wall Street Journal, April 23, 2020.

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Introduction Amazon’s connections to China have already drawn public scrutiny. Past reports have raised questions about the labor practices of China-based operations that support and supply Amazon’s various lines of business. In 2019, Amazon supplier Foxconn was reported to be drafting hundreds of students as “interns” to make Amazon Alexa devices in China. It was suggested at the time that many of the students worked 10 hours a day, six days a week, in violation of labor laws.5 Foxconn claimed the internship “provid[ed] students…with the opportunity to gain practical work experience.”6 A year later, in 2020, Amazon-linked suppliers in China were identified as potentially complicit in forced labor and human rights atrocities imposed on the Uyghur minority in Xinjiang. The Australian Foreign Policy Institute (ASPI) identified Amazon, among other major foreign and Chinese companies, as potentially benefiting from “the use of Uyghur workers outside Xinjiang through abusive labor transfer programs.”7 In response to the ASPI report, Amazon released a statement confirming that the offending suppliers were removed from their supply chain.8 A specific case helps to demonstrate the types of potential risks that attracted attention in ASPI’s analysis. In November 2019, Amazon released a list of the 1,050 suppliers who make its Amazon Basics-branded products. Almost half (487) were based in China.9 The 2019 list of Amazon Basics suppliers included Guangdong Esquel Textiles. Guangdong Esquel is an affiliate of Changji Esquel Textile Co. Ltd,10 which was placed on the US Department of Commerce’s export restriction list in July 2020.11 This report approaches Amazon’s ties to China and the Chinese government from a different angle: The report documents technological connections between Amazon and Chinese government, commercial, and militaryaffiliated entities. At a minimum, Amazon’s growing engagement in China risks providing support to the CCP’s domestic surveillance capacity. At a more strategic level, Amazon’s engagement risks bestowing legitimacy on the CCP’s technological infrastructures, practices, and global standard-setting strategy. These risks could threaten US competitiveness and security. They could also potentially support the ways in which Chinese digital authoritarianism proliferates internationally.

Background: China’s Standards Strategy 5

“Amazon's Supplier Factory Foxconn Recruits Illegally: Interns Forced to Work Overtime,” China Labor Watch, August 8, 2019. 6 Ibid. 7 Vicky Xiuzhong Xu, Danielle Cave, Dr. James Leibold, Kelsey Munro, and Nathan Ruser, “Uyghurs for Sale,” Australian Strategic Policy Institute, March 1, 2020. 8 “Amazon's updated response to the Australian Strategic Policy Institute's Report on Forced Labour of Ethnic Minorities from Xinjiang,” Business and Human Rights Resource Centre, October 2, 2020. 9 Just 101 were US suppliers. “Amazon Supplier List,” https://d39w7f4ix9f5s9.cloudfront.net/cb/19/77dfc5b441c892cd6e2be166ba70/final-amazon-supplier-list-2019-11-14-updated1005am.pdf 10 Guangdong Esquel and Changji Esquel are both wholly owned subsidiaries of the Esquel Group. The two entities share a chairman and legal representative, as well as two of the same directors. 11 Bethany Allen-Ebrahimian, “Subsidiary of World's Largest Shirtmaker Put on U.S. Blacklist over Xinjiang Ties,” Axios, July 21, 2020.

