Zhang Yiming, the founder of ByteDance, was ordered to shut down an app by Chinese regulators in 2018. Following orders, he issued a public apology and pledged to increase the Communist Party’s presence within ByteDance. Now, ByteDance is facing a similar order from the U.S. government to divest TikTok, leading to a legal battle in U.S. courts. As distrust between China and the U.S. deepens, Chinese companies like ByteDance find themselves caught between authoritarian Chinese government and a suspicious U.S. government.
Chinese companies like ByteDance, TikTok, Temu, and Shein, which are prospering in the U.S., are controlled by Chinese owners, leading to concerns over Chinese influence and connections to the government. Chinese entrepreneurs and investors are facing difficulties in finding opportunities abroad due to increasing scrutiny and national security concerns raised by countries like the U.S. Chinese businesses are struggling to navigate their connections to the Chinese government while seeking opportunities in other countries, highlighting the challenges faced by companies with Chinese ownership.
The lack of independence of Chinese companies from the government makes it difficult for the outside world to distinguish them from state-owned enterprises. ByteDance, criticized by some for enforcing censorship and spreading propaganda, has been accused of acting as an arm of Beijing’s propaganda machine while benefiting from the democratic values of the free world abroad. These concerns have fueled suspicions about TikTok’s operations, especially regarding access to user data and potential government influence.
Chinese businessmen facing challenges investing abroad due to national security concerns have resulted in self-imposed exile in other countries where they face challenges due to their Chinese nationality. Silicon Valley start-ups are wary of Chinese investors and are advising them to divest amidst increasing government scrutiny and review of foreign investment transactions. Chinese investment in the U.S. has slowed significantly, with new investment dropping to below $5 billion in 2022 from $46 billion in 2016, highlighting the chilling effect on Chinese investment in the United States.
The U.S. government’s cautious approach to Chinese investment and ownership is seen as a necessary response to the Chinese Communist Party’s national security priorities. As the world retreats from globalization, democratic countries are re-evaluating their principles and practices to balance openness and security. The influence of platforms like TikTok has made Chinese ownership a sensitive issue in the U.S., with due process taking precedence over expedited resolutions seen in China. The need to find a balance between openness and security is crucial as countries navigate the challenges posed by Chinese investment and ownership in the global economy.
