The logic driving China’s big tech clampdown(asiatimes.com)
asiatimes.com
The logic driving China’s big tech clampdown
https://asiatimes.com/2021/07/the-logic-driving-chinas-big-tech-clampdown/
65 comments
> It's clear Xi Jinping considers the platform companies to be middlemen that are not actually adding value, and not "real" tech companies
I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market.
I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market.
The treatment of Alibaba and Ant group is enough to reach the conclusion that Xhi Jing Ping doesnt think highly of these companies. They do add value but these are middlemen companies that part is correct, but that isnt the reason for this clampdown. I think that with the rise of Charismatic Entrepreneurs who have millions of followers both nationally and internationally they command a lot of followign and respect which directly threatens and undermines the Supreme leader. That may not be acceptable to CCP, as it poses a threat to long term viability of CCP, the future is technology driven and thus would be more and more important to the future of the nation and of its people, such decisions in CCP's mind cannot be left to the private sector. If they do China may turn into Oligarchy like Russia or a seemingly democratic Oligarchy like US.
It's all of the above. A large, unproductive rentier class creating a barrier to capitalist dynamics contributes to a stagnant economy, which generates popular discontent and erodes government authority.
> I’m not sure how you arrived at this conclusion. My take away was the Chinese government fears tech companies that might take power away from the Chinese government. This is more about the Chinese government maintaining its own power and full control, and less about the value add or anti trust stance for keeping a competitive market.
I keep the claim that the explanation is even more simpler: whomever becomes a big man in a country like China eventually goes down, and that's the whole story.
There can only be one "big man" in such system, and he tolerates no competition.
This consistently held true through the whole 40 years of modern China: whomever attains too much of the social, political, economical, cultural, moral, or even genealogical prominence consistently gets taken down. This is why most mainland Chinese have that fear of publicity, and standing out almost bordering on panic disorder. And this is why people attaining any level of prominence there keep leaving the country for the West.
I keep the claim that the explanation is even more simpler: whomever becomes a big man in a country like China eventually goes down, and that's the whole story.
There can only be one "big man" in such system, and he tolerates no competition.
This consistently held true through the whole 40 years of modern China: whomever attains too much of the social, political, economical, cultural, moral, or even genealogical prominence consistently gets taken down. This is why most mainland Chinese have that fear of publicity, and standing out almost bordering on panic disorder. And this is why people attaining any level of prominence there keep leaving the country for the West.
There are other areas where the Chinese government is cracking down on improductive activity that is harmful to the economy without challenging the CCP's power, like real estate, bitcoin miners or most recently EdTech.
"Activity that is harmful to the economy?" I think they get much more glaring issues to care about if it comes to this.
What about their wrong simply being "getting too rich, and successful," and causing somebody a burst of jealousy?
Becoming richer than a partyman in some small village is very much a challenge to the party. What changed now is that the entire China has become that village.
What about their wrong simply being "getting too rich, and successful," and causing somebody a burst of jealousy?
Becoming richer than a partyman in some small village is very much a challenge to the party. What changed now is that the entire China has become that village.
By reading coverage in Nikkei and analysts that are on the ground in China. Notably Dan Wang, who totally called it 8 months ago:
https://danwang.co/2020-letter/
> While promoting the status of science and technology with one hand, the Chinese government has with its other hand reined in the activities of consumer internet companies. I’ve never stopped lamenting the marketing trick that California pulled off to situate consumer internet as the highest form of technology, as if Tencent and Facebook are the surest signs that we live a technologically-accelerating civilization. The “tech” giants are highly-capable companies that print cash. But they’re barely engaged in the creation of intellectual property, excelling instead on business-model innovation and the exploitation of network effects. It’s become apparent in the last few months that the Chinese leadership has moved towards the view that hard tech is more valuable than products that take us more deeply into the digital world. Xi declared this year that while digitization is important, “we must recognize the fundamental importance of the real economy… and never deindustrialize.” This expression preceded the passage of securities and antitrust regulations, thus also pummeling finance, which along with tech make up the most glamorous sectors today. The optimistic scenario is that these actions compress the wage and status premia of the internet and finance sectors, such that we’ll see fewer CVs that read: “BS Microelectronics, Peking; software engineer, Airbnb” or “PhD Applied Mathematics, Princeton; VP, Citibank.”
Read the whole letter, it is very informative, unlike most coverage in the Western business press that leans towards the caricatural. Xi may be evil and ruthless, but that does not mean he is stupid, or insincere in his nationalism. It would be a grave mistake to underestimate him and think of him as just another Putin.
https://danwang.co/2020-letter/
> While promoting the status of science and technology with one hand, the Chinese government has with its other hand reined in the activities of consumer internet companies. I’ve never stopped lamenting the marketing trick that California pulled off to situate consumer internet as the highest form of technology, as if Tencent and Facebook are the surest signs that we live a technologically-accelerating civilization. The “tech” giants are highly-capable companies that print cash. But they’re barely engaged in the creation of intellectual property, excelling instead on business-model innovation and the exploitation of network effects. It’s become apparent in the last few months that the Chinese leadership has moved towards the view that hard tech is more valuable than products that take us more deeply into the digital world. Xi declared this year that while digitization is important, “we must recognize the fundamental importance of the real economy… and never deindustrialize.” This expression preceded the passage of securities and antitrust regulations, thus also pummeling finance, which along with tech make up the most glamorous sectors today. The optimistic scenario is that these actions compress the wage and status premia of the internet and finance sectors, such that we’ll see fewer CVs that read: “BS Microelectronics, Peking; software engineer, Airbnb” or “PhD Applied Mathematics, Princeton; VP, Citibank.”
