Caught in ‘Ideological Spiral,’ #US and #China drift toward Cold War. Relations are in free fall. Lines are being drawn. As the two superpowers clash over technology, territory and clout, a new geopolitical era is dawning. pic.twitter.com/dMoZw0q2kz— NRao (@kamireddynrao) July 14, 2020
The latest loss is TikTok, a teenage popular video app with hundreds of millions of dedicated fans in markets like India and the United States. The app is owned by an American CEO but managed by a Chinese company.
The first major hit happened in India last month when at least twenty Indian soldiers were blocked following a heated border conflict with China. Then US authorities said on Monday that they would seek to ban the app because they regard it as a potential threat to national security. The news broke as the company said that it would leave Hong Kong due to concerns over China's comprehensive national security law.
At the heart of this problem is the struggle between the world's two largest economies. The USA and China are competing over super-fast 5 G mobile networks and other technology with artificial intelligence. Although the countries have long-standing economic ties that permit some collaboration, recent tensions over their governments and businesses have pushed to rethink these partnerships.
The struggle is also bleeding into their relations with other world powers. For example, the UK is reviewing its decision to allow Huawei, a Chinese technology company, to help build the 5G network in the country. That review is following the US, which has targeted Huawei repeatedly, imposing penalties on the company that can prevent other companies from supplying it with chipsets to develop its next generation of technology.
The US and China have had conflicting views over how technology is applied for decades. While in the 1980s, IBM (IBM) and Microsoft (MSFT), China laid the foundations for its Grand Firewall - a massive mechanism for censorship that cuts out contents widely available elsewhere on the internet. China , for example, has moved to restructure, and rein in its once-freewheeling Internet with Chinese technology. Over the years , China has created a closed, controlled internet, which found fans among other authoritative nations.
The ambitious Beijing plans to shift the country 's trust in foreign technology by spending trillions of dollars in such areas as wireless communications, microchiping and robotic technologies are increasing Chinese investments in technology even quicker in these last few years, with "Made in China 2025." (For instance, the country imported chipsets in the value of $306 billion last year, or 15 % of the total country's imports)
The Trump administration accused China of theft of US technology, which had been a major issue in the harmful trade war since 2018. Chinese officials have repeatedly rejected such allegations, arguing that all secrets of technology transferred were part of agreements agreed to by each other. The U.S. also imposed sanctions on leading Chinese technology companies and undertook steps to reduce Beijing's access to the vast capital markets of America.
The report published in earlier this year stated how Chinese President Xi Jinping called on the country to break its dependence technologically on the United States. "Beijing has concluded that decoupling is indispensable," Ian Bremer and Cliff Kupchan, President and Chairman of the Eurasia Group, wrote.
"China is expanding efforts to reform international technology, trade and financial architecture in an increasingly bifurcated world, to promote its interests," she wrote.
The analysts of the Eurasia Group stated that the "new Virtual Berlin Wall" will force global economies to select parties. For example , traditional US allies like Taiwan and South Korea can turn to China as they provide cutting-edge semi-conductors on which Chinese companies rely to compete with world competitors.
Global tension also leads countries to consider technology companies as "national industries, not global actors," said Samm Sacks, a senior fellow student in cyber security and US-China relations at Yale Law School's Paul Tsai China Center.
The second approach appears to be TikTok trying. Although the app is owned by Byte Dance, which is based in Beijing, it has been hard to get away from its parent company. In May, Kevin Mayer, the former CEO of Disney, reaffirmed that the data centers of the company are completely outside China where data do not fall under Chine law.
The company could try to break even more dramatically. On Thursday the Wall Street Journal reported that it was planned to establish a video app headquarters outside China or a new board of management to remove the service from China, citing a source that is familiar with the matter. A TikTok spokesman confirmed to CNN Business that the change in its corporate structure weights its parent company.
"I think it's too late for them," Witt said. "The public attention light already shines brightly on them. I believe this won't end well for them."