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Beijing sees a new industrial revolution under way, catalyzed by information technology, and about to redefine the global order. In this moment of change, the CCP has diagnosed the opportunity to leapfrog the existing international hierarchy. To this end, Beijing is pursuing an industrial policy program that fuses real and virtual, military and civilian sources of competitiveness, in order to develop comprehensive national power.12 The “Made in China 2025” policy, a national strategic plan released in 2015 to dominate global production in strategic industries, represents one axis of China’s competitive ambitions.13 This axis focuses on acquiring technology and leverage over global supply chains. The other axis in China’s global commercial engagement focuses on setting international technological standards that will shape the emerging industrial revolution.14 China’s technical standards priorities range from e-commerce to e-payment, social credit to logistics, the Internet of Things, to cloud computing and big data, smart cities to geographic information.15 These constitute the rules, resources, and architectures of information-era global exchange. If Beijing can successfully set emerging foundational standards, Chinese players and the CCP will disproportionately benefit. The SWIFT system offers a historical example of this logic: Today, more than 40 percent of all global financial transactions taking place through the SWIFT system are denominated in US dollars and cleared through US banks.16 That grants the US significant control over the machinery of global financial transactions. Now, as IT transforms the rules and opportunities for global exchange, new, SWIFTlike standards are being set – across not only financial transactions, but also international logistics and communications, commerce and transportation, surveillance and media. Beijing is working to set these standards globally, as well as to build the corresponding architectures. SWIFT-like advantages, across the board, are at stake. How do China’s efforts play out, concretely? There are obvious examples in 5G, e-payment platforms, and data security standards.17 Look also at China’s construction of a global maritime logistics information technology network, controlled by the Ministry of Transport, that collects and disseminates data on the global movement of goods and vessels, as well as the operations at global ports.18 That logistics network risks giving Beijing not only superior information over international exchange, but also the power to shape that information – therefore to influence, or even coerce via, supply chains, regulatory (e.g., customs) environments, and logistics software.19 Or look in e-commerce: Alibaba is building, and China’s State Council has endorsed, the Electronic Trade Platform (eWTP), a nascent public-private initiative; intended to set global eTrade technical, policy, and business rules; and targeted at the developing world. eWTP is explicitly advertised as ranking above existing

See, for example, Josh Rogin, “How China Is Planning to Use the Coronavirus Crisis to its Advantage,” Washington Post, March 16, 2020; Arjun Kharpal, “China Standards 2035: Behind Beijing’s Plan to Shape Future Global Standards in Next-Gen Tech,” CNBC, April 26, 2020. 13 See, for example, the 2020 volume of Strategic Asia published by the National Bureau of Asian Research: https://www.nbr.org/publication/strategic-asia-2020-u-s-china-competition-for-global-influence/ 14 For in-depth discussion of China’s standards strategy, see Emily de La Bruyere and Nathan Picarsic, “China Standards 2035: Beijing’s Platform Geopolitics and Standardization Work in 2020,” Horizon Advisory, April 2020. 15 National Standardization Administration, “Main Points of National Standardization Work in 2020 [2020年全国标准化工作要点],” March 16, 2020. 16 Mary Hui, “The world’s money transfer system is China’s Achilles heel in its sanctions battle against the US,” Quartz, August 18, 2020, https://qz.com/1893235/swift-transfer-system-leaves-china-vulnerable-to-us-sanctions/. 17 See, for example, Thomas Duesterberg, “The Multitier Battle Against Chinese 5G Dominance,” Forbes, July 1, 2020; “China Is on a Mission to Regulate Fintech,” Finextra, November 22, 2019; Rita Liao, “China Presents ‘Global Standard for Data Security,” Tech Crunch, September 8, 2020. 18 Emily de La Bruyère and Nathan Picarsic, “Beijing’s Bid for a Maritime ‘God View’,” Real Clear Defense, October 13, 2020. 19 Ibid.

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international trade organizations: the WTO, UNCTAD, ICC, WCO, UPU.20 Those organizations maintain institutional checks that protect multilateral, norm-based development. EWTP could allow Beijing to evade those checks and leapfrog those organizations – to co-opt developing, dependent countries, and use them unilaterally to determine the structure of e-trade and e-commerce. Beijing aims to fuel its standards strategy with international resources, including collaboration with foreign companies.21 China’s approach to power may reap profit as well as coercive leverage. Beijing also proliferates an authoritarian set of norms and values.22 As a 2015 article in Zhejiang Daily on “Xi’s standardization thought” put it: “Under the conditions of economic globalization and modern market economy…Standards are the commanding heights, the right to speak, and the right to control.23 Amazon is defining the way a range of commercial and information ecosystems work and the balance of power within them. Amazon potentially risks doing so according to, and in support of, the Chinese Communist Party’s global, authoritarian vision.

“About,” Electronic World Trade Platform, https://www.ewtp.org/. 21 For example, the “Main Points of Standardization Work in 2020” issued by China’s National Standardization Committee in March 2020, outline intentions to “promote standards interconnection” through new “cooperation mechanisms” among countries, “standardization cooperation in professional fields,” and “international cooperation” in multilateral bodies on standards in emerging industries. (2020年全国标准化工作要点 [Main Points of National Standardization Work in 2020], National Standardization Administration, March 16, 2020.) 22 Emily de La Bruyere, “The New Metrics for Building Geopolitical Power in a New World,” The National Interest, April 12, 2020. 23 Guo Zhanheng [郭占恒], “Xi Jinping’s Standardization Thought and Zhejiang Practice [习近平标准化思想与浙江实践].” Zhejiang Daily, Septemebr 25, 2015.

