Sometimes it seems like Beijing is working at odds with its tech giants.
Much of TikTok’s last year has been characterized by efforts to show it’s keeping a safe distance from the Chinese Communist Party, despite being owned by Chinese social media firm ByteDance. The latest iteration of that is TikTok’s deal with Oracle that will reportedly set up a new US entity to house the short video app, with the US software giant taking a minority stake and managing user data. But an “opinion” issued by the Communist Party, and publicized this week, might make it hard for TikTok to argue it’s fine for it to continue to be largely owned by ByteDance.
The proposed deal’s structure is already shaped by Beijing’s refusal to allow the US alone to determine TikTok’s fate. China made an outright sale difficult by imposing export controls on algorithms such as those used in the app. Following that, the Party this week spelled out its philosophy that the private sector and entrepreneurs must align ever more closely with its goals of advancing China’s development and “rejuvenating” the Chinese nation.
“With the expansion of the private economy there has been a clear increase in risks and challenges, while the values and pursuit of interests of private entrepreneurs are also diversifying, which has posed a new situation and tasks for the Party’s work,” said the guidelines issued by the Communist Party’s central committee, a grouping of some 200 or so top members, ahead of a conference on the issue on Wednesday.
The decree lists several approaches for the Party to improve its influence over the private sector, including strengthening ideological and political guidance for entrepreneurs so they will be “politically sensible,” arming them with Xi Jinping Thought (a political doctrine developed by the Chinese president for consolidating the Party’s power), and building a team of “high-quality” entrepreneurs whom the Party can rely on “at critical moments.”
While the ideology in the decree isn’t surprising and marks a deepening trend under Xi, the timing of its publication is curious, noted Bill Bishop in his China newsletter Sinocism. The decree draft had already been discussed by some local Party branches internally as early as April, but publishing the text now make it appear a pointed response to the rising pressure on some Chinese tech champions to distance themselves from their home country while expanding overseas.
“It serves as a reminder for the firms that they are always affiliates of the Party, which has firm control over them,” said Wu Qiang, a Beijing-based political analyst.
Wu noted that the guidelines also appear to be a response “to the anxieties felt by some private businesses amid the China-US trade war and the slowing economy hammered by Covid-19.” In recent years, private startups that were running out of cash received infusions from state firms or were acquired for their promising technology, and providing firms with support during the pandemic has only increased the Party’s role in the economy.
There are clues in the guidelines that the Party is also concerned about shaping a younger generation of tech founders, such as Zhang Yiming, the 37-year-old founder of ByteDance. Compared with someone like Alibaba founder Jack Ma, who has long been seen as an informal ambassador for China, Zhang has always emphasized the global reach rather than the Chinese roots of his tech empire. He drew flack at home last month for a statement that appeared resigned to a forced sale of TikTok to a US firm in order to continue its global success—and that failed to thank China.
China must “strengthen the cultivation of young entrepreneurs…guiding them to inherit and continue the great tradition of listening to and following the Party” the decree said.