On October 19, Beijing’s Ministry of State Security and Internet Emergency Center laid bare the details of a cyberattack they attributed to the United States’ National Security Agency (NSA). The NSA purportedly attacked China’s National Time Service Center, an all-important logistics hub responsible for maintaining China’s singular time zone and providing high-precision timing services to key sectors like national defense. Over the course of 28 pages, the attack’s incident report revealed the 42 techniques the NSA had allegedly deployed since March 2022.
But one point stood out to most Chinese readers: the cyberattack was only made possible by a foreign phone brand. Although Beijing strategically refrained from finger pointing within the report, online observers had little doubt that the compromised phones were made by Apple.
Apple is the only foreign smartphone company to hold significant market share in China, according to statistics from research firm Counterpoint. It lays claim to almost one-sixth of total phone sales in China, the rest split evenly with Apple’s Chinese competitors, which include Huawei and Xiaomi.
Days before the reveal of the attack, from October 13-16, Apple CEO Tim Cook visited Shanghai and Beijing, where he met with representatives from China’s Ministry of Commerce and Ministry of Information and Industrial Technology, the country’s top internet and telecommunications regulator. In these meetings, Cook pledged that his company would increase investment within China – his second of such promises this year.
Also during his trip, Cook made public appearances at the exhibition for PopMart’s cult-followed toy Labubu, and unveiled the new iPhone Air at an event hosted by Douyin, China’s version of Tiktok.
Cook’s visit was first met with success, garnering initial approval on Chinese social media and within state news outlets. But, in light of the attack, some netizens perceived the CEO’s visit as a desperate attempt to avoid a crackdown on Apple products.
“No wonder Cook has been groveling nonstop lately,” one user from Shandong province commented under an article about the cyberattack posted on popular Chinese tech website Fast Technology. The user went on to predict: “the day of a complete ban on Apple products in certain sectors is definitely not far away.”
Others saw the hack as a reason to target all American tech companies, with another commenter saying that China needed to ban “Apple, Tesla, Intel, Microsoft… every last one of them.”
A reporter on nationalist (and heavily state-regulated) news site Utopia echoed this sentiment, advocating for a decoupling from American tech “trojan horses” due to the recent cybersecurity breach: “Staying away from American devices like Apple is our legitimate right and a normal response as a sovereign nation… we must maintain a safe distance from U.S. and Western products, or smart devices containing Western chips and operating systems.”
Calls for U.S. tech decoupling are reflective of a growing suspicion of American technology products that has been curated and amplified by Beijing. And precedent supports that an expanded move away from American tech could be incoming.
Cook is just the most recent of the United States’ big tech CEOs to attempt to curry favor with the Chinese government amid ongoing trade escalations between Washington and Beijing. Nvidia CEO Jensen Huang made similar moves in a mid-July grand appearance in the Chinese capital, undertaking what many saw as a “charm offensive” after securing approval from the Trump administration to restart sales of H20 chips to mainland buyers. The move marked the reversal of a strict export control regime intended to hamstring Chinese technology development that had been in place since 2019.
Like Cook, Huang made numerous public appearances, speaking Mandarin at China’s supply chain expo, remarking on his Chinese American identity, and shedding his iconic leather jacket to don a Tang-dynasty tunic. In meetings with China’s Ministry of Commerce, Huang also made commitments to deepen investment in China, especially in AI.
But Huang’s efforts to re-enter the Chinese market backfired. The CEO was recently quoted saying that Nvidia’s position in China has dropped from 95 percent of the advanced chip market in 2022 to zero today. Nvidia’s undoing was ultimately due to accusations of the H20’s security vulnerabilities.
Just days after Huang concluded his China trip, China’s Cyberspace Affairs Commission (CAC) accused Nvidia’s chip of containing backdoor security vulnerabilities, and summoned the company to provide evidence in refutation. One state-funded cybersecurity think tank claimed that the H20 had adopted NSA-created vulnerabilities that would enable tracking and remote shutdown functions. Nvidia denied allegations that its chips contained backdoors, and no evidence has yet been provided to support the CAC’s claim.
Soon after the CAC’s summons announcement, Beijing cajoled its top companies to cancel orders of H20 chips, and stoked the flames of online criticism through nationalistic articles published in state media outlets. Nvidia also had to grapple with comments from Trump officials like Commerce Secretary Howard Lutnick alleging that the goal of restarting H20 exports to China was to get “China addicted to the American tech stack.”
There might still be room for Nvidia to re-enter the Chinese market. U.S. President Donald Trump suggested that Nvidia could negotiate with Xi Jinping to sell its AI-focused Blackwell chip to China. But given that Xi and Trump skirted the topic of Blackwell sales in their October 30 summit, it seems likely that Beijing hasn’t changed its stance on the chipmaker.
Beijing’s decision to reject Nvidia’s chips was ultimately driven by a burgeoning sense of techno-nationalism, which is now coloring Chinese political calculus. Beijing is more confident in its technological gains and grasp on the core components required for advanced manufacturing and mechanics.
China’s increasing techno-nationalism doesn’t stem from the idea that Chinese technology is better than its U.S. counterparts. Many of China’s semiconductors, satellites, and AI applications still have a ways to go before they can claim to be world-class. Instead, the sentiment is based in the conviction that technological self-sufficiency, especially in core and advanced technologies, is essential for realizing full national sovereignty – a statebuilding project that has directed Chinese political motivations since the nation emerged from the period of colonization and internal disarray China now terms the “century of humiliation.”
Internal efforts to realize self-reliance ambitions will only continue to accelerate: Xi has defined tech independence as one of the priorities of China’s new five-year economic strategy roadmap, setting the stage for more domestic technology financing and state support for innovation in critical sectors. It seems that diminishing the influence that American tech companies hold in Chinese markets is a necessary step for China to establish a suitable environment for the country’s domestic tech firms to thrive.
And while China might not be ready (or find it as strategic) to treat Apple like it did Nvidia, it is steadily shifting the burden of embargo onto the consumer. Techno-nationalist narratives circulating in China’s media landscape will only serve to make operations more challenging for Apple and other foreign tech giants seeking to court Chinese consumers, as buyers doubt the safety and integrity of American products.
In this increasingly terse environment, the United States’ most famous technology companies are in a precarious position; there is no appeal that can solve their techno-nationalist problem. Cook and Huang have tried. Beijing has shown little compunction about pushing out American firms deemed to be standing in the way of China’s path toward technological self-sufficiency.