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Amazon and China’s Information Architecture Amazon has contributed to the development of information infrastructures in China, including two data centers and five so-called “innovation centers.” These bring Amazon into connection with the Chinese government and entities closely affiliated with China’s military and domestic surveillance apparatus. To an extent, this is the cost of doing business as a tech player in China. However, that cost – which is reflected across the range of “Big Tech” players’ activities in China, not just Amazon’s – risks undermining US norms, economic prosperity, and national security.

AWS Joint Innovation Centers Since 2017, Amazon has supported five “joint innovation centers” in China. The first, the Qingdao-Amazon AWS Joint Innovation Center, was launched in March 2017, jointly established by the Qingdao Licang District People’s Government, Amazon Connect Technology Services (Beijing) Co., Ltd,24 and Qingdao Wanguo Cloud Business Internet Industry Co., Ltd.25 The Qingdao center was Amazon AWS’s first joint innovation center in the world. Its goal was framed as first, to “cultivate and support local start-ups and transport them overseas,” including through technology cooperation with foreign players; to help foreign start-ups open up the market in China; and “with the help of AWS’s experience…to help traditional Qingdao enterprises realize Internet transformation.”26 It was projected that by 2021, the center would incubate a total of 750 start-ups and upgrade 120 traditional companies.27 Press coverage reported that: It can be seen that the operation mode of the joint innovation center is joint funding and management by the government, international giants, and private enterprises：The government provides preferential policies, Amazon AWS provides cloud empowerment, and private companies provide real estate and operations together…This move not only breaks through the previous cooperation model of Amazon AWS with Chinese enterprises and government.28

A wholly owned subsidiary of Amazon Technology Resources Co., Ltd that appears to serve as a Beijing-based operating company for AWS in China. 25 青岛—亚马逊AWS联合创新中心正式运营 [Qingdao-Amazon AWS Joint Innovation Center Officially Operates], Qingdao News, March 29, 2017. 26 亚马逊AWS布局：全球首个联合创新中心落户青岛 [Amazon AWS Layout: the World's First Joint Innovation Center Settled in Qingdao], Sohu News, April 6, 2017. 27 Ibid. 28 Ibid. Another article reported that, “the Qingdao-Amazon AWS Joint Innovation Center is fully operational, which also means that Qingdao has officially opened a model for nationalized industrial innovation.” (青岛—亚马逊AWS联合创新中心正式运营 [Qingdao-Amazon AWS Joint Innovation Center Officially Operates], Qingdao News, March 29, 2017.)

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This so-called breakthrough model was quickly replicated: In 2018, Amazon joined with the Xi’an Municipal Government and Xi’an Management Committee of Chanba Ecological District to launch the Xi’an-AWS Joint Innovation Center;29 in 2019 with the Nanjing Municipal Government and Jiangning District to launch the Nanjing-AWS Joint Innovation Center30 as well as – with the Shanghai Municipal Commission of Economy and Information, Jing’an District Government, and Shibei High-Tech Park – to launch the Shanghai-AWS Joint Innovation Center;31 and in 2020 with the Chengdu High-Tech Industrial Development Zone to launch the Chengdu-AWS Joint Innovation Center.32 Xi’an-AWS Joint Innovation Center Support Mechanisms33 Policy Support

Technology Support

Incubation Services

Capital Expansion and International Business Support

"One-stop" business entity registration

AWS cloud training and certificate subsidies

Planning and application of IP rights

Investor connection and matchmaking meeting

Up to 12 months complimentary office space

AWS technology salon activities

Mentorship in business development, strategy, financing, and marketing, etc.

