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“Icing on the cake”: how China perceives the US crackdown on TikTok

Dan Wang has been a leading observer of contemporary China for years. As a technical analyst at Gavekal Dragonomics, a research company, and with his in-depth knowledge newsletterWang described the country's rise as a fast-growing high-tech economy and, more recently, its slowdown and growing tensions with the United States.

Wang is now a visiting scholar at the Paul Tsai China Center at Yale Law School and is writing a book on U.S.-China relations. He spoke with DealBook about how China views the latest US crackdown on TikTok. The interview has been edited and condensed.

How does China view TikTok's latest fight?

Chinese state media and government spokespeople have made it clear that this is not welcome. China believes that ByteDance is a very successful company that is being bullied in America because it is Chinese. The Chinese people are offended by the US government declaring this a threat to national security. And Beijing has passed laws that make recommendation algorithms subject to Chinese export controls, making it appear as if the government won't allow a sale to take place.

Is the Chinese government using this affair as a propaganda tool?

State media are keeping their powder dry as there are still several steps before ByteDance has to sell TikTok in the United States. These include Senate passage, White House signing, as well as the legal challenges that ByteDance is sure to bring. Until it really seems imminent, state media does not rally citizens to oppose it.

What does it look like when state media mobilizes the public?

In 2022, Congress passed the Uyghur Forced Labor Prevention Act, and many Western companies have made innocuous statements. Chinese state media seized on one company, H&M, which made a fairly typical statement that it did not source from Xinjiang and did not tolerate forced labor in its supply chains. The report of the Chinese Communist Youth League, which is one of the instruments of the Communist Party, reposted a statement on social media saying that you can't both make money in China and criticize China. This provoked a widespread consumer boycott. H&M products have disappeared from almost all e-commerce sites and H&M stores have disappeared from online maps. The company was virtually erased from the Chinese internet and it was very difficult to buy its products or find its physical stores.

How could China retaliate against American companies?

The more important question is: Does Beijing decide that this act deserves retaliation? I spent all four years of President Trump's trade war in China, and Beijing has been very lenient on American companies for two main reasons.

First, Beijing realizes that large American companies are major employers in China, such as Apple, via Foxconn, or even Tesla.

Second, Beijing realizes that American companies are its last best friends in Washington and would prefer that American companies continue to lobby Congress to maintain their ties. He'd also prefer if Elon Musk didn't spend all day tweeting about how terrible China is.

Is China playing a long game and will it not react if this bill passes?

Beijing doesn't care too much whether ByteDance loses money and, by extension, whether its shareholders lose money.

Beijing may well view this as a fairly substantial propaganda victory if the US government forces a sale or actually bans TikTok. It would play into Beijing's hands to say that the United States has been talking about free speech for a long time – and using that as a stick to beat China on its human rights record – but it illustrates that states -United are hypocrites. Beijing would be happy to say that the U.S. government does everything we do, which makes our actions more legitimate.

What does this episode tell us about how Beijing views Western investors, some of whom, like Coatue and Susquehanna International Group, have stakes in ByteDance?

The Communist Party advocates a big game of welcoming American investors. THE China Development Forum will take place next week, it is a gathering for companies like Apple and Qualcomm to meet with high-ranking officials. Whether Beijing actually implements policies to encourage Western investment is another question.

Beijing would say that if the U.S. government expropriates Western investors, like Coatue and Susquehanna, that's the U.S. government's problem. This is a US law that could harm US investors. If anything, Beijing would tell you to talk to your members of Congress about it..

How is the fact that Steve Mnuchin, the former Treasury Secretary, working on an offer to purchase TikTok?

If successful, it would be considered distasteful – not just in China but pretty much everywhere – for an official who ordered a sale then ends up owning it. For Beijing, it would be the icing on the cake in terms of propaganda if it was aimed at a member of President Trump's cabinet.

What should ByteDance or TikTok do to fight back?

Hire great lawyers and better lobbyists.

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