Saturday, September 18

China sets its technology firm: the communist party is above its race with the US

Big tech’s ability to accumulate power is a global problem. They turn people into users and their rights in terms of use, while for the rest of the companies their ecosystems end up looking a lot like a monopoly in which you accept their conditions or leave the network. It is a dilemma facing both Europe and the US and China. The situation in the case of the Asian giant is to have its own Silicon Valley to compete with the American one or to maintain the ascendancy of the communist party over the population. The Communist Party of China has decided to protect its power.

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The drastic change of course regarding the policy of laissez faire In recent years it has been a torpedo for the aspirations of its own sector. The Hang Seng, the technology index of the Hong Kong stock market, has fallen 40% since February after a series of movements by the government, which has slowed down its companies and prevented them from competing head-to-head with those of the US in the markets. international Those most affected have been those whose business model could alter the scale of power in Chinese society.

“The debate is the same as we have in Europe, even if it takes place in an authoritarian regime. If you remove all the autocratic and party-state veneer of the Chinese government, which is very important of course, the underlying question is the same: until to what extent large technology companies can influence the economy and society outside the control of the State, and what this can generate “, explains Mario Esteban, principal investigator of Asia-Pacific at the Elcano Royal Institute, in conversation with

Maintain financial control

If you talk about control and power, you have to talk about money. It is paradigmatic that it all started with Ant Group, a digital financial technology firm. The company runs the largest online payment system in China, but it is much more than that. A large part of its services are based on microcredits, insurance and more than 6,000 investment products that can be contracted from its app in an instant and that are approved or denied without human intervention, thanks to the large number of financial data it accumulates from each Username.

It is a company without equivalent in Western society that has caught a good part of Chinese society, adding 1,000 million users out of a total of 1,300 million Chinese citizens. Its conception was the idea of ​​the richest man in the country, the e-commerce mogul Jack Ma. Ma is also the founder of Alibaba, which is currently the seventh most valuable company in the world according to the ranking of the consulting firm Kantar.

Ant Group had prepared its IPO in Hong Kong and Shanghai for November 2020. It was expected to be the largest public purchase in history, above the one carried out by the Saudi oil company Aramco in 2019. Estimates suggested that it would achieve some 35,000 million dollars for 11% of its shares. Two days before his arrival at the parks, the Chinese authorities halted the entire operation and called Ma to order.

Shortly before Ant Group’s IPO, Ma had claimed that the Chinese banking system has become outdated and overly dependent on central institutions. That is to say, of the Communist Party. The consequence is that almost a year later Ant Group has yet to hit the trading floors, and all indications are that it won’t until it reformulates itself as one of those traditional regulator-dependent companies that Ma advocated leaving behind.

“It is the clearest example of the policy of reinforcing the Communist Party of China against other influential actors, especially in the technology sector, carried out by President Xi Jinping. And that Jack Ma has always had a very good relationship with him. party, “Esteban, from the Elcano Royal Institute, explains to

What at first seemed like an exceptional performance with a strategic company, has later been shown as the first move of a new state policy aimed at keeping these companies under control. In April 2021, that strategy continued with a historic fine against Alibaba for monopoly, of 2,800 million euros. In May, he opened an investigation into abusive practices against the entire Chinese technology staff, such as Tencent (video games and entertainment), Baidu (the Chinese Google) or ByteDance (owner of TikTok). In July came one of the hardest blows with the ban on downloading DiDi, the Chinese Uber, from the country’s app stores.

DiDi’s fall from grace also resonates as exemplary measure. The Chinese authorities assured that it was due to the transport app violating data protection. However, the veto came just after the company skipped the Communist Party’s recommendation not to list on any stock exchange other than the domestic one. A week after DiDi’s debut on Wall Street came the veto. The value of the company, which also operates in several South American countries, has plunged about 50%.

The “common prosperity”

China does not want its technology multinationals to depend financially on the outside and has made it known (DiDi, the most punished, had already received very important investments from Apple and Uber). They are national security measures similar to Trump’s vetoes against Chinese technology companies. But the actions of the Asian giant also have a depth charge aimed at defending the role of the regime before its citizens, something that has been seen in its intervention in the educational apps sector.

The digital private education sector has been very buoyant in China in recent years. The training that the State can provide is very uneven depending on the region, so many families invest in a reinforcement that comes via app. There are many of them, specialized in all subjects. Subscriptions can be large, such as the 1,000 euros a year that VipKid is worth, an app that has connected 70,000 North American teachers to teach English to Chinese children.

The regime has realized that this is a danger. You cannot build a narrative that defends meritocracy and equal opportunity if society is increasingly unequal

Claudio Feijo
– Co-director of the Sino-Hispanic campus of Tongji University (Shanghai)

“The regime has realized that this is a danger, a deep, long-term problem. It cannot build a narrative that defends meritocracy and equal opportunities if it turns out that society is increasingly unequal,” he explains to Claudio Feijoo, co-director of the Sino-Hispanic campus of the University of Tongji (Shanghai). “The case of education is very clear because clubs are set up in which people who have more money can pay for better applications, with native-American teachers. They have more opportunities.”

According to a FastData report, educational apps reached 200 million users in China. Controlling the sector is one of the measures that Xi Jinping has framed within the “common prosperity” in which he also frames the actions against big technology. However, behind this policy there is also a national security component, since the regime also considers the exposure of minors to foreign influence through these applications a threat.

Ready for “tough times”

A third leg of this change of course and in which China has also gone further than Europe or the US has been the regulation of video games. Although it has not yet imposed it, the regime has announced that it will establish a limit for minors of three hours per week of online games, which the official Chinese media define as “spiritual opium” and electronic drug. “The result was the same. , with the companies of the sector, with a lot of weight at the international level, collapsing in the stock market.

“The Chinese narrative has already set in motion a concept of Mao’s communism which is ‘the people’s struggle’. They think that in order to survive the confrontation that comes with the United States, they foresee that it will be very hard because at some point the Americans they will put all the meat on the grill and will be very aggressive “, details Feijo, also the author of the essay. The great dream of China. Techno-Socialism and state capitalism (Technos). “That is why one of the key elements for them is to be prepared; that society, especially young people, is ready for this fight. They do not want accommodative people.”

The expert explains that the measures against the “electronic drug” of video games are in line with the government’s fight against a conformist current that is spreading in Chinese society. “There is a nihilistic tendency that can be summed up with an expression that can be translated as It’s all so complicated that I pass, I throw myself to the ground, I stay lying. There is a part of the population that is being overwhelmed by extreme competitiveness and that has begun to settle for survival. The regime does not like this, “he continues.

“The Chinese government thinks that the consumerism in which the new Chinese generation has grown up is a problem. Deep down it is another of their contradictions, because they do not want accommodating people, but they do not like it to be rebellious and to criticize the system” , concludes.

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