Read the whole letter, it is very informative, unlike most coverage in the Western business press that leans towards the caricatural. Xi may be evil and ruthless, but that does not mean he is stupid, or insincere in his nationalism. It would be a grave mistake to underestimate him and think of him as just another Putin.
It’s a good read but I find it pretty bias as well. I certainly don’t think Xi is stupid though. He has shown time and time again to be a good strategist, even if you don’t like his ruthlessness.
He's a Chinese-Canadian who lives in China and works as an analyst for an investment research firm. What you think of bias may simply be a different perspective from someone who is actually on the ground there.
Coverage of China in the US business press is abysmal, which is kind of surprising given how important the bilateral relationship is, but then again the US is so big, so central to the world economy and so powerful it could survive for a long time with an insular point of view, a luxury it no longer has. You will get much better coverage in Japan's Nikkei, and in specialized blogs.
Coverage of China in the US business press is abysmal, which is kind of surprising given how important the bilateral relationship is, but then again the US is so big, so central to the world economy and so powerful it could survive for a long time with an insular point of view, a luxury it no longer has. You will get much better coverage in Japan's Nikkei, and in specialized blogs.
I tried to take your comment seriously, but 'tech companies that might take power away' part made me laugh. What do you think those tech companies are? Their most advanced technology is a chat app and an online mall.
Influence public opinion, destabilize the financial system
That would be a quick route to the firing squad. As Mao wrote, all power flows from the barrel of a gun, and his student Xi Jinping took copious notes.
Influence public opinion might be plausible.
but destalizie the financial system would be undesirable by any government, hardly to say it's a CCP problem.
but destalizie the financial system would be undesirable by any government, hardly to say it's a CCP problem.
Undesirable enough to be taken seriously then (not laughable)?
Nobody said it had to be intentional.
While I disagree with the methods and objectives outlined above. It’s incredibly refreshing to hear an honest take on Chinese economic and political policy that doesn’t boil down to “CCP wants control”.
Tech has greatly empowered rent seeking activities in the western world. It’s not implausible that the Chinese government is simply curtailing this activity using the mechanisms that they have traditionally used for other political objectives.
Tech has greatly empowered rent seeking activities in the western world. It’s not implausible that the Chinese government is simply curtailing this activity using the mechanisms that they have traditionally used for other political objectives.
This is just not true.
Not only is the premise that 'DiDi' etc. do not create 'real value' simply false, the notion this is Xi's primary concern is isn't true either.
Xi's #1 concern is power and control. It's ridiculous that they're talking about 'protecting people's rights and warding off monopoly' when they're literally doing the opposite in Orwellian terms.
There's no 'hollowing' of the economy due to any of giant's usage of data. While competition is a concern, it would be really bad industrial policy to consider 'chips' somehow more important than the things you can do with them.
Ant is consumer credit where there was none before, and that's a huge, huge pillar of economic growth especially on the domestic consumption side where Xi wants to push the economy.
The notion that Google et. al. are 'middlemen' is beyond wrong.
Xi has also stopped these companies from listing in the US, which isn't good for anyone but the CCP.
This is mostly a game of power, not industrial policy.
Not only is the premise that 'DiDi' etc. do not create 'real value' simply false, the notion this is Xi's primary concern is isn't true either.
Xi's #1 concern is power and control. It's ridiculous that they're talking about 'protecting people's rights and warding off monopoly' when they're literally doing the opposite in Orwellian terms.
There's no 'hollowing' of the economy due to any of giant's usage of data. While competition is a concern, it would be really bad industrial policy to consider 'chips' somehow more important than the things you can do with them.
Ant is consumer credit where there was none before, and that's a huge, huge pillar of economic growth especially on the domestic consumption side where Xi wants to push the economy.
The notion that Google et. al. are 'middlemen' is beyond wrong.
Xi has also stopped these companies from listing in the US, which isn't good for anyone but the CCP.
This is mostly a game of power, not industrial policy.
Google is an advertising company, with some hobby businesses in cloud or self-driving cars. It doesn't get much more middleman than that.
Didi committed the sin of going ahead with a US listing against explicit orders from the government, in the context of an economic cold war with the US. China has plenty of capital, it's not as if we're in the 1970s and the US is the only way to go. You can bet that if JP Morgan Chase wanted to shift its headquarters to Hong Kong, the US would also take swift action. What the Chinese are doing with foreign listings is not all that different from what the US does with CFIUS.
Wanting to preserve privacy from private companies is not at all inconsistent with wanting the government to have total surveillance power. There are many domains where government has a monopoly, from issuing currency to the exercise of violence.
You will note Xi is cracking down in other areas that are not a plausible threat to the CCP, like bitcoin miners or the educational tutoring arms race. Sometimes, the stated agenda is the actual agenda.
Didi committed the sin of going ahead with a US listing against explicit orders from the government, in the context of an economic cold war with the US. China has plenty of capital, it's not as if we're in the 1970s and the US is the only way to go. You can bet that if JP Morgan Chase wanted to shift its headquarters to Hong Kong, the US would also take swift action. What the Chinese are doing with foreign listings is not all that different from what the US does with CFIUS.
Wanting to preserve privacy from private companies is not at all inconsistent with wanting the government to have total surveillance power. There are many domains where government has a monopoly, from issuing currency to the exercise of violence.
