Apple: Another victim of economic McCarthyism?

By Xu Peixi
0 Comment(s)Print E-mail, April 11, 2013
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Salespersons count the number of iPhone 5 cell phones to be sold in Binhai New Area in Tianjin, north China, Dec. 13, 2012.[Xinhua]

Salespersons count the number of iPhone 5 cell phones to be sold in Binhai New Area in Tianjin, north China, Dec. 13, 2012.[Xinhua]

There has been a lot of press about Apple’s apology to its Chinese consumers regarding problems with both warranty and customer service. Much of it has been misleading and lacks any perspective on the political economic context in which the events occurred. More misleading, however, is the accusation about China’s economic nationalism.

Apple’s brush with the Chinese state media and the nation’s consumers can be read as a Chinese reply to Obama administration’s solidifying yet misplaced strategy of fanning up economic McCarthyism in the U.S. and the world, from its blocking Huawei and ZTE, to its recent allegations of cyber attacks. China has sent out a warning signal, and did so not on an entirely unreasonable basis.

The first victim of Obama’s economic policy was not Chinese, but was Japanese Toyota, which found itself entangled in an accelerated series of somewhat inflated scandals. China observed the case unfold itself into a confrontation between Toyota and the American state machine, complemented by the involvement of both lawyers and commercial media.

Even an open letter issued by the four governors of Kentucky, Indiana, Mississippi, and Alabama – listing the federal government’s stake in Toyota’s competitors and more serious problems with several other automakers – did not stop the Congressional Committee from carrying out further investigations. Toyota had to pay a heavy fine and apologize.

A ten-month investigation headed by the U.S. Department of Transportation eventually proved Toyota’s innocence in the affair by stating that no electronic flaws were found. By that time, however, the major American automakers had already recovered from the financial crisis.

Obama was able to proudly declare in his 2012 State of the Union Address that he had led the auto industry out of crisis. “General Motors is back on top as the world number one automaker,” “Chrysler has grown faster in the U.S. than any [other] major car industry,” “Ford is investing billions in U.S. plants and factories,” and more importantly, “The entire industry added nearly 160,000 jobs.”

While the Toyota scandal continued in the U.S., Chinese Toyota buyers followed the tide and also requested Toyota to recall its vehicles from the market, but the ruling elite were fully aware of the next target the American Sword of Damocles, or trade protectionism, would fall upon. Not surprisingly, the next targets were Chinese enterprises Huawei and ZTE. The congressional hearing took place in September 2012.

Huawei’s Senior Vice President Charles Ding and ZTE’s Senior Vice President Zhu Jinyun repeated Akio Toyota’s experience of being “tortured” by American lawmakers. The real reason for the allegations against both Chinese companies was simply to protect American Cisco the way Ford was protected before, but the explanation differed.

While the excuse for punishing Toyota bore at least some substance because mechanical flaws were indeed identified, the excuse put on Huawei and ZTE was that of a fabricated threat to American national security, one failing to cover the true intentions behind the accusations.

In the Toyota case, the Obama administration’s economic policy could be understood at a level of trade protectionism; yet when it came to the Huawei-ZET cases, this level was upgraded to one of pure economic McCarthyism. Worst of all, as it turned out later, the accusations attached to both Chinese companies were only the preliminary rehearsals for a much bigger story.

The subsequent events developed into a full-fledged stigmatization of China’s government and businesses in the alleged hacking of American secrets. One of the major directors of the whole drama was Mike Rogers, chairman of the House Permanent Select Committee on Intelligence. Instead of telling the global public the root causes of America’s economic problems, these politicians – with the help of commercial media – placed the blame on scapegoats.

This was perhaps the last straw that broke China's patience and eventually led to Chinese retaliations. The Japanese way to reply to the American frame-up is to offer the other cheek – after being slapped in the face once already. Toyota paid America a fine as high as 17.35 million dollars, and Japan additionally cooperated more closely with the American Pivot to Asia strategy. Events were bound to unfold this way because the Japanese domestic market is slightly more off-limits to foreign businesses; there are no other cards to play.

China, on the other hand, has been on extremely friendly terms with American businesses for years, enabling the nation to send out a warning signal through domestic action. Rapidly growing Apple makes an easy target for the state media, and the underlying reason for this is not all that irrational: Apple offered different services to its Chinese and foreign consumers. China simply needed to turn this difference into a public concern.

Nevertheless, Apple was caught by surprise and appeared sluggish in its response. In spite of the sympathy the company gathered from Apple enthusiasts on several social media platforms, the company still gave way to the pressure and apologized.

The main lesson to be taken away from this drama is the potentially damaging effects of economic McCarthyism as political hands may have finally reached too far. Another lesson to the world is that neither the G2 mechanism nor the ABC (Anything But China) mechanism, which the U.S. used to engage China in such a flexible way, can prove helpful to the global economy.

The author is a columnist with For more information please visit:

Opinion articles reflect the views of their authors, not necessarily those of

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