Find, dock, and land pilot projects, with enterprises and other local industry leaders

Up to 25,000 USD worth of AWS Promotional Credit AWS Credits or 80,000 USD worth of "go cloud" government subsidies

AWS 1 on 1 solution architect support

Policy guiding, instruction and consultation

Amazon Global Selling helps expand global ecommerce business

International talent apartment

Enterprise management product design, and other entrepreneurship courses available

Enterprise roadshow day and market promotion

Participation in the "Startup World Cup"

Local government beneficial policies

Service support such as overseas business reference, financial counseling and international brand promotion

西安与亚马逊AWS共建“西安联合创新中心” [Xi'an and Amazon AWS jointly build "Xi'an Joint Innovation Center"], China Business News, September 18, 2017; “Xi’an-AWS Joint Innovation Center,” https://www.amazonaws.cn/en/jib/xian/. 30 “南京-亚⻢逊AWS联合创新中⼼正式启航 [Nanjing-Amazon AWS Joint Innovation Center Officially Set Sail], Doit, March 3, 2019. 31 上海-亚马逊AWS联合创新中心亮相2019上海静安国际大数据论坛 [Shanghai-Amazon AWS Joint Innovation Center unveiled at the 2019 Shanghai Jing'an International Big Data Forum], Shanghai-Amazon AWS Joint Innovation Center Zhihu Account, September 20, 2019; “Shanghai-Amazon Web Services Joint Innovation Center,” https://www.amazonaws.cn/en/jib/shanghai/ 32 “Chengdu-AWS Joint Innovation Center,” http://www.amazonaws.cn/en/jib/chengdu 33 “Xi’an-AWS Joint Innovation Center,” https://www.amazonaws.cn/en/jib/xian/.

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These centers were launched in partnership with Chinese government entities. They are operated, in part or in full, by Chinese commercial incubating and management entities. They seek the same goals as the first, Xi’an center: To support Chinese start-ups, with capital and technological support, and to connect them with overseas players and financial resources. Accordingly, the centers offer a range of preferential policies and technological support, as reflected in the above chart. The joint innovation centers also provide additional programming, including road shows, talent training, and demo days.34

Shanghai-AWS Joint innovation Center The Shanghai-AWS Joint Innovation (SHA-JIC) offers an instructive case demonstrating the types of support and programming offered across these Amazon supported centers. Focused on smart cities, global big data, and cloud computing, the SHA-JIC describes itself as “an international technology innovation platform built under the guidance and with the support of the Shanghai Economic and Information Commission and the Jing’an District Government.” 35 Press coverage suggests that the center aims to benefit from Amazon’s technology, influence, and legitimacy: As a 2018 piece by the Shanghai Big Data Alliance put it, SHA-JIC “makes full use of the global brand influence and internationalization of Amazon AWS, relies on AWS’s leading cloud computing and big data technology innovation, and global practice of big data and smart city construction.”36 A 2018 Liberation Daily article called the SHA-JIC “another important step that Shanghai has taken in the global practice of big data applications and smart city construction.”37 The SHA-JIC is operated by Shanghai Tuneful Cloud Computing Technology Co., Ltd (Shanghai Tongfu).38 Chinese government-backed Shanghai North High Tech Co. and Chinese State-owned Shanghai Information Investment Co. each have 27.5 percent stakes in Shanghai Tongfu. The latter, Shanghai Information Investment, is 24 percent owned by China Telecom Corporation.39 In August 2020, the Department of Defense determined that China Telecom was tied to the Chinese military.40 The SHA-JIC’s settled companies have included, among others, Silong Intelligence and Kyligence. Silong Intelligence’s website describes it as “committed to the customized R&D, integration, and service of command systems and smart community management and control systems in the field of public safety and emergency rescue in China.”41 Products on its website include “portable face recognition forensics” that “can quickly import the image data of fugitives/key personnel from the Ministry of Public Security, collect face photos in concealment, and input them into the comparison system in real time to identify and compare data” and that “can be widely used in public security, national security, customs, major security activities, and other

See, for example, “Chengdu-AWS Joint Innovation Center,” http://www.amazonaws.cn/en/jib/chengdu 上海-亚马逊AWS联合创新中心亮相2019上海静安国际大数据论坛 [Shanghai-Amazon AWS Joint Innovation Center unveiled at the 2019 Shanghai Jing'an International Big Data Forum], Shanghai-Amazon AWS Joint Innovation Center Zhihu Account, September 20, 2019. China’s smart cities are closely tied with its surveillance efforts. See, for example, Matthew Keegan, “In China, Smart Cities or Surveillance Cities,” US News and World Report, January 31, 2020. 36 上海-亚马逊AWS联合创新中心启动将共同打造产业创新生态 [Shanghai-Amazon AWS Joint Innovation Center Is Launched and Will Jointly Create an Industrial Innovation Ecosystem], Shanghai Big Data Alliance, January 11, 2018. 37 上海-亚马逊AWS联合创新中心落户市北高新园区 [Shanghai-Amazon AWS Joint Innovation Center Settled in Shibei HighTech Park], Liberation Daily, January 11, 2018. 38 四月动态: SHA-JIC加入静安众创空间联盟，9家新入驻企业名单公布 [April News; SHA-JIC joined the Jing'an Makerspace Alliance, and the List of 9 New Companies Announced], AWS Joint Innovation Center, May 6, 2020. 39 Shanghai North High Tech is 58.88 percent owned by Pacific Electromechanical Group Co., Ltd, a wholly owned subsidiary of Shanghai Electric. 40 DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA, Department of Defense, August 28, 2020. 41 Solutions, Silong Intelligence, http://www.soloai.com.cn/. 35