You will note Xi is cracking down in other areas that are not a plausible threat to the CCP, like bitcoin miners or the educational tutoring arms race. Sometimes, the stated agenda is the actual agenda.
"Google is an advertising company, with some hobby businesses in cloud or self-driving cars. It doesn't get much more middleman than that."
1) Where a company derives it's revenues, is not necessarily where it creates value.
2) Search is not a side-show, neither is mapping, Chrome, v8, Android, Google Cloud, Go, Flutter etc. - and frankly neither is advertising.
3) Advertising is valuable. Only really those who've never worked in business don't realize this. Companies don't spend gazillions on it for no reason. Lack of efficiencies in marketing are obvious, but so are they in other fields.
... also:
"China has plenty of capital, it's not as if we're in the 1970s and the US is the only way to go."
This little sense as China has it's own central bank, which is politicized, and Xi makes his own capital out of thin air.
China never needed 'US Dollars' for anything. They needed 'US Buyers' and to steal 'US knoow how and tech' - but they never really needed foreign direct investment.
"Xi is cracking down in other areas that are not a plausible threat to the CCP, like bitcoin miners"
No, BTC is one of the biggest threats to the control of the CCP (and other financial institutions) because it puts economic activity completely out of his control - especially trans national control.
'Crypto Currencies' - or any for of economic freedom outside the purview of the CCP - is probably the #1 threat to the CCP - more than military, or social upheaval. BTC is obviously too small right now to be a problem, but it balloon quickly putting everything outside his power, and the rest would follow.
1) Where a company derives it's revenues, is not necessarily where it creates value.
2) Search is not a side-show, neither is mapping, Chrome, v8, Android, Google Cloud, Go, Flutter etc. - and frankly neither is advertising.
3) Advertising is valuable. Only really those who've never worked in business don't realize this. Companies don't spend gazillions on it for no reason. Lack of efficiencies in marketing are obvious, but so are they in other fields.
... also:
"China has plenty of capital, it's not as if we're in the 1970s and the US is the only way to go."
This little sense as China has it's own central bank, which is politicized, and Xi makes his own capital out of thin air.
China never needed 'US Dollars' for anything. They needed 'US Buyers' and to steal 'US knoow how and tech' - but they never really needed foreign direct investment.
"Xi is cracking down in other areas that are not a plausible threat to the CCP, like bitcoin miners"
No, BTC is one of the biggest threats to the control of the CCP (and other financial institutions) because it puts economic activity completely out of his control - especially trans national control.
'Crypto Currencies' - or any for of economic freedom outside the purview of the CCP - is probably the #1 threat to the CCP - more than military, or social upheaval. BTC is obviously too small right now to be a problem, but it balloon quickly putting everything outside his power, and the rest would follow.
Obviously the the reason that the CCP is able to do these things is because they HAVE control. Do you think the taxi app, mall app, or a chat app is a threat to their control? Their firewall is notorious.
I don't even get it why you bothered to mention Ant, I wouldn't feel sorry for comsumer loan companies in another lifetime. You claim it to have pushed economic growth, that's the same as saying the pre-2008 housing market in the US is a huge pillar of economic growth, and look at where that lead us.
I don't even get it why you bothered to mention Ant, I wouldn't feel sorry for comsumer loan companies in another lifetime. You claim it to have pushed economic growth, that's the same as saying the pre-2008 housing market in the US is a huge pillar of economic growth, and look at where that lead us.
Maybe CCP/Xi is genuinely interested in sensible governance and is in a (reluctant) position to pioneer now that models which PRC previously emulated has either failed or became paralyzed with dysfunction. We're in the post end of history era. CCP conducted thorough analysis on the collapse of USSR, while the luster of western governance and economic management faded post GFC, and more so now after Trump. On Xi, we have early CIA testimony that he's incorruptible by money. LKY likened him to Nelson Mandela type of individual. Unlike all the other "interests" his speech writers and publicist feigns, he seems to be incredibly fixated with governance and bureaucracy on an intellectual, bordline autistic level. IMO this is just government governing in system based on performance legitimacy, improving comprehensive national power, instead of vetocracy (or equivalent) politics. Lot's people out there projecting other motives because they can't recognize proper governance anymore.
Let's not put Xi on a pedestal. His family is certainly corrupt as heck (like all the princeling families of Mao's companions that dominate Chinese politics), as the NYT investigated (and this led to it being banned by the Great Firewall) and his anti-corruption drive is highly selective.
He has also done tremendous institutional damage to the PRC by rolling back Deng's reforms and going back to the Mao model of, ahem, governance. That Xi himself is a relatively competent leader does not guarantee his successors will also be, and you have to consider how Mao killed more people than Hitler and Stalin combined through sheer incompetence to understand how dire the consequences could be.
It's interesting given his family history: his father was purged by Mao, rehabilitated by Deng, but eventually also fired by Deng. Xi Jinping had a very hard time after his father's fall from favor, and some have compared his adoption of Maoism as a form of Stockholm Syndrome.
Xi also overreached by challenging the US too soon rather than bide his time and wait another couple of decades by which point China could have weaned itself from dependence on the US for tech like semiconductor fabrication and been much less vulnerable.
Xi's model of governance is essentially the traditional Chinese model of an Emperor aided by a mandarinal bureaucracy, just with engineering substituting for study of the Confucian classics as training mode for the mandarins. Chinese politicians' advancement is conditional on them meeting GDP growth objectives (now also environmental indicators), essentially it's run just like Google with its OKRs.
