What the US-China Divide Means for Tech
Paris Marx is joined by Louise Matsakis to discuss the growing divide between the US and China, the long history of Western concern about the East, and why we should pay attention to who these anti-China narratives benefit.
Louise Matsakis is a technology reporter at Semafor who previously worked at NBC News, Rest of World, and Wired. You can follow her on Twitter at @lmatsakis.
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Paris Marx: Louise, welcome to Tech Won’t Save Us!
Louise Matsakis: Hey, thanks for having me.
PM: Absolutely! I’ve been reading your work for a while, when you were at Rest of World, and the various other places that you’ve been. Now you’re at Semafor and you wrote this piece last week that was on YouTube videos. It suggests that the Chinese economy is imminently about to collapse or various other things that are suggested about China, that it’s going to run out of food or water or any of these sorts of things. Do you want to give us a basic overview of what you found with these YouTube videos and what they are suggesting about China and its future?
LM: Around six months ago I started to see this very specific type of video popping up on YouTube, a diverse range of creators — the finance bros, the NFT guys, Falun Gong, this melting pot of characters — were publishing these really similar videos. Almost always the headline or the video title is something like “China’s Economy Is on The Verge of Collapsing.” Or sometimes they would even give a timeline, like “24 Days Until China’s Economy Collapses,” or “Things are Getting Really Bad…” You would see these creaters publish a few weeks later after their first round, and they almost always had a really sad picture of Xi Jinping with a lot of red, maybe a dragon, maybe fire. They all had this really similar aesthetic and I was just really interested in this because I felt it was an exaggerated version of a narrative I see a lot in mainstream media. This was a exaggerated cartoon version of that, and I thought that was really interesting.
PM: It’s fascinating that you say these narratives are coming from many different places. On the one hand, you have Falun Gong, which is this kind of anti-CCP group. I don’t know exactly how to describe them.
LM: It’s a religious group; I would say religious movement.
PM: They’re behind — what’s that publication?
LM: The Epoch Times is one of the main ones that they’re behind. It makes sense this would be the narrative that the Epoch Times, and similar publications would pick up because they’ve done a really good job of catering to the far-right in the US. These anti-China narratives are really popular right now in those media ecosystems, so it makes a lot of sense to me that you would see this. But they’ve been doing that for a really long time, saying: This is the end of the CCP. I think right now, these narratives are more popular than they ever have been, in a lot of ways.
PM: It’s convenient that something that they have been saying for a long time is now invoked both on the far-right in the United States, but also increasingly further along the political spectrum as there’s this growing tension with China and the United States. Of course, you note that these are narratives that we also see in mainstream media, though maybe not as exaggerated. People will be familiar with seeing articles that suggests the Chinese economy is on the brink of collapse many times in previous years. Whether it’s because of real estate bubbles, or excessive investment by the CCP in various sectors of the economy. Also, random people who probably don’t have much knowledge of China are seeing these types of videos kind of pick up and saying: Oh, maybe I should make one of these because it will be popular with the algorithm people who are looking for these types of videos.
LM: Definitely. I think this is just an age-old narrative. Even when relations between the West and China were relatively rosy, this narrative is so timeless. There’s something about a communist power and the West wanting to see it being taken down or seeing it as fragile or thinking it’s another Soviet Union. I think the most recent example is probably in November, or when there were widespread impactful, and important protests across China against their COVID-19 lockdown policies, the Zero-COVID policies. But you did see a number of mainstream commenters, mainstream journalists, say: Is this going to be regime change? They immediately went to: Okay, there’s a few sort of young people calling for Xi Jinping to step down — is this going to be the end of the Chinese Communist Party? When you see similar protests, or even more widespread protests, in places such as the US, rarely, if ever, does it go to: the US government is going to be toppled. In China, you sort of see that narrative really quickly. It’s often wishful thinking. Mix that with the YouTube algorithm and what kinds of incentives there are on a platform like YouTube, and you get this cartoon version where it’s going to happen in a certain number of days, there’s going to be fire, there’s going to be Doom. It’s really interesting because it’s easier to see what this narrative is when you see it put through a system similar to YouTube. When you see a New York Times article suggesting that there’s going to be regime change, or kind of suggesting that this is the end of the CCP, because of these protests or are really emphasizing the people calling for Xi Jinping’s downfall, versus a YouTube video that’s like: It’s going to collapse in 20 days. It’s a lot easier to see what’s happening here, what the underlying narrative really is, and what people want to hear.
PM: It is interesting when you look at protests, what happened in November. Very clearly protests against the Zero-COVID policies kicked off by particular developments that happened in the country — the burning of a building — and have this set off various degrees of anger through the population. Immediately, a lot of the Western responses were like: They want liberal democracy or something like that, because that’s kind of the playbook that often gets run. I was wondering, with these videos that we see on YouTube, how you perceive them and what they’re doing. The people who are creating these videos, and maybe it’s different for different people. Some people are not China experts, some groups might be associated with Falun Gong, are they looking to manufacture consent for particular kinds of policy approaches toward China? Are they trying to develop a greater kind of skepticism toward China or opposition to China within the public that would be watching these videos? Are they responding to a desire that’s already out there for people who want to see critical content about China to justify ideas that they already have? Or are they just further pushing people to extremes? Or something else?
