Chinese officials last week criticized a lack of “impartiality” in the United States after the swift passage of a House bill requiring Chinese company ByteDance to sell the popular social media app TikTok.
China's Foreign Ministry spokesperson accuses the US of “deliberately suppressing good companies from other countries” under the guise of national security, blocking Beijing from forced sale of its most popular social media app He strongly indicated his intention to do so.
But experts say that given China's current economic position and its own censorship policies, China's options for potential retaliation against the United States remain limited beyond blocking the spinoff.
“The more they take kind of retaliatory measures, the more they actually accelerate the decoupling agenda that some people have in Washington,” said Martin Chozempa, a senior fellow at the Peterson Institute for International Economics. “It will be.” “[That] It will encourage companies to leave China because they don't feel safe there. ”
China considering options with TikTok
The Congressional action marks a new twist in a years-long effort to limit the size and influence of social media apps that have grown to more than 170 million users in the United States.
Since launching in 2017 as the international version of parent company ByteDance's popular Chinese app Douyin, TikTok has become one of the most downloaded apps in the world, along with META's Instagram.
But concerns about the vast amount of data collected on the platform and the Chinese Communist Party's ability to control ByteDance have alarmed U.S. lawmakers who view TikTok's ties to China as a national security risk. I'm strengthening it.
TikTok CEO Shou Zi Chew claimed in Congressional testimony that the company stores Americans' data in Virginia and Singapore, not China. However, as reported by Forbes, the company later acknowledged that there are some exceptions to creator data.
“The Chinese government has broad legal authority to coerce companies on matters of national security,” said Colin Costello, CFIUS and national security advisor at Freshfields Law Firm. “So from the perspective of someone who sees the Chinese government as an adversary, and a very capable adversary, the question is not whether it has been used, but can it be used? And the answer to that is… .From the perspective of the people who wrote this bill, yes.”
This is not the first time the Chinese government has responded to the US' threat to ban TikTok.
In 2020, after former President Donald Trump signed an executive order effectively banning TikTok and WeChat in the United States, ByteDance immediately moved to update its export control rules. As a result of this change, the export of “technology based on data analysis for personal information recommendation services” will be restricted.
Rhodium Group Director Reba Goudjon expects Beijing to intervene as well if the Senate passes the House bill and President Joe Biden signs it “in a show of resistance against the United States.” are doing.
But China's own economic realities and a significant slowdown in overseas investment may also influence Beijing's calculations of the scale of its response. Foreign direct investment into China fell to a 30-year low in 2023, partly due to concerns about geopolitical tensions and an unpredictable business environment.
“With China's economic challenges already on full display, Beijing needs to consider the risks of further alienating foreign investors,” Gujon said. “Additional defensive measures, such as export controls, data security, and cybersecurity measures, will only push companies further down the path to diversification.”
That has not hindered the Chinese government's response so far. Major social media and online platforms in the U.S., including Alphabet Inc.'s Google (GOOG), Meta Inc.'s Facebook Inc. and Snapchat Inc. (SNAP), have already been banned by the world's second-largest economy.
Last year, the government also banned domestic critical infrastructure operators from purchasing Micron (MU) products, following the introduction of export controls on key U.S. components and chip-making tools. Months later, China ordered central government employees to stop using Apple's (AAPL) iPhones, citing national security concerns.
If passed by the Senate, the TikTok bill would set a six-month deadline for TikTok to exit ByteDance, a difficult scenario given the complexities of separating U.S. assets from the global app. becomes.
Chozenpa said the Chinese government is unlikely to approve any deal, regardless of price or corporate structure, in part because of what TikTok represents: a global social media platform made in China. It is a success story.
“If the Chinese government is weighing a ban on the U.S. market versus losing global dominance, [over an app]it is not clear to me whether they would prioritize a sale and a dividend to existing shareholders over losing that channel,” Chozempa said.
One reason for this, he said, is that “China's significant actions over the past few years have made it clear that shareholder interests and shareholder economic interests are not very high on the Chinese government's list of priorities.” He added that this is because he is doing so.
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