By Ed Flanagan, NBC News Producer

BEIJING – The condemnation in the United States that followed the news that Cisco Systems was close to finalizing a deal with the city of Chongqing to assist in the installation of “Peaceful Chongqing,” a vast new municipal surveillance system was not surprising and was likely anticipated by company officials. 
 
Probably less expected was the flak Cisco has gotten from China’s state-run media.

Cisco’s sale is limited in scope by U.S. law, a holdover from legislation passed by Congress following the 1989 Tiananmen Square demonstrations which banned American companies from selling crime-control products to China.

To work around those restrictions, companies like Cisco and Hewlett Packard have instead been invited by Chongqing officials to sell networking and server equipment to manage the estimated 500,000 cameras the program is expected to install over nearly 400 square miles, according to a Wall Street Journal report on the project.

Critics in the West were quick to point out that these companies were taking advantage of a loophole in the law by focusing on the traffic-control aspects of their bid and turning a blind eye to the system’s other possible applications, such as the surveillance and suppression of political dissenters.

But after positive news reports in the Chinese press touting the traffic management and crime prevention aspects of the “Peaceful Chongqing” program, it was surprising to see local media turn on Cisco’s involvement in the project.

Suspicions about American-made surveillance
Yesterday’s Global Times – China’s reliably nationalistic, government-run newspaper – argued in its Chinese edition that rather than the potential threat of the government employing this proposed surveillance system to nefariously suppress political will, people should be more concerned about the ramifications of using American systems to monitor Chinese cities.

“It should be the Chinese who need to arouse vigilance when American-made security monitors are installed in a Chinese city,” one article in the Chinese version of the Global Times wrote. “If New York or Los Angeles installed China-made security monitors, American congressmen would surely protest.”

The article added, “The Chinese should stay assertive and confident in business fights as well as opinion fights with the U.S., where the U.S. has always occupied the advantageous position.”

That sentiment was echoed on the Global Times’ English edition, which has often been a more moderate voice in its coverage of international events compared to its Chinese-language sibling. Nevertheless, in an editorial Thursday, the newspaper claimed that “things are upside down here,” and argued that surveillance video from Chongqing could one day be of important national security. Why then should a foreign company, especially one “from a not so friendly country” be relied on to handle such a project?

“The U.S. has been teaching us lessons that there should be no neglect concerning national security,” continued the editorial, “by this token, we should call for the Chongqing authorities to use domestic surveillance cameras only.”

Why go outside ‘indigenously developed’ technology?
In recent years, China has been gobbling up the press with high-profile debuts of “indigenously developed” technology such as their J-20 stealth fighter and most recently, the high-speed rail line between Beijing and Shanghai. Yet, why Chinese officials turned to American companies for assistance with the “Peaceful Chongqing” project as opposed to one of China’s most successful so-called “national champions” is certainly an interesting question.

Surely a company like Huawei, which is China’s largest networking and telecommunications equipment supplier, could have provided much of the expertise and technology required to manage such a project. Awarding the bid to Huawei would also have satisfied the Chinese government’s desire to foster “indigenous innovation,” a principle so near and dear to officials here that proposed laws introduced last year would have strong-armed many American companies into forced technology transfers as a cost for entry into the China market.

China’s overtures to Cisco could be another game attempt at improving the country’s security apparatus through forced technology transfer. Perhaps more cynically, China’s willingness to deal with American companies could also be seen as a preventative move to silence human rights critics in the West. After all, it is harder for the U.S. to claim the moral high ground when American companies and technology are powering supposed human rights violations.

Whatever the motivations, it’s surely not the last we’ll hear about any of this from both sides of the Pacific.