LM: I think they’re trying to get views, honestly. I don’t think there’s an ideological movement or anything really underpinning most of these videos, aside from the Falun Gong. They’re anti-CCP; they have been have good reason to be, frankly. But why these videos are successful right now, in particular, is that they’re exploiting some things that are very much true, which is that China’s borders have been closed for the last three years. It’s incredibly difficult to get information from the ground. There are a few dozen journalists publishing work in English that are still there. Their movement is really restricted. A lot of information is what we can get on social media or the few people in certain places that can be reached. In that information vacuum, what is going to come out? It’s going to be speculation. It’s going to be fear. I think that’s sort of the natural result. There’s also a kernel of truth, which is that China’s economy sort of was this miracle from the early aughts until now, where it just continued to grow at an incredible pace. There were millions of people who were lifted out of poverty, who were able to live sort of middle class lives, and it was this incredible transformation that the country went through. Now, that’s stopping. Growth has slowed and there’s not as much purchasing power. I think people are upset. There’s been genuine problems, in particular with the real estate industry, so I think there’s sort of a kernel of truth here, and there’s an information vacuum and there is growing anti-CCP sentiment all over the West, for good reason. A lot of people point to human rights abuses, or they point to sort of things, the Zero-COVID policy, or aggression towards Taiwan. So I think all of that mixed together with the YouTube algorithm and very sophisticated creators who know their audience really well, they know what does well.
They also mimic each other. They see: Hey, that one guy did this video about China’s economy collapsing, let me try that three weeks later, the economy didn’t collapse, but I’m just going to say it again. Oftentimes too, it’s worth noting that these are clickbait headlines. They’re the clickbait headlines of YouTube. I spent a really long time watching these videos and a good number of them are a little bit more reasonable, or they’re just playing mainstream news clips and talking over them or not really outright being as extreme as the framing and the marketing is —they’re careful because they don’t want to totally lose their audience. Especially these finance bros, who their audience come to them for investing advice, or advice about what to do with their money, so they need to be careful. The overarching thing that lays on top of all of that of all of the current context, is that this narrative about the East collapsing, or the East being on the verge of destruction, or taking over the world is so alluring, and has been for a really long time. Something I do is look back at mainstream magazine covers from the 80s. I’ll never forget — it’s seared into my brain — when we were so terrified of Japan in the 80s. There is an incredibly racist Atlantic cover of a Sumo wrestler, and the headline is like: Containing Japan, and it’s a big Sumo wrestler who’s as big as the rest of the earth. That narrative hasn’t gone away, it is not so overt.
Some analysts have come to call it Schrödinger’s China, after Schrödinger’s cat. The concept of Schrödiger’s cat is that it’s neither dead or alive — it’s inside this box. We can’t really say it’s both of those things at the same time. That is always how China is talked about in the West, by people who are not there. It’s either on the verge of taking over the world, or about to collapse tomorrow or in 34 days, or whatever the YouTube headline says. These YouTube videos are one side of that everlasting double-sided coin. I always tell people the truth about is that it is Schrödinger’s China. The answer to basically every question you can ask is always yes and no. It’s always like: Yes, no, kind of, or yes, but only in this one place. That’s like everywhere else; it’s complicated. 1.4 billion people, it’s an incredibly complicated place. We have always loved simple narratives about China, or about Japan, or about the East in general, and making it into this mythical place of comparison, or this mythical place that we can use to sort of judge our own society against. These YouTube videos are just one part of that and they’re YouTube-ified. That’s what I find — I hate to use the word charming — but that’s what is silly about them, they’re the YouTube-ified version of that narrative we’ve had for decades really.
PM: It’s always convenient to reduce any complex problem to something that’s going to be very simplified and justifies or reinforces your pre-existing ideas about what it might already be. I find it really fascinating that you bring up Japan because Japan has been on my mind for the past few years, as there’s been this growing discussion around chips and semiconductors. In the 70s, and 80s when all this was happening, one of the big threats, or one of the big things that the tech industry was worried about, was that China was picking up a lot of the semiconductor manufacturing business that was previously in California, and in the United States more broadly. There was a bunch of public support in order to defend and protect the industry from Japan. There were agreements with Japan to regulate semiconductor prices, so when you see the concern in the United States over the past couple of years around China’s control over semi-conductor manufacturing, the need to limit their access to technology, and the need to subsidize US manufacturing of semiconductors bring more of it back on shore. I was like: Man, this is like Japan all over again.
LM: Totally. There’s such amnesia about this narrative. It’s always been like: We’ve never had a competitor like this before; this has never happened; this is the future of the world if we don’t secure this technology. I want to be careful to say that I do very much understand these concerns, in some ways, and that’s what makes this conversation really difficult because there are things to be worried about with China and with China’s growing power. There’s no doubt about that, but the way these arguments are presented is often disingenuous. It’s often using China or using a cartoon or a really simplified version of what’s going on in China to justify or explain something that’s actually happening. China is almost a mythical place that doesn’t really need to exist. It’s just an example you need to have in your head in order to understand the argument that a US politician is making, it’s not actually about making a point about something that’s going on in China. Because if you really wanted to do that, you would have to listen to people and try and write or listen to people who really knew what they were talking about. So I think these discussions are often a way to say: We want to bring chips here; we want to build a factory here; we want to justify this immigration policy or other sorts of policies, I think, just based on the idea of a place that we’re going to warn you about, because if we don’t do this, we’re going to become that scary place.
