This week, shares in Chinese giant Didi, a transportation app for requesting car transfers, fell by more than 20%. A few days earlier, Didi had earned more than 3.7 billion euros in a large public offering for sale (IPO) in New York which became the largest IPO of a Chinese company since Alibaba’s debut in 2014.
The immediate cause of Didi’s collapse was an announcement by the Chinese Government’s Cyberspace Administration in which they expressed their suspicions that Didi had illegally collected and used personal information of its users. In the absence of an investigation, the agency ordered Didi to stop registering new users and removed the platform from Chinese app stores.
In an editorial on Monday, the newspaper Global Times – State-owned – noted that Didi is the company with “the most detailed personal travel information” of all technology companies, and that the company poses a potential risk to people because it could perform a big data analysis on customs and behavior. of its users.
But since when has Beijing cared about the privacy of Chinese citizens? The Chinese government is doing everything in its power to spy on them.
It is very likely that the huge stock exchange in New York has made Beijing nervous to think that the United States may have access to a huge amount of personal information of Chinese citizens: where they live, where they work and where they travel. This data could threaten China’s national security.
On Wednesday, another Chinese regulatory body fined several internet companies, including Didi, for allegedly violating the country’s antitrust law.
The incipient cold war between Beijing and Washington is more about data than traditional weapons: the collection, accumulation, analysis and use of this data to the maximum to outpace the rival. Cybersecurity boils down to who has access to more information about the other and who can use it better.
This week, China also announced that it will increase regulation of foreign-listed tech companies and monitor what kinds of information they send and receive from across borders. The official justification is that they want to make sure Chinese consumers are protected from cybercrime and personal information leaks. The real reason is probably Chinese national security.
Politicians in Washington are almost as nervous as politicians in Beijing about the flow of information to the other side.
“Even if those shares recover, US investors are not aware of the financial strength of the company because the Chinese Communist Party prevents our country’s regulators from reviewing their accounting books,” Rubio said. “That jeopardizes the investments of American retirees and sends the dollars we so desperately need to Beijing.”
Please. If Rubio and other lawmakers really wanted to protect American investors, Rubio and his colleagues would try to restrict the amount of American savings that leak into China through pension funds, mutual funds, and exchange-traded funds.
However, Chinese companies currently represent the largest percentage of emerging stock indices, which determine where American savings move in the world. Despite geopolitical tensions rising in recent years, China’s allocation has grown dramatically. So much so that bond market indices have included Chinese government bonds in their equity portfolios.
Investment of portfolios of US securities in Chinese companies and government bonds of that country could exceed the € 843.3 billion by the end of 2021.
What really worries US lawmakers about Didi and other big Chinese tech companies securing their financial position in the US is that they could collect huge amounts of data on the US and continue to respond to the Chinese government, that is, the same concern that it has Beijing.
Beijing and Washington’s fears about data security are understandable. However, from a practical point of view, the two economies are intertwined. Officially, the Chinese economy remains communist and state-controlled, but unofficially the leaders of tech companies are capitalists and have become nearly equal to their American counterparts.
Entrepreneurs and finance brains in both China and the US understand well that the two nations together make up the world’s largest market. And they will continue to do their best to make money within this gigantic market, regardless of the increasingly strong technological nationalism of their respective political offices.
This means that the next most interesting conflict will not be between China and the US as such, but between the business elites of both nations who seek to generate large revenues and the political elites of both nations who want to protect their countries and, incidentally, protect their own. power centers.
Robert Reich was a former US Secretary of Labor, a professor of public policy at the University of California at Berkeley, and the author of “Saving Capitalism: For the Many, Not the Few, and the Common Good.” His most recent book, ‘The System: who rigged it and how to fix it’, has just been published in the US. He is a columnist for Guardian US.