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government agencies.”42 They also include a “mobile multi-channel face recognition system” for front-line police officers and guard patrols as well as a “mobile multi-channel video feature forensics system” designed to analyze public security footage in support of “public security, criminal investigation, anti-terrorism, intelligence” and other applications.43 Kyligence’s “intelligent analysis platform software” appears to be part of the National Military-Civil Fusion Public Service Platform – a national-level platform designed to share dual-use relevant technology and information among military and civilian government entities.44 SHA-JIC’s broader network of relationships suggests additional exposure to the Chinese government and military apparatus. The Shanghai Data Exchange Center (SDEC) stands out as a representative case. Established in 2016, the SDEC is a State-owned data project supervised and guided by national ministries and commissions as well as the Shanghai Municipal Government.45 It serves as a data aggregator, regulator, and provider. The SDEC describes itself as promoting the large-scale aggregation of data across the government and commercial domains, data services and circulation built on top of that aggregation, and data interconnection and cooperation across regions.46 A “State-controlled, mixed ownership company,” SDEC’s backers are primarily State-owned or State-backed actors. 47 They include China Telecom, China Electronics Corporation, and China United Network Communications Group.48 In June 2020, the US Department of Defense identified China Telecom as connected to the Chinese military.49 In August 2020, the US Department of Defense found the same of China Electronics Corporation and China United Network Communications Group.50 SDEC is among the SHA-JIC’s “co-construction and implementation units.”51 What precisely that means is unclear: As one press release puts it, “this means that the SDEC and other institutions are jointly responsible for various specific implementation tasks.”52 An example of a template Chinese “co-construction and implementation unit” agreement suggests that these partnerships can cover support in product design and research and development; provision of servers and server operation; development of software systems and technical architecture; joint intellectual property ownership and technology transfer agreements; and shared funding streams.53

Solutions, Silong Intelligence, http://www.soloai.com.cn/. 43 Solutions, Silong Intelligence, http://www.soloai.com.cn/. 44 跬智智能分析平台软件 [Intelligent Analysis Platform Software], National Military-Civil Fusion Public Service Platform April 17, 2019 45 上海数据交易中心介绍 [Introduction to the Shanghai Data Exchange Center], Shanghai Data Exchange Center, chinadep.com 46 上海数据交易中心公共数据赋能普惠金融行业应用入选2019上海市大数据典型案例集 [Shanghai Data Exchange Center's Public Data Empowerment of Inclusive Financial Industry Applications Was Selected into the 2019 Shanghai Big Data Typical Case Collection], Shanghai Data Exchange Center, July 15, 2020. 47 Ibid. 48 上海数据交易中心 [Shanghai Data Exchange Center], Zhipin.com. 49 “DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA,” Department of Defense, August 28, 2020. 50 Ibid. 51 上海-亚马逊AWS联合创新中心启动将共同打造产业创新生态 [Shanghai-Amazon AWS Joint Innovation Center is Launched and Will Jointly Create an Industrial Innovation Ecosystem], Shanghai Big Data Alliance, January 11, 2018. 52 Ibid. 53 服务平台共建单位合作合同协议书范本 [Service Platform Co-Construction Unit Cooperation Contract Agreement Template].

