Why China’s digital ambitions are doomed to fail

Henrik Tiemroth

September 1, 2020

The rise of Chinese technology firms has been one of the major developments of the last decade. As some of those companies expand their operations overseas, some observers see China laying the groundwork for a broader imperial project, using their growing digital might to project power and influence. By 2030, will we all be sending messages on WeChat, searching on Baidu, and shopping on Alibaba?

Probably not. As China’s major tech firms attempt to expand to global markets, they are running into a glass ceiling of their government’s own making: people don’t trust them. The recent ban on ByteDance’s popular social media app TikTok in the United States demonstrates the extent – and the limits – of China’s digital ambitions.

TikTok was the first Chinese internet product to have a mass following in the United States. As of 2020, the app has 100 million active users in the US – about a third of the population. But the popular and seemingly innocuous app for making, viewing and sharing quippy homemade music videos has been declared a national security threat.

In August, President Trump signed an executive order effectively banning the app, along with WeChat, unless their US operations are taken over by a domestic company. Given the close links between Chinese companies like ByteDance and the government, they argue, the data collected on American users of the app could be used by the Chinese state for espionage or other nefarious purposes.

The Trump administration is not the first government to take this step. In July, India banned TikTok, along with 59 other Chinese apps, amid rising tensions with China. The government cited similar concerns about the potential for mining and misuse of private data. Indonesia temporarily banned the platform in 2018, and Japan is reportedly considering following the US’s lead.

Across the world, people are becoming warier of who uses their data and how. Lawmakers are perking up, as the implications of data for national security are becoming more clear. In 2018, the European Union implemented landmark data privacy laws. In the US, tech CEOs are regularly dragged before congressional committees and a bipartisan movement for regulation is building.

Chinese internet companies face those same concerns and then some. It’s one thing to have your personal data used to promote conspicuous consumption. It’s another entirely to have it weaponized by a sophisticated digital surveillance state at the cutting edge of data-driven totalitarianism.

In China, it is essentially impossible to do business at a significant scale without good relations with the Communist party, and tech companies are happy to play along with Beijing’s rules. The Great Firewall has censored politically sensitive topics, like Tiananmen, Tibet or Taiwan, for years.

Companies like TenCent also helped the government keep a lid on news of the spread of the novel coronavirus late last year. According to the University of Toronto’s Citizen Lab, more than 2,000 keywords related to the virus were censored on WeChat, including the information that the virus spreads from human to human.

In return, China heavily subsidises domestic companies and shields them from international competition. Censorship of digital communications acts as a de facto trade protection. Restrictions on foreign companies like Facebook create opportunities for Chinese firms to dominate the domestic market.

Many Chinese platforms were specifically designed to allow the government to censor the web more easily, but provide the same service as their American counterparts. Alibaba is essentially Chinese Amazon. Baidu is a search engine-turned-everything company like Google. WeChat performs the same functions as Facebook Messenger, with some added bells and whistles.

Yet, in some areas, Chinese companies are producing real innovations that could be exported abroad. China is the world leader in mobile payment technology, with 81 per cent adoption among smartphone users (Denmark is in second place, with just 41 per cent). It is investing heavily in artificial intelligence, with the goal of AI supremacy by 2030. And the success of TikTok shows they can even compete in the faddish market for social media.

But the country’s crony political economy is preventing genuine Chinese innovations from reaching a global market because foreigners do not trust them to keep their data out of the hands of the Chinese surveillance state.

TikTok is not the first Chinese company to be banned due to worries about espionage. Last year, the US congress barred the military from using Chinese products in procurement or defence contracting over fears that they might contain hidden technology to render them defective in the event of war.

Earlier this year, the British government scrapped plans to use technology developed by Huawei in the construction of their 5G grid after sustained pressure from the US state department, which threatened to exclude the UK from intelligence-sharing. American officials worry that grids built with Huawei infrastructure would be vulnerable to Chinese espionage in digital communications.

Still, the move against TikTok, an inane social media app with no connection to defence or critical infrastructure, is a new escalation in the digital cold war. If TikTok is a national security threat, then so is any other Chinese technology. If other countries do not trust them with homemade music videos, then other Chinese innovations in areas like digital payments or artificial intelligence do not stand a chance.

American tech companies are happy to pick up the slack and play their part in the digital conflict that is rapidly brewing. Microsoft has proposed to buy out TikTok’s US operations, while Facebook released a short-lived competitor called Lasso. Meanwhile, China is likely to retaliate with new restrictions against American companies operating in China.

As the long-anticipated cold war between the US and China begins to take shape, a new iron curtain is descending across the internet. As China seeks to expand its technological influence outside its borders, the US is fighting back and pressuring its allies to reject Chinese tech. Google’s ex-CEO Eric Schmidt predicts the internet will be bifurcated over the coming years between American- and Chinese-led blocs.

Mark Zuckerberg spoke for his generation of tech entrepreneurs with his mission to “make the world more open and connected.” But as China is quickly demonstrating, it also matters who you connect with. Might the dividing lines in a new era of great power competition be defined by these digital networks? Don’t rule it out.


Written by Henrik Tiemroth

Henrik Tiemroth is a political commentator.


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