He has also done tremendous institutional damage to the PRC by rolling back Deng's reforms and going back to the Mao model of, ahem, governance. That Xi himself is a relatively competent leader does not guarantee his successors will also be, and you have to consider how Mao killed more people than Hitler and Stalin combined through sheer incompetence to understand how dire the consequences could be.
It's interesting given his family history: his father was purged by Mao, rehabilitated by Deng, but eventually also fired by Deng. Xi Jinping had a very hard time after his father's fall from favor, and some have compared his adoption of Maoism as a form of Stockholm Syndrome.
Xi also overreached by challenging the US too soon rather than bide his time and wait another couple of decades by which point China could have weaned itself from dependence on the US for tech like semiconductor fabrication and been much less vulnerable.
Xi's model of governance is essentially the traditional Chinese model of an Emperor aided by a mandarinal bureaucracy, just with engineering substituting for study of the Confucian classics as training mode for the mandarins. Chinese politicians' advancement is conditional on them meeting GDP growth objectives (now also environmental indicators), essentially it's run just like Google with its OKRs.
For you last paragraph, that's been the Chinese model since Mao. The only substantial difference between the imperial governance and that of the current regime is that the emperor is selected by an albeit small committee, provided the candidates are top ranks in the bureaucracy before a specific age, not granted through birth.
Sure, but whether the Emperor is selected by accident of birth or by committee matters far less than how the bureaucracy is managed. A good example is how the authorities in Wuhan tried to cover up the coronavirus pandemic, but once the central government found out about the situation, Xi acted decisively (and effectively, it turns out) to stamp it out.
Every monarchy in history has had to deal with unreliable minions. Usually they deal with it using a secret police, and another secret police to watch over the first secret police, and so on.
Every monarchy in history has had to deal with unreliable minions. Usually they deal with it using a secret police, and another secret police to watch over the first secret police, and so on.
> Xi also overreached by challenging the US too soon rather than bide his time and wait another couple of decades by which point China could have weaned itself from dependence on the US for tech like semiconductor fabrication and been much less vulnerable.
Yes but he wouldn’t be alive by then. It also helped unite his citizens to a common enemy to ensure he had continuing support while he selectively purged powerful party members that wasn’t on his side. I am sure he weighted the consequences and determined China was economically powerful enough for a long fight.
Yes but he wouldn’t be alive by then. It also helped unite his citizens to a common enemy to ensure he had continuing support while he selectively purged powerful party members that wasn’t on his side. I am sure he weighted the consequences and determined China was economically powerful enough for a long fight.
It's not just my opinion. Xi's predecessors seem to agree with it:
https://asia.nikkei.com/Editor-s-Picks/China-up-close/Retire...
https://asia.nikkei.com/Editor-s-Picks/China-up-close/Retire...
>Let's not put Xi on a pedestal.
Not based off my opinions but assessements of intelligence dossier from CIA on Xi's background, his reputation prior to elevation as Shanghai party secretary and opinion of eminant China hand Lee Kuan Yew. Enough intelligence from credible sources comports to Xi's character to dispel generic corrupt princeling narrative. I was a Xi skeptic, he's uncharismatic, doesn't seem intelligent, but in retrospect, he appears to be the genuine article.
> done tremendous institutional damage to the PRC
He dug PRC out of the exitentially corrupt hole when Deng's reform ran it's course, i.e. growth + decadence that led to thorough CIA infiltration. Enter anticorruption drive and national security policies that purged all the foreign influence, finally securing restive territories like XJ, Tibet, HK. Obviously succession might be an issue, but he mitigated otherwise existential crisis. Short term that takes precedence. Just like Mao kept the country together at cost of 60M lives is bluntly far from dire at PRC scale. Sure Xi's family might be corrupt, but grafting a little on the side (again millions/billions is peanuts relative to CCP scale) does not mean his overall governance of the country does not focus on right priorities and outcomes, i.e. Xi's fixation to expedite the creation of durable insitutions that is designed to outlast any one individuals reign is a worthwhile gamble.
> interesting given his family history
This is generic pathologizing by lazy China watchers who has gotten more wrong than right. Again, evaluate Xi based creditable sources that actually interacted with him. There's too much China Collapse, CCP corrupt memes substianted by nothing but feelings and reguritated ad nauseum.
> Xi also overreached by challenging the US too soon
No, Xi responded to US pivot to Asia under Hu. Containment already proceeded Xi, and wild card Trump is not something that even Xi could anticipate / manage, which by all accounts he did well until covid19, another wildcard. 10Trillion GDP China in 2017 already could not hide + bide anymore, US reeeing at China threat in the last few years was in response to PRC modernizing military with less than NATO's 2% in defense spending. The fact that Xi actually committed to modernizing PRC military compared to BoXiLai who was buddy with corrupt PLA brass is absolutely clutch to mitigating ongoing US containment efforts. Side effect of Deng's development model / hide & bide = being helpless @ US bombing PRC embassy in Kosovo, US carriers groups sailing through strait during cross strait crsis', pre-NSL HK becoming spy capital of Asia etc etc. Semiconductor bans was happening under Obama as well, pre Xi. Again your timeline is backwards, Xi anticipated and mitigated ramp up in US containment efforts. Cannot stress this point enough. That alone, makes him the BEST possible successor to Hu. 5-10 years late in building up coercive military power = huge opportunity for US to shift regional balance. Forcing potential US supporters to hedge by no longer biding was not overreach, it was presient. Xi is doing something spectactularly right when Trump, who filled his cabinent with all the worst China-hawks, like Pompeo, still didn't sail US Carriers through TW strait during the worse break in relations in generations.