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AWS itself is also an international partner of SDEC.54 In June 2019, AWS Global Vice President Rudy Valdez visited the SDEC, accompanied by the Vice President of the SDEC. The two discussed strengthening exchange and cooperation between AWS and the SDEC and plans for AWS to provide the center with cloud service support.55 In addition to being government-backed, SDEC also works with entities across China’s military-civil fusion and public security apparatus. In 2019, the SDEC signed a strategic cooperation agreement with the China Aerospace Science and Industry Corporation, which the US Department of Defense has identified as linked to the People’s Liberation Army (PLA).56 The SDEC has also cooperated or held dialogues with the Shanghai Municipal Public Security Bureau and Municipal Party Committee Cyberspace Affairs Office on data security;57 with the Social Credit Promotion Division of the Shanghai Development and Reform Commission (SDRC) on data tools and aggregation;58 and with the United Front Work Department of the Shanghai Municipal Party Committee on using data in tourism and culture.59 These are Chinese government, security, and surveillance entities. Their work deals in China’s social credit system, the surveillance state underlying it, and the dissemination of Chinese propaganda at home and abroad.60

Data Centers: Zhongwei Cloud Base In November 2013, Beijing and Ningxia, an autonomous region in north-central China, signed a strategic cooperation agreement jointly to build a science and technology industrial park oriented around the goal of developing an “internationally-leading” cloud computing base, the Zhongwei Cloud Base.61 The Zhongwei Cloud Base is effectively a data-focused center in a larger industry park. It was launched according to a three step plan: First, to introduce leading domestic and foreign companies to build a new generation of cloud data centers and corresponding supply chains and technological capabilities; second to use those capabilities to support China’s future strategic data security and preparedness, as well as to support State-owned enterprises, the government, and other sectors in data storage and support; finally, to serve as a strategic fulcrum of the 54

AWS全球副总裁Rudy Valdez莅临，上海大数据应用展示中心迎来第40000名来访者 [Rudy Valdez, AWS Global Vice President, Is Here, and Shanghai Big Data Application Exhibition Center Welcomes the 40,000th Visitor], Shanghai Data Exchange Center, June 6, 2019. 55 Ibid. 56 上海数据交易中心2019精彩回顾 [Wonderful Review of Shanghai Data Exchange Center 2019], Shanghai Data Exchange Center, December 31, 2019; DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA, Department of Defense, August 28, 2020. 57 2020数据安全高峰论坛在重庆举办上海数据交易中心CEO汤奇峰发表主题演讲 [2020 Data Security Summit Forum is held in Chongqing, Shanghai Data Exchange CEO Tang Qifeng Delivers a Keynote Speech], Shanghai Data Exchange, September 15, 2020. 58 上海市发改委、上海市信用中心领导来访上海数据交易中心 [Leaders from Shanghai Development and Reform Commission and Shanghai Credit Center Visited Shanghai Data Exchange], Shanghai Data Exchange Center, October 31, 2019. 59 市委常委、市委统战部部长郑钢淼率队调研上海数据交易中心 [Zheng Gangmiao, Member of the Standing Committee of the Municipal Party Committee and Minister of the United Front Work Department of the Municipal Party Committee, Led a Team to Investigate the Shanghai Data Exchange Center], Shanghai Data Exchange Center, May 13, 2019. For context on the United Front, see Alex Joske, The Party Speaks for You: Foreign Interference and the Chinese Communist Party’s United Front System, ASPI, June 2020. 60 See, for example, “China’s Overseas United Front Work and Implications for the United States,” US China Economic and Security Review Commission, August 24, 2018; “China’s Corporate Social Credit System,” Congressional Research Service, January 17, 2020. 61 The center is supposed to take advantage of Beijing’s technological strength and Ningxia’s energy, climate, and land advantages. (李建华在中卫西部云基地调研新一代云计算数据中心宁夏落成 [Li Jianhua Investigates the Completion of a New Generation of Cloud Computing Data Center in Ningxia at the Zhongwei Western Cloud Base], Office of the Central Committee of the Communist Party of China Network Security and Information Technology, September 12, 2015.)

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Digital Silk Road, a force multiplier in exporting cloud computing information services and new models for resource exchange across the world.62 The Cloud Base industrial park hosts a number of projects, including a data center built by the China Electronics Technology Group Corporation that covers more than 90 acres and is expected to carry some 1000,000 sets of standard servers.63 As noted earlier, the US Department of Defense has found China Electronics Technology Group to be connected with the PLA.64 China Mobile, also deemed by the US Department of Defense to be connected to the PLA,65 has a data center in the Cloud Base industrial park, and China Telecom is reportedly building a data center at the facility as well.66 The Cloud Base further cooperates with the BRICS Satellite Data Center, the China Meteorological Administration, and the China Resources Satellite Application Center (CRESDA).67 The China Meteorological Administration, an administration under the State Council, is connected to China’s military and military-civil fusion apparatus.68 CRESDA is a part of the State-owned China Aerospace Science and Technology Group,69 a company designated as affiliated with the Chinese military by the US Department of Defense.70 In 2015, Amazon chose the Zhongwei Industrial Park as the site of its tenth data center internationally, signing a cooperation agreement with the Ningxia government.71 AWS proceeded to launch what Chinese press reporting described as a “customized data center for Amazon that provides cloud computing services nationwide” complete with tens of thousands of servers.72 Amazon is currently developing the second phase of that project.73 In October 2015, the secretary of the Party Committee of the Ningxia Autonomous Region visited the Cloud Base and held a meeting to discuss the development of the project. A representative from Amazon AWS delivered a speech.74 What the Amazon representative said is not clear. It is however clear that 62

