Does the Chinese government have officials inside TikTok's parent company ByteDance pulling the strings? And will storing data from popular social media apps outside of China protect Americans?
These questions appear to be dominating current U.S. thinking over whether to ban TikTok if its owner, Chinese tech giant ByteDance, refuses to sell the platform.
But in my opinion, developed over 40 years as a researcher of China, its political economy, and business, both questions obscure a more interesting point. Furthermore, they suggest a serious misunderstanding of the relationship between the state and private enterprise in China.
Simply put, China does not have a clear boundary between the state and society like a democracy. The Chinese Communist Party is synonymous with the Chinese state, owns the state, and is also the state. And that applies to private companies as well. They are run like a joint venture where the government is both a partner and the biggest boss. Both parties know it, even if the relationship is not explicitly codified and perceivable to outside observers.
Byte dance seen under a microscope
Consider ByteDance. The company has gained attention in the United States, largely because its subsidiaries have a huge impact on the lives of young Americans. About 170 million Americans are TikTok users, and American politicians are concerned that their data has a direct route back to the Chinese state via Beijing-based ByteDance.
Location aside, concerns in the U.S. have cited evidence from former ByteDance employees that suggests interference from the Chinese government, and that the Chinese government is secretly investigating ByteDance's Chinese subsidiary, Beijing Jiji Jump Technology Co., Ltd. The company reportedly acquired direct shares and a seat on the board of directors. .
TikTok's Singaporean CEO Shou Gee Choo, who was pursued by the House of Commons Energy and Commerce Committee in March 2023, clarified that ByteDance is not an “agent of China or any other country.”
But the history of dealings between the Chinese government and private companies suggests something more nuanced.
Rise of China Corporation
Throughout its century-long history, the Chinese Communist Party has sought to control every aspect of the country, including the economy. In the early days, this control took the form of a coercive command economy in which everything was produced and consumed according to government plans.
In the second half of the 20th century, after the death of Mao Zedong, the founder of the People's Republic of China, China took a step in a more capitalist direction. But even Deng Xiaoping's reforms in the late 1970s and 1980s, which are credited with opening up China's economy, served the party's goals. With China's economy in ruins, the Party focused on economic development and loosened its grip on power to encourage it. Continuing party control remained the top priority, and reforming the economy was all that was needed to ensure that goal.
That doesn't mean the party wanted pluralism. After decades of economic growth, its GDP, measured at purchasing power parity, surpassed that of the United States, and the Chinese government began to shift its focus once again to comprehensive control of China.
In recent years, with Xi Jinping's increasing centralization, the Chinese government has clearly chosen to run the entire country as a giant corporation, with the ruling party in charge.
party with unusual powers
Unlike political parties in democracies, which people can freely join or leave, the Chinese Communist Party resembles a secret society. To join, a person must be introduced by two party members, undergo a lengthy test, and then pledge to die for the party's cause. To stop it, the party's approval is also required. Orders are implicit and it is important to follow your superiors.
Those who do not cooperate face serious consequences. In 2022, officials warned residents who did not comply with authorities' orders for COVID-19 testing that their non-cooperation would negatively impact three generations of their descendants. The same applies to businesses. Ride-sharing company Didi Chuxing incurred the party's displeasure by listing its shares in the United States, resulting in severe penalties and being forced to delist, losing more than 80% of its value.
All surviving and successful private companies become supporters of the Party, whether willingly or not, because those who disobey the Party are removed or punished and are considered to have learned their lesson. ing.
China Inc.'s rapid rise has caught even veteran Chinese entrepreneurs off guard. Consider the case of Sun Dawu, a successful agricultural entrepreneur known for advocating for rural reform and farmers' rights. This offended the party, and in 2020 authorities confiscated all his assets and sentenced him to 18 years in prison.
As if that wasn't enough, China's National Intelligence Law gave the country's spy agencies broad powers and required companies to assist with intelligence operations. This has led some US lawmakers to worry that ByteDance could be forced to hand over Americans' personal data to the Chinese state. TikTok denies this is the case. However, recently leaked files from Chinese hacking company I-Soon reveal that public-private collusion in data sharing is common in China.
That's why I'm not convinced by TikTok's claim that US users' data is safe because it's stored outside of China, in the US, Malaysia, and Singapore. I also don't think it matters whether the party has members on ByteDance's board or has given explicit orders to TikTok.
Regardless of whether ByteDance has a formal relationship with the Party, management works under two bosses: the company's investors and, more importantly, political supervisors representing the Party. There is probably a tacit understanding that But most importantly, when the interests of two bosses collide, the party wins.
Therefore, we believe that as long as ByteDance owns TikTok, ByteDance will use TikTok to support the Party — not just for its own business survival, but for the safety of ByteDance and TikTok's employees and their families. Also for.
