On August 7, under the United States International Emergency Powers Act, US President Donald Trump issued an executive order banning, after 45 days, any transaction by a US entity with TikTok, and its parent company ByteDance. The order cited need to secure the information and communications technology and services supply chain, and asserted that “spread in the United States of mobile applications developed and owned by companies in China continues to threaten the national security, foreign policy, and economy of the United States”.
Concerns listed included TikTok automatically capturing vast swathes of information from users about network activity, location data, browsing and search histories. This, in turn, enabled the Chinese Communist Party (CCP) to get Americans’ personal and proprietary information, with the potential for future blackmail and corporate espionage. Among its justifications for arriving at this assessment, the order specifically referred to recent Indian government action banning TikTok. In a subsequent order of August 14, ByteDance was given 90 days to divest itself of all its properties in the US.
Several years earlier, Chinese hackers had been suspected to have stolen personal data of nearly 15 million US federal officials, and insurance-related data of more than 100 million people in US.
The US action against TikTok followed earlier steps against Chinese technology companies Huawei and ZTE, controlling any further access by them to US technology, equipment, software etc. It was followed by restrictions on US entities using Weibo and WeChat. The US has also been running an aggressive international campaign to prevent use of Huawei in 5G rollouts, with some success so far in Europe and Asia.
The Chinese had so far been restrained in their responses, recognising the continued US technology inter-linkages for many of their leading companies, and not wanting to provoke the unpredictable Trump as he headed into a difficult re-election campaign. In the TikTok case, however, they have barred any sale of AI-related technology, and the algorithm used by the App — a clear signal of some countervailing technology power.
In an article in the May issue of The Atlantic, HR McMaster, a former Trump national security advisor, cited Chinese Premier Li Keqiang telling Trump in November 2017 that “China, having already developed its industrial and technology base, no longer needed the US….its role in the future would merely be to provide China with raw materials, agricultural products, and energy to fuel its production of the world’s cutting- edge industrial and consumer products”.
It can now be legitimately asked if the US-China economic and technology rivalry has finally crossed the Rubicon, and if some measure of decoupling is inevitable. The US has been struggling with its China policy for more than a decade now. For a long time, mainstream opinion supported ‘integrating China into the international mainstream’, which was assessed as leading to inevitable economic and political liberalisation. This did not happen.
China gamed the WTO and international trading systems, initially keeping the Yuan devalued, and then subsidising heavily its State-owned enterprises, and building excess capacity in many areas, including steel. It sponsored national champions in technology. Under President Xi Jinping, China abandoned the Deng Xiaoping era policy of ‘hide your strength and bide your time’, and threw the gauntlet through its China Dream, and Made in China 2025, seeking to make China a leading global high-tech manufacturer.
Trump has, no doubt, seized on a sharp anti-China rhetoric as electoral strategy, hoping to retain the votes of his 2016 base, which had seen its jobs vanish under globalisation, and to deflect the anger of those impacted by COVID-19. At the same time, his administration has taken the strongest measures, since the 1971 US opening to China, on tariffs, trade, technology denial, sanctions against Chinese officials and others for their actions in Xinjiang, Hong Kong, Tibet, and the South China Sea.
Aside from Trump, many senior US officials, including the Vice-President, have made sustained statements calling out China on cyber hacking, disinformation, intellectual property theft, forced technology transfers, human rights violations, and transgressions of international law. Democratic Presidential candidate Joe Biden issued a statement on September 3, asserting that as US President he would “put values back at center of American foreign policy”, meet with Dalai Lama, and appoint a Special Coordinator for Tibetan issues.
Whoever wins in US on November 3, there will be a new normal in US-China ties. Tech rivalry and reordering of supply chains will continue. There will be new opportunity for India if it builds on its Comprehensive Global Strategic Partnership with the US, to consolidate a ‘trusted partner’ status, or ‘supply chain resilience’ in areas of strength such as digital and pharma, or in new tech areas such as AI, cyber, quantum and big data.
Arun K Singh is former Indian Ambassador to the United States. Views are personal.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