Ibid. 63 Zhang Yue, 中国电科云西部云基地揭牌推动银川数字经济高质量发展 [China Electronics Cloud West Cloud Base Unveiled to Promote the High-quality Development of Yinchuan's Digital Economy], China Network Science, October 12, 2019. 64 DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA, Department of Defense, August 28, 2020. 65 西部云基地助力宁夏高质量发展 [Western Cloud Base Helps Ningxia's High-quality Development], Xinhua News, November 5, 2020; DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA, Department of Defense, August 28, 2020. 66 中卫西部云基地:打造数据资源集聚区宁夏：云计算产业带动高质量发展 [Zhongwei Western Cloud Base: Building a Data Resource Gathering Area Ningxia: Cloud Computing Industry Drives High-Quality Development], Ningxia People's Network, October 3, 2019. 西部云基地助力宁夏高质量发展 [Western Cloud Base Helps Ningxia's High-Quality development], Xinhua News, November 5, 2020 67 李建华：把云基地打造成西部云产业高地 [Li Jianhua: Build the Cloud Base into a Cloud Industry Highland in the West], Ningxia Daily, June 7, 2016. 68 See, for example, 中国气象局与战保局共商军民融合发展 [China Meteorological Administration and War Insurance Bureau Discuss Military-Civilian Fusion Development], China Meteorological Network, February 5, 2016. 69 See, for example, 中国资源卫星应用中心：目前管理15颗在轨卫星_中国航天科技 [China Resources Satellite Application Center: currently manages 15 satellites in orbit], Space China, May 15, 2017. 70 DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA, Department of Defense, August 28, 2020. 71 亚马逊宁夏项目困局：三年换了四任董事长，云业务仍飘在天上 [Amazon Ningxia Project Dilemma: After Three Years of Changing Four Chairman, Cloud Business Is Still Floating in the Sky], Yicai, November 16, 2017. 72 Wang Jianhong, 李建华在中卫西云基地考察 [Li Jianhua Inspects the Western Cloud Base in Zhongwei], Ningxia Daily, October 13, 2015. 73 亚马逊云计算中卫合作项目二期推进会顺利召开 [The Second Phase Promotion Meeting of the Amazon Cloud Computing Zhongwei Cooperation Project was Successfully Held], Zhongwei City Cloud Computing and Big Data Development Services Bureau, March 4, 2019. 74 发挥优势优化服务建好西部云基地 [Give Full Play to Advantages, Optimize Services, and Build a Good Western Cloud Base], Ningxia Daily, October 13, 2015.

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at that meeting, the Party Committee secretary laid out plans to “accelerate the construction of Amazon’s data center” as well as to “intensify the preliminary work of the three data center projects of China Mobile, China Unicom, and Yihui Technology.”75 In March 2019, the Municipal Cloud Computing and Big Data Development Bureau organized 13 local government departments to participate in a meeting on the second phase of the Amazon Cloud Computing Zhongwei Cooperation Project.76 The Bureau issued a report of the meeting: On the afternoon of February 19, Wen Haobing, manager of the infrastructure construction department of Amazon AWS, and a group of 15 people came to coordinate with relevant departments to solve the problems of filing and design of the second phase of the Amazon Cloud Computing Zhongwei cooperation project. The Municipal Cloud Computing and Big Data Development Bureau organized 13 relevant departments including the Development and Reform Commission and the Bureau of Industry and Information Technology to participate in the second phase promotion meeting of the Amazon Cloud Computing Zhongwei Cooperation Project. The first phase of the Amazon Cloud Computing Zhongwei Cooperation Project went live on December 12, 2017, and 50,000 servers have been installed. According to the development of the data center business, Amazon AWS plans to carry out the construction of three computer rooms in the second phase of the Amazon Cloud Computing Zhongwei Cooperation Project in 2019 and is currently in the process of project filing and design. The smooth convening of this meeting solved the problems in the filing and design of the second phase of the project in a timely manner and accelerated the progress of the second phase of the project.77 China’s legal and regulatory requirements do not allow a foreign company to operate a data center in China on its own.78 To comply with the requirements, Amazon has established a strategic technical partnership with Ningxia West Cloud Data Technology Co., Ltd (NWCD), making that company the data center’s operator.79 NWCD is a Chinese company charged with helping the Zhongwei Municipal Government develop the Cloud Base.80 AWS also has a data center in Beijing, this one operated by Beijing Sinnet Technology Co., Ltd. (Sinnet).81 In 2017, Amazon AWS reportedly had to sell approximately 2 billion RMB of its assets in Beijing to Sinnet because of a round of Chinese regulations forbidding foreign companies from owning or operating specific technologies or providing cloud services.82

