Economy & Politics

USA vs. ChinaTiktok and the guerrilla war between Washington and Beijing

Tiktok has become the bone of contention in the US-Chinese conflictimago images / ZUMA Wire

It was to be expected that tensions between Beijing and Washington would escalate by election day in the US. Chinese fighter jets are currently entering Taiwanese air space almost every day. At the same time, American delegations travel to the island, assure the government of their support and sign arms deals.

Seen in this way, the tussle over the Tiktok video platform is just another arena of battle between the two superpowers. The app from the Chinese company Bytedance should have been sold by September 15th. Otherwise, US President Donald Trump threatened to block the service in the USA.

As it became known on Sunday, the US companies Oracle and Walmart should now own 20 percent of the shares in the new company. The company, called Tiktok Global, is based in Texas. Tiktok Global with around 25,000 employees is to be listed on the stock exchange in the next twelve months. But as far as the majority situation is concerned, the news is contradicting itself: While the US side said that the majority of the new company was in American hands, Bytedance said it was a rumor on Monday. You only get an American majority if you add the 41 percent share of American investors.

Beijing strikes back

The alleged establishment of an “Education Fund” worth US $ 5 billion is also causing confusion. Trump announced this on Saturday. The Bytedance management, on the other hand, said that this was the first time that the media had heard of this education fund.

The Chinese countered: On Saturday the Chinese Ministry of Commerce published details of an “Unreliable Entity List”. Companies that “endanger the national security, sovereignty, and development of China” can now be prevented from doing business in China. The points are deliberately kept vague. Analysts assume, however, that a US company will land on the list by the end of the year – as revenge for Tiktok. The list was announced in May 2019 after Trump imposed sanctions on telecommunications equipment supplier Huawei.

The editor-in-chief of the state newspaper Global Times, Hu Xijin, known for his nationalist failures, wrote on Twitter on Monday: “The American restructuring and takeover of Tiktok could become a global model. Should all overseas businesses like Google and Facebook be placed under local control because of security concerns. “

A not so absurd idea, after all, for a long time there have been proposals to smash the big American Internet companies because of their market power. However, Hu’s tweet is involuntarily ironic in at least two ways. Because Facebook, Google and numerous other social media platforms have been banned in China for years. On the one hand, the Communist Party fears that critical information and opinions are outside its control. On the other hand, the ban served to keep foreign corporations out of China and thus give their own Internet companies enough space to grow. The Tiktok video platform is also a product of this policy.

Wechat remains allowed for the time being

Wechat has much more influence on the everyday life of the Chinese. The super app from Tencent is repeatedly referred to as the “Swiss Army Knife” among apps. 1.2 billion Chinese people use Wechat for communication, cashless payments, data, uploading holiday photos and text messages. Wechat should have gone offline yesterday, Sunday, if it had been for Trump’s will. Millions of overseas Chinese, including around 19 million in the US, who use the app to communicate with their families in China, would have been hit hard. But now a court in California has temporarily suspended the ban.

Bytedance is also planning to move parts of its business to Singapore. According to Southeast Asian media reports, the Beijing company plans to invest billions in the city and acquire a banking license there. The example could set an example: Allegedly, the Tencent and Alibaba groups are also looking for locations outside of China to protect themselves from geopolitical power games. India banned numerous Chinese apps from the Indian app stores after ongoing border disputes with China in the Himalayas.

It is also clear that the tussle over Tiktok and the Trump regulations create uncertainty and damage the investment climate. It becomes uncomfortable for foreign companies in the US as they run the risk of being expropriated or banned for political reasons. Until now, this was only known from China.

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