This week, shares of China’s giant ride-hail app Didi plunged by more than 20%. A few days before, Didi had raised $ 4.4 billion. In a massive IPO in New York – the largest initial IPO of a Chinese company since Alibaba’s debut in 2014.
The immediate cause of Didi’s crash was a statement from China̵
China’s state-owned Global Times noted in an editorial Monday that Didi has the “most detailed personal travel information” for users among all major technology companies, and that the company posed a potential risk to individuals because it could conduct big data analysis of users’ habits and behaviors. .
But since when does Beijing worry about the privacy of Chinese citizens? The Chinese government is doing everything in its power to spy on them.
More likely, the massive IPO in New York triggered concern in Beijing that the United States might have access to vast amounts of personal information about where the Chinese live, work and travel – data that could threaten China’s national security.
On Wednesday, China’s antitrust regulator fined several Internet companies, including Didi, for violating the country’s monopoly law.
The new Cold War between Beijing and Washington is less about traditional weapons than about data collection, aggregation, analysis and the maximum use of it to maneuver the other side. Cyber security comes down to which side has access to more information about the other and can use it best.
This week, China also announced that it would increase regulation of overseas listed technology companies and monitor what kind of information they send and receive across the country’s borders. The official rationale: to ensure that Chinese customers are safe from cybercrime and personal data leakage. The probable cause: national security.
Politicians in Washington are almost as nervous as politicians in Beijing about the outflow of information to the other side.
Senator Marco Rubio told the Financial Times that it was “ruthless and irresponsible” for the New York Stock Exchange to let Didi sell shares. His promised concern? Protection of retired Americans.
“Even though the stock is returning, U.S. investors still have no insight into the company’s economic strength because the Chinese Communist Party is preventing U.S. regulators from reviewing the books,” Rubio said. “It jeopardizes the investments of U.S. retirees, and funneled heavy use of U.S. dollars to Beijing.”
Please. If Rubio and other U.S. lawmakers really intended to protect U.S. investors, Rubio and his colleagues would try to limit how much U.S. savings flow into China through U.S. pension funds, mutual funds, and exchange-traded funds.
Yet Chinese companies now make up the largest share of major indices for emerging markets that govern where U.S. savings move around the world. And despite the escalating geopolitical tensions, China’s allocation has grown dramatically over the last few years. Global bond indices have even added Chinese government bonds to their portfolios.
US portfolio investment in Chinese companies and government securities together could total more than $ 1 tonne by the end of 2021.
US lawmakers’ real concern for Didi and other major Chinese high-tech companies gaining a foothold in the United States is that they may be collecting boat-filled data about the United States, and yet they are accountable to the Chinese government – in other words, mirror image of Beijing’s concern .
Beijing’s and Washington’s concerns about data security are understandable. But as a practical matter, the two economies are intertwined. Officially, the Chinese economy is still state-run and communist. Unofficially, its high-tech chiefs are as capitalist – and have grown almost as rich – as their American counterparts.
Entrepreneurs and economic guides in both China and the United States understand well that the two nations together constitute the largest market in the world. They will continue to do everything they can to make money in this gigantic market, regardless of the growing techno-nationalism of their respective politicians.
This means that the most interesting conflict in the future is not between China and the United States as such. It is between business elites in both nations who seek great profits and the political elites in both nations who want to protect their countries and thus their own centers of power.