>Xi's model of governance
That's a very reductionist view of governing the most populous country with lots of domestic and international components including competition with US. With respect to the topic, how does it address PRC's tech regulation. To be similary pithy, Xi is closing the comprehensive power gap with US during an extremely vital time where both countries are at their most vunerable and with future hegemony on the line. IMO he's doing more right than wrong.
Not based off my opinions but assessements of intelligence dossier from CIA on Xi's background, his reputation prior to elevation as Shanghai party secretary and opinion of eminant China hand Lee Kuan Yew. Enough intelligence from credible sources comports to Xi's character to dispel generic corrupt princeling narrative. I was a Xi skeptic, he's uncharismatic, doesn't seem intelligent, but in retrospect, he appears to be the genuine article.
> done tremendous institutional damage to the PRC
He dug PRC out of the exitentially corrupt hole when Deng's reform ran it's course, i.e. growth + decadence that led to thorough CIA infiltration. Enter anticorruption drive and national security policies that purged all the foreign influence, finally securing restive territories like XJ, Tibet, HK. Obviously succession might be an issue, but he mitigated otherwise existential crisis. Short term that takes precedence. Just like Mao kept the country together at cost of 60M lives is bluntly far from dire at PRC scale. Sure Xi's family might be corrupt, but grafting a little on the side (again millions/billions is peanuts relative to CCP scale) does not mean his overall governance of the country does not focus on right priorities and outcomes, i.e. Xi's fixation to expedite the creation of durable insitutions that is designed to outlast any one individuals reign is a worthwhile gamble.
> interesting given his family history
This is generic pathologizing by lazy China watchers who has gotten more wrong than right. Again, evaluate Xi based creditable sources that actually interacted with him. There's too much China Collapse, CCP corrupt memes substianted by nothing but feelings and reguritated ad nauseum.
> Xi also overreached by challenging the US too soon
No, Xi responded to US pivot to Asia under Hu. Containment already proceeded Xi, and wild card Trump is not something that even Xi could anticipate / manage, which by all accounts he did well until covid19, another wildcard. 10Trillion GDP China in 2017 already could not hide + bide anymore, US reeeing at China threat in the last few years was in response to PRC modernizing military with less than NATO's 2% in defense spending. The fact that Xi actually committed to modernizing PRC military compared to BoXiLai who was buddy with corrupt PLA brass is absolutely clutch to mitigating ongoing US containment efforts. Side effect of Deng's development model / hide & bide = being helpless @ US bombing PRC embassy in Kosovo, US carriers groups sailing through strait during cross strait crsis', pre-NSL HK becoming spy capital of Asia etc etc. Semiconductor bans was happening under Obama as well, pre Xi. Again your timeline is backwards, Xi anticipated and mitigated ramp up in US containment efforts. Cannot stress this point enough. That alone, makes him the BEST possible successor to Hu. 5-10 years late in building up coercive military power = huge opportunity for US to shift regional balance. Forcing potential US supporters to hedge by no longer biding was not overreach, it was presient. Xi is doing something spectactularly right when Trump, who filled his cabinent with all the worst China-hawks, like Pompeo, still didn't sail US Carriers through TW strait during the worse break in relations in generations.
>Xi's model of governance
That's a very reductionist view of governing the most populous country with lots of domestic and international components including competition with US. With respect to the topic, how does it address PRC's tech regulation. To be similary pithy, Xi is closing the comprehensive power gap with US during an extremely vital time where both countries are at their most vunerable and with future hegemony on the line. IMO he's doing more right than wrong.
I think this short write up of the problems of consumer internet companies from a (Chinese) societal perspective is extremely on-point and obviously also applies from a western perspective:
https://insider.techbuzzchina.com/c/policies-and-regulations...
1. Companies burning money in an effort to scale up and obtain a monopoly.
2. Using human weaknesses to design products and acquire traffic.
3. Monopolistic online platforms taking asymmetric measures to collect information from users and infringing on their privacy.
4. Discriminatory pricing.
Sometimes I wonder whether we in the west are capable of doing a similar crackdown? Or we have past the point of no return and companies like Facebook, Google, Amazon etc. are simply too powerful and too politically influental?
https://insider.techbuzzchina.com/c/policies-and-regulations...
1. Companies burning money in an effort to scale up and obtain a monopoly.
2. Using human weaknesses to design products and acquire traffic.
3. Monopolistic online platforms taking asymmetric measures to collect information from users and infringing on their privacy.
4. Discriminatory pricing.
Sometimes I wonder whether we in the west are capable of doing a similar crackdown? Or we have past the point of no return and companies like Facebook, Google, Amazon etc. are simply too powerful and too politically influental?
Worth noting that we have different incentives in the US even accounting for different philosophies.
US big tech is globally influential, clipping their wings would reduce that influence. Chinese big tech is generally more about the large Chinese market and diaspora.
US big tech is globally influential, clipping their wings would reduce that influence. Chinese big tech is generally more about the large Chinese market and diaspora.
TikTok has quite a bit of influence outside China. So it seems that Chinese big tech can compete quite effectively in a global market.
So why did TikTok come out of China and not the US? Maybe it is because the monopoly of Facebook is too strong for alternatives to flourish.