PM: Absolutely. You can use China in that very convenient way, in order to promote these policies you might have wanted to pursue anyway. We’ve had a number of years now of narratives growing in the United States, particularly under the Trump administration, but a lot of these things have really stuck around as the Democrats took back power in 2020. The Biden administration has kept up that more hostile or more divisive policy toward China and wanting to create more of a divide between those two countries that had been so close, so aligned, and are still very economically dependent on one another, despite the rhetoric that goes on. I find it interesting that as you talked about the legitimate concerns to have about China and the Chinese government, whether it’s on human rights abuses, it’s on hostility toward Taiwan, and things like that. But I feel those narratives are used in a convenient way to justify what is really more a geopolitical and economic concern on the part of the US government to try to create this growing agreement or desire within the public to accept these policies toward China, instead of working more collaboratively.
LM: I think the trope that people say is engagement has become a dirty word in Washington these days. It’s really difficult to propose any sort of collaboration, even on issues that I think used to be pretty nonpartisan or that we can all agree upon climate change or global trade policies. I think there was a little bit more leeway there. Now it’s just totally a political nonstarter to say that you want to work with China or that you think that there’s a better way to engage with China. That’s sad, in a lot of ways, because this is the second largest economy in the world and we need to collaborate on things such as climate change if there’s going to be any hope. It’s also really sad for Chinese-Americans, or for anyone who cares about both of these countries, it’s just been really difficult. It’s worth saying, I don’t think China has made it any easier and that is sad as well. I definitely think it’s interesting to see how nothing unites Americans like an enemy. And that is sort of something that I think is as true as time and right now that enemy is China, and maybeecondarily Russia. The Biden administration is just realizing that this is a total bipartisan issue. The Democrats have woken up to it and realize that they are also concerned about China’s rising power. The Biden administration is reacting appropriately to voters, and you’re watching Biden move towards the center. I get concerned when I think that these policies don’t actually have the teeth, there’s no follow through. I can’t take seriously that when these politicians say we’re worried about this tech issue with China, that they are totally genuine about it. When you look at the specifics of the policy, it’s like: Okay, we’re concerned about human rights abuses in Xinjiang. But where is the policy where we’re going to allow more people from Xinjiang to get asylum. Is there going to be some pathway for people from Hong Kong to move here safely?
The elephant in the room that I’m obviously thinking about right now is TikTok, if you want to talk the growing TikTok ban. I think it’s the perfect example of what we’re discussing— this feared uncertainty about China, the need to do something the need to find a boogeyman — but it not actually disturbing US business interests too much or not actually having a long term impact beyond a single app. Over the last few weeks we’ve watched, I think it’s up to 19, US states have banned TikTok from US government devices or state owned devices, and Congress has also done the same. What is that really accomplishing? In the off chance that the Chinese government was going to use someone’s TikTok app on a junior Congressman’s cell phone to hack the US government. The US government has already said that China has hacked the US personnel office, I think it was Marriott Hotels. These are targets where if they want information going through one person’s Tik Tok app is not going to be particularly effective. But it doesn’t do anything to actually protect anyone’s privacy more broadly.
It’s very ironic to me watching all of the hoopla over TikTok when two of the most popular apps in the country right now are Temu and Shein, which are both Chinese e-commerce apps. They’re incredibly popular. Temu was opening in the number one or number two app for weeks and now. It had a really good holiday season — lots of people are buying from that app. Millions of American teenagers are obsessed with Shein and we see nothing about that. If the concern is an app on American’s phones that can collect data about you why are these other apps not mentioned? There are hundreds of Chinese apps like this. That’s not to say that I think that banning Chinese apps or regulating Chinese-owned apps is the solution necessarily, but can see that this is not a genuine, serious effort to do something about an issue that is concerning. I think this is a way to win political points and voters should not fall for it. They should see: Is my privacy actually protected? Do we have a national privacy law? The answer is no. What if the Chinese government decides to hack an American owned app? Would that do anything? No, because we’re allowing these companies to collect wide swaths of data about us all the time, trade that data, sell it, send it to third parties. We’ve done nothing about that despite the hundreds of hearings about the tech industry in Congress over the last few years. That just makes me sad. If you’re trying to score political points by being tough on China, in a sort of presentation or in an optics way, the only result of that is increased xenophobia, you’re encouraging people to turn away from China.
What I would love to see is encouraging more Americans to actually learn about the country, because I think that would actually help American security if we had more people who were wanting to study there or wanting to learn Mandarin or wanting to spend more time learning about the country. Instead, we have this optics situation of everything Chinese is untrustworthy and we’re going to nominally ban it, or we’re going to nominally tell you it’s badand leave it at that. Those sorts of things are also really easy to pass. If piece of legislation, or new rule, is not going to have an impact, or have a really minimal impact, easy to move that through. That’s why you saw these states do it really quickly. You saw some of the bigger impacts actually get rolled back. In Georgia they realized their state football teams have gigantic TikTok accounts. Then they had to clarify: Just kidding, it doesn’t apply to that,don’t worry. They realize: Oh, this is a big recruiting and promotion tool for our schools and then they rolled that back. When there is even somewhat of an impact, you see politicians saying nevermind. I find it really annoying. We’ve had a few years of this and despite the shouting of people like me — and I think a lot of experts who are way more qualified than I am to sort of make this point — saying: Great, we’re so happy you want to do something about this, let’s make it lasting and make it beyond the hottest app of the moment. But that just sort of hasn’t happened.
