There have been plenty of hypocritical statements by foreign ministry spokesmen over the years. Russia’s protestations that it wants peace in Ukraine ring hollow, and Iran’s claims that it has nothing to do with unrest in the Middle East don’t sound convincing.
And yet, even by the low standards of the genre, China’s official mouthpiece hit a fresh low last week with its complaints that the forced sale of the social media app Tik Tok violated free and fair competition between open markets. From the country that has banned Facebook, X, YouTube and many others, the hypocrisy was stunning.
The US would be quite right to demand it be sold. If the bill passes the Senate, China will be forced to either open up its own markets, or else accept that its multinationals won’t be able to expand globally – and either would be an improvement on the blatantly rigged market we have right now.
If it happens, it is going to be a huge sale, and one that will reshape the social media industry. With 1.7 billion users globally, Byte Dance’s TikTok is by far the most successful new internet product of the last decade. Last week, the US House of Representatives decided on national security grounds that the company could no longer be allowed to operate in the country while it was controlled from China.
With a value estimated at $40bn to $50bn (£30bn-£40bn), and potentially much more given that digital properties of its value don’t come along very often, a forced divestment will be the biggest deal of the year.
A consortium of investors might take control – Donald Trump’s former treasury secretary Steve Mnuchin is reported to already be putting together an investor group – or if the regulators will allow it, Amazon, Apple or Facebook’s owner Meta would be keen to buy it. Whatever happens, it will reshape the global web industry, with TikTok’s new American-approved owner joining the tech big league.
The Chinese government is complaining angrily about that. “This kind of bullying behaviour that cannot win in fair competition disrupts companies’ normal business activity, damages the confidence of international investors in the investment environment, and damages the normal international economic and trade order,” according to its spokesman Wang Wenbin. “In the end, this will inevitably come back to bite the United States itself.”
Well, perhaps. And yet the Chinese government is hardly in a position to accuse anyone else of unfair competition. This is a country where X (formerly Twitter), YouTube, Facebook, WhatsApp, Google and Instagram are all blocked from operating.
If it genuinely had a problem with “bullying behaviour”, not to mention the “economic and trade order”, then China could make a start by taking down the firewalls that prevent American websites and apps from operating in the country.
It could follow that up by making Mastercard and Visa acceptable forms of payment, allowing global banks to open up branches, and letting Western media companies and streaming services operate within the country. That would be a lot more effective than just issuing a few angry denunciations.
The US move to force the restructuring, or indeed the sale, of Tik Tok may be the start. But surely it doesn’t end there. As China’s giant companies, all emerging from the country’s 30 years of modernisation, move into Western markets, they can expect similar challenges and restrictions.
The fast-fashion retailer Shein is already a huge presence in Western markets, but there is no reason why that should be allowed if European and American rivals are not offered the same access to China’s market. The same applies to the rapidly expanding web retailer Temu, a kind of Chinese Amazon, which is already one of the most ubiquitous advertisers on the web.
The automakers, led by BYD, with a slick range of competitively priced electric vehicles, are already starting a big push West, and while the likes of Volkswagen are big players in China, other manufacturers have not been able to secure the same kind of slice of the market.
With the Comac-C919 plane now on sale, China may well start to close down access to the aviation market for Boeing and Airbus in favour of its own national champion, but that is surely unfair, and if it happens Comac should be shut out of Western markets before the world’s two dominant plane-makers are destroyed.
The list goes on and on. There are lots of industries where China may well have excellent products, but it has also benefited from domestic protectionism.
The TikTok decision is going to force China to make a historic choice, and one that is surely long overdue. Does it believe in free and open markets, based on respecting World Trade Organisation rules, or not? For a long time, it has shielded its domestic markets from competition, while rapidly building up its own industrial muscle. It could get away with that so long as it was mostly a supplier to Western companies.
As its conglomerates start aggressively expanding into the rest of the word, as they are right now, that is not going to work any more. Either it opens up its own markets to fairer competition, starting with the internet, and moving on rapidly to finance, media and pharmaceuticals.
Or else it will have to accept that its giant conglomerates will be prevented from conquering Western markets, and will have to divest themselves of overseas units when they grow too big, or else face punishing tariffs and quotas.
Either outcome will be far healthier than the one-sided global economy we have right now, and a lot fairer as well. And the Chinese government will have to make up its mind over the next few months if the TikTok legislation comes into force – because farcical condemnations that it is unfair are not going to work.
No comments:
Post a Comment