Point is: Even-though American big tech’s dominance is an US advantage, the monopolies still come at a cost.
Point is: Even-though American big tech’s dominance is an US advantage, the monopolies still come at a cost.
TikTok did, but none of the others except for maybe Alibaba made it. Tiktok is also popular outside of China with a product different from inside China (Douyin) that they acquired from another company after tiktok was released.
Would we want a similar crackdown from the duopolistic political side?
The Chinese government can move quickly and decisively because it doesn't have any checks or balances. The US would benefit from a system in which (a) there are clear rules for competition and (b) those rules are enforced, even-handedly; but it's harder than you think to get to that point.
The Chinese government can move quickly and decisively because it doesn't have any checks or balances. The US would benefit from a system in which (a) there are clear rules for competition and (b) those rules are enforced, even-handedly; but it's harder than you think to get to that point.
It's not like this crackdown is about the CCP's concern for protecting user data and preventing monopolies. It's just a turf war over the data and in a larger sense over control of the direction of the country.
Same reason Jack Ma went (extremely) conspicuously missing last fall.
CCP wants the economic growth and international prestige that a burgeoning tech sector provides, but does not want anything resembling the system we have where facebook can tell the White House to take a hike. https://www.nytimes.com/2021/07/17/technology/facebook-vacci...
Same reason Jack Ma went (extremely) conspicuously missing last fall.
CCP wants the economic growth and international prestige that a burgeoning tech sector provides, but does not want anything resembling the system we have where facebook can tell the White House to take a hike. https://www.nytimes.com/2021/07/17/technology/facebook-vacci...
I find it interesting that the paper does not mention other potential motivations for the changes and seems to take the CCP's statements at face value. Maybe they are simply directly reporting on what has been stated, but it does make sense that the CCP is concerned about the shifting power of control. I think this has little to do with privacy and protections of peoples' rights and everything to do with a tug of war happening above the citizens heads.
It's hard to run a country if you make public policy announcements that don't reflect what you want. Even if you tell your inner circle not to take the policy seriously, there'll be a lot of outsiders taking it at face value, especially in a country with more than a billion people. Based on what they heard coming from the central government, various municipalities are working on stricter laws (e.g. Shenzhen's new data regulations http://www.szrd.gov.cn/szrd_zlda/szrd_zlda_flfg/flfg_szfg/co... ) and economic publications are talking about the potentially astronomic fines and steps compliance departments are taking to manage that risk https://mp.weixin.qq.com/s/bAbyNyg4FZSsbrY9he5BkA
Sure would be a bummer if the government didn't really mean it that way, but companies end up improving their data management practices anyway.
Sure would be a bummer if the government didn't really mean it that way, but companies end up improving their data management practices anyway.
I think that the article is implying all of that without saying so directly (maybe trying not to be banned in China). They refer at several points to the government's fear of companies having more data on people than the government does, making clear that this is about maintaining control and power.
I was mystified by the Ant crackdown until recently. Charlie Munger (Berkshire Hathaway VP) thinks it makes a lot of sense. https://www.reuters.com/business/finance/berkshires-munger-s...
That’s article has zero content other than a couple quotes from Munger that say nothing more than “I agree”.
Agree with what?
Agree with what?
> The CCP is obsessed with data – so much so that it was recently dubbed a “factor of production” alongside land, labor, capital, and technology
I've never thought of data in these terms. Makes a lot of sense for the 21st century.
I've never thought of data in these terms. Makes a lot of sense for the 21st century.
Clearly China wants to use other markets but tries to avoid becoming a market be it education or social platforms. Very clever strategy I'd say
It's called mercantilism, and is a well-worn strategy. The US used it against the UK, who had used it against the Dutch before them, and the Germans had also used it against the UK.
This website "Asiatimes" is, despite the name, almost wholly authored in US, and London.
I cannot understand the Western desire to always rationise, and overthink actions of "smart, sophisticated Asian regimes." It's now almost a trope of some kind.
Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.
I cannot understand the Western desire to always rationise, and overthink actions of "smart, sophisticated Asian regimes." It's now almost a trope of some kind.
Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.
>Some times the Occam's Razor explanation of events is the one which is true, and in this case it's the extremely vindictive regime just ruining lives, and fortunes of people whom they think are good targets to attack today, and there is nothing "smart, and sophisticated" about it.*
I don't understand how an explanation built up on tropes is the simplest one. One what basis is the CCP "extremely vidictive"? How is the simplest explanation that the government decided to blow up the economy "just because". Your explanation seems very counter intuitive - in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power.
I don't understand how an explanation built up on tropes is the simplest one. One what basis is the CCP "extremely vidictive"? How is the simplest explanation that the government decided to blow up the economy "just because". Your explanation seems very counter intuitive - in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power.
> in some way you take the opposite view as your criticism; reducing the chinese to some barbaric government system, and not the world 2nd largest super power.
China became world's 2nd largest economic power because money were almost raining on them from the sky, and not because of any level of sophistication.
Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd largest economy today, but a 1st one, and by a large extend.
With them seeing that the West was willing to pour money on them even when they were failing as hard as they did, they had not a single incentive to not to blow up the economy "just because", as you said, every few years, and being anything else than this "barbaric government system."
The extend of economic mismanagement during the so called "China's golden decade" was just that bonkers. 10, 11 digits sums were going up in flames, or vanishing in Swiss bank accounts almost monthly back then.