Ibid. 76 亚马逊云计算中卫合作项目二期推进会顺利召开 [The Second Phase Promotion Meeting of the Amazon Cloud Computing Zhongwei Cooperation Project was Successfully Held], Zhongwei City Cloud Computing and Big Data Development Services Bureau, March 4, 2019. 77 Ibid. 78 AWS 中国 (宁夏) 区域现已开放 [AWS China (Ningxia) Region Is Now Open], Amazon AWS Official Blog, December 14, 2017. 79 Ibid. 80 宁夏西云数据科技有限公司招聘人才 [Ningxia Xiyun Data Technology Co., Ltd. Recruits Talents], April 25, 2018. 81 "Introducing AWS in China," Amazon Web Services, www.amazonaws.cn/ 82 亚马逊宁夏项目困局：三年换了四任董事长，云业务仍飘在天上 [Amazon Ningxia Project Dilemma: After Three Years of Changing Four Chairman, Cloud Business Is Still Floating in the Sky], Yicai, November 16, 2017.

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Conclusion Amazon is the world’s dominant e-commerce platform. Well before COVID-19, Amazon disrupted the retail business. Amazon’s growth and market dominance has only increased during COVID-19. The company is poised to shape an increasingly diverse set of product segments moving forward. The CCP has rapidly enhanced its role in the world over the past decade. And the CCP has positioned to capitalize on the havoc that COVID-19 has wrought and the shifts it has encouraged. In fact, the CCP is in many ways applying lessons from Amazon’s commercial dominance to the geopolitical domain. Amazon’s power stems in part from its extensive data collection paired with its logistics network. The former fuels big data and artificial intelligence applications that can make Amazon’s logistics operations, its pricing and marketing, and its product investment decisions more efficient. The company’s logistics network allows it to scale that advantage internationally and across sectors to out-compete across the board. Beijing is developing parallel capabilities, but with geopolitical ambitions and applications. The CCP aggressively collects global data while guarding its own data, across military and commercial domains. The CCP also builds international logistics platforms for flows of data and goods. These allow China to make its commercial champions’ operations, pricing, marketing, and product investment decisions more efficient, globally. They do the same for the PLA, Beijing’s propaganda machine, and the CCP’s surveillance apparatus. The risk of anti-competitive behavior by “Big Tech” is an active concern for regulators and small businesses in the US and Europe. Players like Amazon can potentially use their platform role to develop superior knowledge on sellers and buyers, producers and consumers, to integrate vertically, and to stifle competition. China applies the platform model pioneered in the commercial domain to world governance: Beijing works to harvest superior data on its population and the world’s, vertically to integrate global resources, and to stifle alternatives to its control. Beijing pursues its platform geopolitics by leveraging resources siphoned from the very platform players, like Amazon, whose model it borrows. Enticed by the Chinese market, low-cost sources of supply, and regulatory arbitrage, global technological and corporate giants risk fueling the CCP’s capture of next generation infrastructures and standards. Beijing collects data from these companies, including through regulations that ensure localization of data and domestic operation of data centers. Beijing also uses joint projects to harvest technological and process innovations. “Big Tech” has a central role to play in defining a new global architecture of new information and industrial infrastructures. That architecture could present a foil to Beijing’s digital authoritarianism and would benefit from active protection against and vetting of risks of supporting the CCP’s vision.

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