PM: It’s incredibly easy to pass legislation that’s not doing anything concrete, it’s just there to serve the base, but when it actually comes to doing something serious it becomes a lot more difficult to get that through, as we’ve been seeing with a lot of American tech legislation.I wanted to go back to the bigger point that you were mentioning there though. Because what really stands out to me is that we had this period where the United States didn’t really have a major geopolitical rival. In that moment it was okay to work with China and to have China grow and to take advantage of Chinese workers and the Chinese economy in order to get low cost goods to the United States, to have trading technology or moving technology over there to move Chinese industry forward so it would benefit the United States in that way.
Then when China rises to become more of a geopolitical foe and to develop its own kind of technological capacities, in a way that challenges the technological dominance of the United States, then all of a sudden it becomes more of a threat. And these kinds of policies that need to target China, that needs to divide the US and China, that need to create what some people are calling a new Cold War, where these developments have been going. One place that this stands out to me is in thinking about the internet and tech policy in particular. Since the 90s the internet spread globally and that really benefited American companies. The idea was: You need to take down your barriers; you need to let the internet come in, and all of these services, you shouldn’t be having a great firewall or anything like that, to protect your own economy, to protect your own businesses. Rather, American companies benefited from the global spread of the internet companies like Google or Amazon, that grew to become global behemoths. Now that other countries are having tech companies or tech platforms, TikTok, that can really challenge the American dominance in a way that we hadn’t really seen previously, then all of a sudden more of an American kind of tech protectionism comes to the fore, in a way that we hadn’t seen as much in that period. Would you agree with that?
LM: I think that that’s definitely a fair assessment. I also think in the heyday of engagement with China there was wishful thinking that economic prosperity could only come with the rise or democratic value. I think anyone who cares about China will never forget to Bill Clinton’s, one of the dumbest things he ever said is the jello comment: The internet is like jello, you can try and contain it and it would just get everywhere. You couldn’t contain it. You couldn’t do what China was doing, forever. But it has been incredibly difficult. This Whac-a-Mole approach to their Internet censorship regime, but it’s happened. They have a parallel ecosystem in China that is completely different from the one that we have elsewhere, except for TikTok. There is a domestic version of TikTok that is not accessible outside of the mainland, which is called Douyin. TikTok is different, but it is owned by the same company. They have a lot of similarities and it’s the DNA of this Chinese company. That was a turning point for a lot of people to realize: Oh, this tech actually could be exported and maybe people have more in common than they do differences and that they like to do the same sorts of things on the internet.
I think what you’re seeing now because of TikTok, is this tit-for-tat mindset, which I think is really dangerous, because a lot of people said: Well, why can’t Trump ban TikTok and WeChat because they’ve banned Facebook and Twitter? Isn’t that only fair? Then, you’re adopting an authoritarian regime’s policies, and that’s really problematic. There’s not a principled approach behind it. We’re banning this app for this reason, or these reasons, or perhaps a better approach would not be the app itself, but we’re banning this sort of practice that tech companies can do. But I think you saw like: Okay, you’ve poked us in the eye; you’ve poked our industry; we’re going to poke you back. I think because all of those companies lost access to the Chinese market, you saw a bandwagoning. They started to get on this idea of gettig on this idea of we’re also get on the anti-China rhetoric because we have a lot less to lose. I think another famous example, from this time period that we will never forget is Mark Zuckerberg running in Beijing — it was either Beijing or Shanghai. I have this picture in my mind of him jogging, and he’s famously said that he would allow Xi to name one of his children or something like that. There was a groveling to the Chinese government because they wanted access to that market.
And then I think once they realized that they wouldn’t, there was an about-face and was a like: Okay, great, let’s ban TikTok. TikTok is scary now they’re a competitor. They banned our international competitors. I understand why that rhetoric is appealing to some extent, or why it can seem logical on its surface, but it’s not a very fruitful policy. You see now, much later, China still struggles with this. Every few months there’s another app they need to ban and they’re banning it for different reasons. It’s not necessarily about competition — it’s more about censorship. It’s more about controlling the population. Although, they are very proud of the fact that they have been able to grow these domestic companies that are employing people domestically, but it’s also that those domestic companies are complying with those censorship requirements. That’s also a huge part of it, but then Clubhouse comes out and they’ve got to ban Clubhouse. There was a bunch of people a few weeks ago who are making mini programs inside WeChat and they were making mini programs with ChatGPT. Which is really cool but of course, ChatGPT is trained on the open internet, so those got squashed immediately. It’s just the never ending very laborious process, and I don’t think we want the US government to be part of that, something that’s so beautiful. Maybe I’m just a kid of globalization, and still idealistic, but I think it’s great to have this system where the vast majority of the world experiences the internet in relatively similar ways.