It's only when it got so bad as it is now economically, did the CPC turn on the current crisis mode. It is now slowly reverting to its pre-199x state — the perpetual crisis. It will be becoming increasingly more paranoid as the situation deteriorates, and increasingly more panic prone. The history shows that's how it was with every marxist, communist, or hardcore socialist regime in the past.
China became world's 2nd largest economic power because money were almost raining on them from the sky, and not because of any level of sophistication.
Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd largest economy today, but a 1st one, and by a large extend.
With them seeing that the West was willing to pour money on them even when they were failing as hard as they did, they had not a single incentive to not to blow up the economy "just because", as you said, every few years, and being anything else than this "barbaric government system."
The extend of economic mismanagement during the so called "China's golden decade" was just that bonkers. 10, 11 digits sums were going up in flames, or vanishing in Swiss bank accounts almost monthly back then.
It's only when it got so bad as it is now economically, did the CPC turn on the current crisis mode. It is now slowly reverting to its pre-199x state — the perpetual crisis. It will be becoming increasingly more paranoid as the situation deteriorates, and increasingly more panic prone. The history shows that's how it was with every marxist, communist, or hardcore socialist regime in the past.
> Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd larger economy today, but a 1st one, and by a large extend.
You know China is on track to surpass the US’ GDP in the 2030s, right? And that the Chinese middle class is growing while the US middle class is shrinking? Given that China was a completely impoverished agrarian country recovering from multiple colonial incursions in 1949, that’s a pretty remarkable accomplishment.
If no sophistication was involved, why hasn’t India seen the same outcomes since gaining its independence around the same time?
You know China is on track to surpass the US’ GDP in the 2030s, right? And that the Chinese middle class is growing while the US middle class is shrinking? Given that China was a completely impoverished agrarian country recovering from multiple colonial incursions in 1949, that’s a pretty remarkable accomplishment.
If no sophistication was involved, why hasn’t India seen the same outcomes since gaining its independence around the same time?
“On track” doesn’t mean much and based on population size, an equal GDP means 25% of GDP per capita which doesn’t sound quite as impressive.
> If no sophistication was involved, why hasn’t India seen the same outcomes since gaining its independence around the same time?
Because the West wasn't raining gold on India, and was raining gold on communist China instead.
And it didn't because India wasn't willing to let in Western businesses, and give them a carte blanche to make money like China did.
It also didn't because India wasn't starting from such a low base as China.
It also didn't because Indian workers were a few cents per hour more expensive than Chinese.
It also didn't because Indian workers had some absolutely minimal labour protections, unlike Chinese.
It also didn't because India had some absolutely minimal semblance of rule of law, functioning legal system, and China didn't.
It also didn't because India wasn't as completely open to corruption as the Chinese state was.
The point that India was a more bureaucratic country than China back then can't hold water. Both countries were bureaucratic nightmares, and keep being them to this day, but for some reason this trope persists.
As somebody who spend a big portion of my career in China, I will tell that China at no point was that libertarian capitalist paradise that the delirious Wall Street, and Silicon Valley people imagined it be.
Because the West wasn't raining gold on India, and was raining gold on communist China instead.
And it didn't because India wasn't willing to let in Western businesses, and give them a carte blanche to make money like China did.
It also didn't because India wasn't starting from such a low base as China.
It also didn't because Indian workers were a few cents per hour more expensive than Chinese.
It also didn't because Indian workers had some absolutely minimal labour protections, unlike Chinese.
It also didn't because India had some absolutely minimal semblance of rule of law, functioning legal system, and China didn't.
It also didn't because India wasn't as completely open to corruption as the Chinese state was.
The point that India was a more bureaucratic country than China back then can't hold water. Both countries were bureaucratic nightmares, and keep being them to this day, but for some reason this trope persists.
As somebody who spend a big portion of my career in China, I will tell that China at no point was that libertarian capitalist paradise that the delirious Wall Street, and Silicon Valley people imagined it be.
My point is absolutely not that India was more bureaucratic. The decisive difference is that China was reestablished as a people’s republic led by a communist party which organizes the whole sphere of the economy to improve the overall standard of living. So now China has eliminated absolute poverty whereas India is still struggling to provide basic food security.
> The decisive difference is that China was reestablished as a people’s republic led by a communist party
The communist party doesn't lead.
Its political edicts are a complete mumbo jumbo. Tell me of a single sane person who can decipher any meaning from the phychomumbling of party heads on CCTV. Even CPC members themselves have barely any understanding what the hack their own party line is.
> which organizes the whole sphere of the economy to improve the overall standard of living.
The communist part did not organise anything, it literally been doing nothing except floating belly up on the water 20 years straight from 1990 to 2010, while Western money kept piling on them.
I will not deny that some state companies attained a level of commercial success, and that some select municipalities had moderately competent hired hands working for them. But this was hardly a result of any deliberate effort.
> China has eliminated absolute poverty whereas India is still struggling to provide basic food security.
You have to say it's Chinese people who eliminated the absolute poverty, and not the talking head only showing in a village for a few hours once a few weeks to deliver ideological sermons from a loudspeaker.
Saying the opposite would be an insult to ones intelligence when it's the party, and especially local party heads, which consistently keep rural people downtrodden.
The communist party doesn't lead.
Its political edicts are a complete mumbo jumbo. Tell me of a single sane person who can decipher any meaning from the phychomumbling of party heads on CCTV. Even CPC members themselves have barely any understanding what the hack their own party line is.
> which organizes the whole sphere of the economy to improve the overall standard of living.
The communist part did not organise anything, it literally been doing nothing except floating belly up on the water 20 years straight from 1990 to 2010, while Western money kept piling on them.
I will not deny that some state companies attained a level of commercial success, and that some select municipalities had moderately competent hired hands working for them. But this was hardly a result of any deliberate effort.
> China has eliminated absolute poverty whereas India is still struggling to provide basic food security.
You have to say it's Chinese people who eliminated the absolute poverty, and not the talking head only showing in a village for a few hours once a few weeks to deliver ideological sermons from a loudspeaker.
Saying the opposite would be an insult to ones intelligence when it's the party, and especially local party heads, which consistently keep rural people downtrodden.
Mumbo jumbo? I’ve read the CPC’s latest five-year plan, and it seemed pretty clear and concrete to me. Anyone interested can do the same: https://docs.google.com/document/d/e/2PACX-1vQEtwcbYa9hTqs7y...
Based on my research into China’s poverty alleviation program I can only say you’re completely misrepresenting it. It’s a wide-ranging effort that includes the CPC building infrastructure, hospitals, and schools in the far reaches of the country. Of course you’re right it’s something all Chinese people should be proud of.
Based on my research into China’s poverty alleviation program I can only say you’re completely misrepresenting it. It’s a wide-ranging effort that includes the CPC building infrastructure, hospitals, and schools in the far reaches of the country. Of course you’re right it’s something all Chinese people should be proud of.
The people's republic was established in 1949 without improving the standard of living much for the next three decades. Then Deng Xiaoping came along and abondoned organizing the whole sphere of the economy in favor of letting companies produce as much as they could sell. And the US right across the Pacific ocean happened to be very happy to buy cheap goods en masse. Without that foreign money pouring in, it would've been much harder to pay for all that poverty alleviation.
India, too, has had Five Year Plans, but they don't seem to have helped that much. If they could get foreigners to give them more money, though...
India, too, has had Five Year Plans, but they don't seem to have helped that much. If they could get foreigners to give them more money, though...
I think India is torn apart by its own racial and religious problems, not to mention the notorious caste system, but that's story for another chapter
In the very least, the Chinese gov, at Mao's time or at Deng's time tried to provide general welfare and equity to all of its citizens. Even though Mao's delusional thinking resulted from perhaps old age made that dream impossible and left the coutry iredemmable damaged til Deng.
In the very least, the Chinese gov, at Mao's time or at Deng's time tried to provide general welfare and equity to all of its citizens. Even though Mao's delusional thinking resulted from perhaps old age made that dream impossible and left the coutry iredemmable damaged til Deng.
India is much more diverse, including at a genetic level. The Han Chinese are one people, whereas Indians are clustered in hundreds of populations of around 3 million that have managed a higher level of endogamy than Ashkenazi Jews for over 3 millennia:
Source: chapter 6 of "Who We Are And How We Got Here" by David Reich.
Source: chapter 6 of "Who We Are And How We Got Here" by David Reich.
“We welcome foreign investment and advanced techniques. Management is also a technique. Will they undermine our socialism? Not likely, because the socialist sector is the mainstay of our economy. Our socialist economic base is so huge that it can absorb tens and hundreds of billions of dollars’ worth of foreign funds without being shaken. Foreign investment will doubtless serve as a major supplement in the building of socialism in our country. And as things stand now, that supplement is indispensable. Naturally, some problems will arise in the wake of foreign investment. But its negative impact will be far less significant than the positive use we can make of it to accelerate our development. It may entail a slight risk, but not much.” — Deng Xiaoping
I’m sure you know better though.
I’m sure you know better though.
Thank you for the nice quote. You seem to think it contradicts what I said, but I don't see it that way. The importance of foreign investment was exactly my point.
Maybe because I said that he "abondoned organizing the whole sphere of the economy"? But the economy is no longer 100% state-owned like it was in 1978, is it not? (I'm having trouble finding reliable figures, but I vaguely recall it being around 40% of GDP nowadays.) Of course GDP has grown 40x since then, so even just 40% of that represents 16x growth and Deng wasn't wrong about the socialist sector benefiting from foreign investment. It's just that the private sector grew even more.
Maybe because I said that he "abondoned organizing the whole sphere of the economy"? But the economy is no longer 100% state-owned like it was in 1978, is it not? (I'm having trouble finding reliable figures, but I vaguely recall it being around 40% of GDP nowadays.) Of course GDP has grown 40x since then, so even just 40% of that represents 16x growth and Deng wasn't wrong about the socialist sector benefiting from foreign investment. It's just that the private sector grew even more.
That doesn't mean the sphere of the economy isn't being organized, though. Deng's reforms were just a new stage of that development.
Really sounds like you are just letting your prejudice guide you, instead of trying to find out what is going on.
He is, of course, absolutely correct. Lax antitrust enforcement in the US (nonexistent, really) is leading to concentration and stagnation.
As for EdTech, it's an arms race of tutoring to get into a limited places in good universities, with diminishing results leading to a stalemate since everyone gets tutored, and just a parasitic drain on the economy, hence efforts to clip its wings. Nonprofits like Khan Academy that are genuinely interested in improving education would continue to operate. Much the same could be said of political contributions in the US.
I would expect the residential property business bubble to be next, since it's another huge misallocation of resources (although it's already started with Wanda and Vanke).
https://www.aljazeera.com/economy/2021/7/28/in-its-latest-cr...