I think, unfortunately, we’ve seen a lot of countries that take a page out of China’s book recently. I also think, if we were to ban TikTok, what would that say to a country such as Iran, or many countries throughout the Middle East or in Africa, or basically in any part of the world. It would signal: Okay, it’s cool to do that, we’re going to take a page out of that book, and we’re going to start banning a whole host of apps as well. It’s very disturbing to see a number of lawmakers and analysts in Washington to say: Good for India. Well, because India banned TikTok and they had a wave of domestic competitors who tried to fill the gap afterwards. You also saw Meta making a big push to push their own TikTok competitors there as well. Do we really want to be copying Modi? That’s the model that we want to be following? So I just think these arguments fall apart really quickly and it’s sort of concerning to me to see that sort of rhetoric. It just seems shallow and it’s not going to go anywhere. But at this momentyou can win so many political points by being tough on TikTok, and being tough on Chinese companies in general.
TikTok in particular is so fascinating as a target, because it has a lot of cultural cachet and right now legislators are betting on the fact that sort of the biggest TikTok fans in the US are not voting or they’re not old enough to vote. I wonder if you tested that thesis, would it actually work? I live in Los Angeles, and I think about how much of the economy here sort of powered by TikTok influencers. There’s so many companies now that rely on TikTok for marketing. Whether directly or inadvertently, I think that a lot of jobs and a lot commerce flows through the app now. Especially because this arguing over TikTok has taken so long that it’s become more entrenched in American culture. It’s huge for the music industry, the fashion industry, these pillars of American culture, in many ways. And I do wonder if the effort to actually ban the app became really serious, or you saw it actually have teeth, whether or not those electorates would mobilize? Maybe not, but you’re talking about a lot of people who have a lot of influence already, and have enormous platforms to speak from. These are the kinds of people — politicians, celebrities, big multinational companies — I wonder if any of them took a stand would it become this problem where the youths are revolting against Biden or whatever? I wonder if that’s something that the Administration is considering.
On the other hand, they’re going to lose a lot of moderates if they don’t do something. Ultimately, those moderates decide elections. I think that all the TikTok influencers are probably going to vote for Biden no matter what. It’s interesting to think about what would happen if that contingent of people mobilized because what some of the other companies banning semiconductor equipment or advanced semiconductor equipment being sent to certain Chinese companies, or these more esoteric issues for a lot of people have less impact, they matter. The Biden semiconductor policies that came out in October were earth-shattering and much more strict than anyone expected and were a huge surprise and matter to a lot of companies, a lot of industries, but they don’t have that cachet or it’s not something that millions of Americans think about every single day. There’s something close to two-thirds of teens wake up in this country and look at TikTok first thing and I think it’s just really interesting that that’s become the political football.
PM: It’s similar to when Huawei was banned, not as many people have a direct connection to Huawei. It’s like: Okay, this is the infrastructure decision that’s going to affect the telecom companies and they’ll have to make some different decisions, buy products from different companies.
LM: I remember there were sad interviews where people were like: Oh, I liked my Huawei phone and I can’t get it at Best Buy anymore. Obviously, that was not the same level of importance to people. They were like: Whatever, I’m going to get a Samsung. I don’t think it was not that influential. But I do remember there was a video, or a picture, of a guy outside of Best Buy looking somewhat distraught. There was a change. But I totally agree with you.
PM: Not as significant because there’s more comparable products, then a TikTok to something else. TikTok feels it’s more unique in the social media ecosystem.
LM: I think if you asked 100 Americans: What does Huawei make or if you’ve ever seen a Huawei device? It’d be like: What? Whereas a lot of grandparents know TikTok is these days and have some awareness of it.
PM: Totally. I want to pick up on what you were saying about the banning platforms and what it means for the tech economy thing because I find it really fascinating. Especially, when you look at China and how there are other countries who are trying to mimic some of the actions that China has taken. On one hand, there is the concerning part where, yes, you are closing off access to these services, you are limiting access to other parts of the internet, to the open web, and things like that and we should be concerned about that. But then there’s another piece of it, where it does look like an economic development policy, even when we look back to Brazil or South Korea or Japan and how they use tariffs to lock out other products so that they could build domestic manufacturing industries. Especially in the case of South Korea and Japan, how that was really successful for them and developing an auto industry, or technology industries that they have today. And seeing China lock out American tech companies was felt to me in a way of developing their own kind of domestic tech industry and that was very successful for them. It’s one of the reasons why the US is targeting them in the way that they are, especially companies like Huawei and similar things, because they weren’t able to develop these domestic companies that could compete internationally. I think that there’s some other countries who look at that and say: Instead of just allowing Google or Amazon or Facebook to be the tech platforms that all the people in my country use, I would like to see domestic companies be able to compete with that to a certain degree.
LM: We want to Kakao Talk?
LM: I think it’s a really alluring idea and it makes sense. My thought is that banning is not the mechanism to do it. A lot of the time, what we’ve seen is that Facebook or Google have stumbled into these countries and made a lot of missteps, because they didn’t understand the local context very well. A good example of this is my friend, Vittoria Elliott, wrote the story about how Cambodians were using Messenger and only using voice notes because it’s really hard for them to type. That’s a perfect example. You could see a domestic competitor that made it easier to record voice notes, or just made the keyboard better or assimilated to the local language, or made it easier to type or had better options. So it’s about encouraging those domestic companies to compete in ways that the international platforms can’t. Obviously, that’s a tall order and I’m not saying it’s easy for a lot of countries to do that, but it’s a better path than banning the Open Internet.
That’s the difference. It’s one thing to have tariffs of physical goods that are being imported and it’s a little bit different when you’re talking about a website that is accessible anywhere. Maybe it’s about regulating the advertising that could happen on that platform. I think there are creative ways to do it. Often when I see the banning, the economic aspect of it is part of the political rhetoric, but the actual intent is about censorship in 99.9% of cases, the primary reason that a country is trying to do this is because of censorship. Maybe they believe that they will have better control over a local platform. The other thing that we’re seeing is in a lot of authoritarian regimes is: Screw trying to encourage a local platform that we can control and also get some economic benefits; we’re just going to force Twitter or TikTok or Meta to put people here locally. So that if they do something we don’t like and let that dissident keep talking, we’re just going to arrest their employees. That’s the sort of tactics that we see expanding a lot faster.
But I totally agree. There’s been a lot of deserved backlash to American tech companies going into markets that they don’t know much about and quickly taking over and chaos or really serious problems ensue. And Americans took that for granted, that that was a way that the world worked. It’s one thing I find really interesting is you hear from a lot of American TikTok employees, and I’m really sympathetic to how they feel. But it’s sort of surreal because they talk about: Oh, these meetings are in Mandarin and I don’t know what’s going on, or I get emails in Mandarin, or they say things I don’t understand. I just think to myself: That’s how every Google employee must feel in every country around the world. It’s like: This meeting is always in English, or they’re doing this weird American thing I don’t understand. I, myself included, took for granted that international business standards, or the way that tech companies operated, was the way that American tech companies operated. Now, American employees at companies like TikTok or Shein are realizing: Oh, this is really different. This is weird, I’m working for a Chinese company now. That is an interesting wrinkle of this whole situation that I find really fascinating because it is a turning point. A moment that a lot of people are realizing: Oh, this country just has more cultural cachet than I ever expected. Because for so long most Americans associated China with, I call them plastic widgets, all the stuff. It’s where clothing came from, or clothing that we didn’t have a lot of respect for came from.
Now it’s just interesting to see these tech exports. There’s gonna be more competition, is the way that I would put it in other markets, because we’re like: Oh, we have TikTok. That’s crazy how much TikTok has taken over the US. But I think about a company like Shein and a country like Mexico, for example, where Amazon is not nearly as entrenched and you can see Chinese companies getting a much larger market share because they understand how that market works, because it’s closer to the way that the Chinese market works. That’s going to be an interesting trend that plays out over the next few years. I have nightmares about whether the US is going to be pressuring other countries to ban TikTok or other Chinese apps that have large market share in those countries or not? Is that going to be the next battle that plays out after the telecom wars, or the chip wars that we’re seeing take place right now. That’s going to be painful and annoying, but might be interesting to see, the rise of Chinese consumer apps and other parts of the world. I think it’s an example of how the Great Firewall is porous because these companies now, are like: Oh, we have 800 million users in China, we saturated the market, we have to go to Southeast Asia or we have to go to South America to continue growing? Will the US are those other countries that have quibbles about that? Especially if they’ve seen the US ban TikTok? Or take serious action against the company?
PM: Absolutely, you can totally see that in the way that US tech companies expanded globally in the 90s and 2000s. You can definitely expect that now Chinese companies, as they have reached this level of scale, are going to try to do the same things. Whereas, in North America and Europe, we might be a bit more likely to limit some of these Chinese companies from operating in our countries. There’s going to be a lot of countries around the world that aren’t going to be so proactive in wanting to do that, or caring to do that, and will be more open to dealing with Chinese companies over American companies or won’t really have a preference, just whatever works best. You can definitely see that happening.
And I think the other piece of this is that it also feels, as you were talking about Facebook Mark Zuckerberg, the US tech companies also seem to be buying more and more into this narrative of division between the US and China as they see Chinese tech companies as competitors, to their own products, to their own services and the way that they’ve been able to grow globally over the past few decades. As you were saying, with Zuckerberg, but many of these other tech companies have been doing the same thing, being more open to these divisive policies on China or China policies that are going to restrict Chinese companies from operating in the United States, or to access chip technology or those types of things. The other piece of that being is using it to say: We are your American champions, we are around the world, this is not the right time to look at trying to break us up or limiting our activities because we are championing America and American values in the tech ecosystem. We need to compete against these big major competitors.
LM: This is the perfect example of using China to justify something else or using the threat of China to justify something else. You’ve seen the tech companies say: You can’t regulate us because then we won’t be able to compete against China, or we need to build the most advanced AI tools and bring them to market immediately, despite the risks or despite the biases of the training data. If we don’t, then China’s going to do it first. That’s the narrative you’ve seen take hold in the tech industry right now in the US, where this ambient fear about China that can be used for a lot of things. Sometimes those things are good — wanting to increase domestic innovation, wanting to invest in more research and development in the US — but I worry that using a competition framework to do that is not the best way to achieve what we want. I would love to see them say: I want to invest in research and development in the US because there’s millions of Americans who suffer from cancer and we want to alleviate that suffering or we want to bring high-speed trains. That’s never going to happen. But we want to have this —
PM: Come on! I want high-speed trains!
LM: — This great thing for Americans, because if the framework is we need to beat China, often I ask those people and I talk to these people a lot. Some of them are very smart. And you sit there and you say: So, what is winning? They’re often really dumbfounded because I’m like: What does it look like? When will we say we’ve won? Is it when China’s economy collapses in 27 days? Is it when there’s regime change? What does winning look like in a competition framework? That question is really hard to answer because there isn’t really one. If the competition ends, then all the air comes out of that. All the air comes out of that effort. If in five years or whatever China’s economy does collapse or they face serious headwinds, then do we just give up on all these research and development ideas? Do we give up on all these projects to do we turn off ChatGPT? We don’t need the crazy AI tools anymore? It’s hard to see what is the endgame of this is if the end game is not making life better for Americans, or making the world a better and safer place for everyone — pick your platitude. But I worry when these tech companies adopt this framework that is about competition and like: We have to beat China; we have to win this war, this new Cold War, as you put it, and you see that framework a lot.
But it’s really hard to see what is the logical end of that. And is the logical end of that like Google, Facebook and Amazon have more power than ever because we had to give it to them to beat China? What does that mean? Does that mean more Amazon workers are working in warehouses under a really difficult and sometimes inhumane conditions? Does that mean that Google gets all my data? Do I need to give Google my diary to ensure that they can give me the best ads possible so I don’t lose to China? When you follow these arguments to their natural conclusions, they’re really unsatisfying. In this moment, when you’re only looking at the narrow slice of what will happen next, it breeds fear and it breeds a do anything to prevent that scary outcome from happening. And I think we should really push tech companies on that, and ask them: What do you mean? What exactly do you mean? Don’t allow them to use the fear and the uncertainty and the doubt to push whatever agenda they want. That’s the danger, among others, of using the enemy to pass policies.
PM: It potentially sends us in a very different direction than if our engagement with China or other countries around the world were based on cooperation, rather than competition. Then that competition being used to justify things that we wouldn’t otherwise be okay with. But because we have to compete with China, all of a sudden, we need to just suck it up and accept it because otherwise we’re letting the enemy win.
LM: I think it’s a reasonable and justifiable thing to say: We are passing this policy because of something that China has done that we think is unacceptable. Or we’re punishing them for these human rights abuses, but usually you don’t see that rhetoric. Then what happens is, the Chinese government, or the Chinese people, sit there and say: Well, they don’t want to say it, but they’re trying to punish us. I think we need to be very specific if that is the goal. Because a lot of times when Biden passes a China policy, or something like that, lot of people sit around and say: Okay, what is the intention here? Because the intention, we just said, can’t just be to compete. To compete to do what? A lot of times, that’s how it’s talked about and it’s important to say: We’re doing this because we want to punish them for this thing we think is unacceptable, or we want to do this to help ourselve because we think that this is an important issue. Oftentimes, all of that gets muddied together and you’re left with this image that we’re running on a treadmill and the treadmill is getting faster and faster. Theoretically, we’re running against this enemy, who’s also on a treadmill somewhere else, but at the end of the day we’re stuck in our own gym, we can make it better or not. I worry that we’re not seeing these arguments in full and all of a sudden, we’re gonna wake up and be like: Well, we’ve passed a lot of really dumb stuff, or neglected a lot of policies because we were just worried about TikTok and we still don’t have the trains. We don’t TikTok anymore, but we have all these other Chinese apps and we haven’t really done anything that has made the country more resilient.
PM: As you say, framing it that we’re competing against China, it’s good politically, as you were saying earlier. It also seems that it’s good economically because instead of coming out and arguing in favor of investing in domestic manufacturing because you want to create jobs in the United States. It’s easier to come out and say: We’re going to create these jobs in the United States so they don’t go to China, or because we can’t trust Chinese companies to be able to supply us. Now, it’s not just because you’re trying to promote domestic manufacturing, domestic industry, but there’s a competition element to it as well, which helps to get more people on side with that policy.
LM: I think that’s a really good way to put it. I worry about what is the conclusion. Is the conclusion more xenophobia? Is it more racism? One of the conclusions I worry about a lot is less immigration from China here, because the best and brightest, for a long time, have rightfully wanted to study and work and do research in American institutions. I reported recently that one of the things that the Biden administration was considering was this policy where they’ve been thinking about ex-bound investments, limiting Chinese investment in American companies, just figuring out how much money do we want go to these places. One of the things they were considering was limiting investment in companies founded by Chinese nationals. That policy idea is really dangerous because we want a PhD student to come here, get a PhD in computer science, and start a cutting-edge AI company. They want to live here; they want to work here. Discouraging that because a company is not going to be able to get investment just because of the nationality of their founder I think is really dangerous. You’re already seeing a drop in the number of students who want to come here. They’re saying that they want to go to Canada, or the UK, Europe, or other parts of the world. That is just such an enormous loss. So I worry that is the sort of unintended consequence that you get when you’re not careful and specific about how you frame these things.
PM: Meanwhile, Canadian universities are like: Go for it! It’s really interesting. I think that, to some degree, it seems the Biden administration is heading down that path with the CHIPS Act and the restrictions that it put on people being able to work back and forth in China and exchanging information and intellectual work. Hopefully, it doesn’t go too much further.
To end our conversation, I wanted to talk a bit about regulation. In the United States, there’s been a lot of talk about regulating technology and, in more recent years, discussion around anti-trust. A lot of those efforts haven’t gone very far, with the Republicans taking over the House in the United States. The government will be split between the Democrats and the Republicans, so it looks as if these anti-trust measures are likely not going to move forward, at least for the next couple of years, unless the Democrats can retake power again in 2024. Meanwhile, China has been moving forward with a lot of heavy regulation on the tech industry, that’s been called a crackdown in some Western media, which targeted financial tech companies, gig companies and the working practices there, put limits on online gaming for young people. There were recent regulations targeting AI tools, as you were saying earlier. What should we make of the regulatory push in China and do you think that there any of these attempts that we should be trying to learn from instead of just kind of writing them all off as an authoritarian government cracking down on tech companies?
LM: Definitely. A lot of the regulations that you saw were extremely fascinating, and mirrored a lot of the same issues that we’ve seen in the US. I think a good example of that you said is the gig platforms. There was this amazing investigative story that went viral about delivery workers in China, and it showed. That they needed to go down the wrong way on one way streets, and needed to cross through alleys, and they were getting into accidents because of how quickly they needed to deliver orders. Then were being unfairly penalized because an elevator was broken, or something like that. That actually influenced the government to say: We need to do something here to protect workers and to make it more fair for them. That’s a good example of the things that we still see a lot of states in the US fighting over, about how to treat Uber drivers or delivery workers. There’s definitely natural problems that come from these big tech companies, especially consumer apps and the impacts that they ended up having. I think that’s because a lot of these companies had similar investors and mindsets and ways they organized themselves after startups from Silicon Valley— or they had investiments or they work together. It’s natural that the regulatory problems that come up would be relatively similar. It’s hard to generalize about the “tech crackdown” in China because there were a lot of different policy goals — cracking down on the tutoring industry was about making the education system fairer and less expensive in order to encourage people to have more children — that’s one of the many reasons they might have decided to crack down on that industry. We don’t have a parallel in the US where every single kid is paying for after school tutoring from a private company. Although, of course, plenty of rich people have private tutors.
It’s important to remember that there are fights between the government and China — especially old guard of these really big tech companies — that for a long time were much more loyal to capitalism than they were to the party. It’s sort of interesting, when you see all the rhetoric about TikTok being in the back pocket of the CCP, this is a company that irritated the government for many years. TikTok was founded by somebody who had a blog post about how banning Google and Facebook from China was a bad move. He’s not a member of the CCP. These were idealistic tech founders, who had a lot more in common with the kinds of tech founders in Silicon Valley than a lot of politicians are saying, but that doesn’t mean that they’re not under different pressure. There’s no doubt that someone like Jack Ma cannot behave the way that Elon Musk does towards US politicians We saw that he basically disappeared for two years after criticizing the government. So there’s definitely differences, but it would help everyone in the US and in the west, to look at China’s tech industry as similar to their own and after making a lot of money and growing as quickly as possible than anything else. Almost all of the data bears that out, sometimes that involves catering to the government, but it does in the US, too.
It’s important to look at that as the intention first. This crackdown, which could never have happened in such a sweeping way in the US, where the government was trying to address all of the same problems, because these companies are similar and behave similarly. A lot of our customers are similar, the upper middle class elites in big cities. Now you’re seeing a lot of tech companies in China that are targeting people in third or fourth tier cities, but it makes sense. Getting an underpaid delivery driver to get you boba tea in Shanghai is not that different than ordering a burger from Uber Eats in San Francisco. Of course, governments are going to respond similarly to trying to protect those workers. The way that that plays out, it’s going to be different if you have a different political system, but that’s how I would look at it. It’s just that there are similarities, it will be interesting to see over time how these regulations play out. Also, they’re doing some weird stuff that will be interesting to see. A good example is they’re trying to regulate algorithms. It is uclear what that means and how that will work. But a lot of the headlines at the time said: China, the first company to try and regulate algorithms. Who knows what the specifics of that will actually be, but it could be a learning opportunity for other countries to see if these regulations work, what works, what doesn’t. Obviously, collecting data about that is not going to be easy. But just sort of seeing if these help alleviate some of the problems that a lot of countries are grappling with right now.
PM: I think you’ve put it really well and even though there’s this growing rhetorical division between the West and China, we should still be looking to see what they’re doing with the tank regulations to see if there’s anything we can learn from that and to try to restrict our own tech companies over here and make them better serve the public and what we want. I remember seeing that some of those regulations were motivated a bit, as you were saying, by cracking down on this consumer sector to refocus some of the attention toward tech manufacturing and research industries. Louise, it’s been great to speak with you. It’s been great to get your perspective on China and tech and the relationship to the US and how these things are being communicated across social media, whether it’s YouTube or TikTok, or anywhere else. Thank you so much for taking the time.
LM: Thank you so much for having me!