Chinese firms will proceed to face intense scrutiny as U.S.-China tensions and competition won’t be easing anytime soon, one analyst told CNBC.
“There may be this intense geopolitical competition. Chinese firms are getting a ton of scrutiny partly due to their ties to the Chinese Communist Party,” said Lindsay Gorman, senior fellow for emerging tech on the German Marshall Fund’s Alliance for Securing Democracy, on CNBC’s “Squawk Box Asia” Tuesday.
Last Thursday, TikTok CEO Shou Zi Chew was questioned by lawmakers for five hours over the app’s ability to operate independently of its Chinese parent ByteDance.
The short-video app faces a possible ban in the usover concerns that American user data may find yourself within the hands of the Chinese government. Chew said that China-based employees at ByteDance can have access to some U.S. data from TikTok.
It’s really intense competition [between the U.S. and China]. That is why you see each side of it fighting so hard to have their very own technologies win the day.
Lindsay Gorman
Senior fellow, German Marshall Fund’s Alliance for Securing Democracy
“I believe it is vital to take a look at the broader context of the Chinese Communist Party’s efforts to interfere in democratic institutions to suppress free speech and democracies,” Gorman told CNBC.
China had said that it will “strongly oppose” a forced sale of TikTok from its parent company ByteDance, hours before Chew’s testimony before U.S. Congress.
Under the ocean
Each countries are also competing for control over subsea cables — the backbone of the web. Greater than 99% of worldwide communications are transmitted over fiber optic cables, most of them undersea.
Huawei and China Telecom have built undersea cable networks the world over.
The U.S. and China are vying for technology dominance “due to that fundamental web infrastructure,” in keeping with Gorman.
“Whoever builds the infrastructure and gains dominance in industries that we’re constructing today and for the longer term — whether that is artificial intelligence, subsea cables, or quantum information systems, those are going to be the leaders of the longer term, of the world,” said Gorman.
“That is why you see each side of it fighting so hard to have their very own technologies win the day,” she added, noting that the technological competition between the U.S. and China is “really not going away.”
The U.S., concerned about China spying on subsea cables, has reportedly obstructed several Chinese projects to construct underwater cable networks since 2020, in keeping with a Reuters.
On Monday, the U.S. Congress passed the Undersea Cable Control Act to limit countries like China “from acquiring American-made goods and technologies which are utilized in developing and supporting undersea cables.”
That basically speaks to simply how intertwined the U.S. and Chinese technological ecosystems are and have been.
Lindsay Gorman
Senior fellow, German Marshall Fund’s Alliance for Securing Democracy
“Whether it’s TikTok or a spy balloon, the U.S. has been caught flat-footed in countering Chinese influence. We will not let undersea cables grow to be one other example of that trend,” said U.S. Congressman Brian Mast, within the press release.
“We cannot empower the identical China that wishes to topple America and put communism on top to regulate some of the powerful communications tools on the planet. We must protect this infrastructure and technology that Americans depend on daily,” said Mast.
In response to the act that was passed, China’s foreign ministry spokesperson Mao Ning said: “We oppose the U.S.’ overstretching the concept of national security to hobble foreign firms and abusing state power to disrupt normal market rules and order. The pursuit of ‘competitive edge’ doesn’t legitimize bad behavior.”
‘Intertwined’
After Thursday’s TikTok hearing in Congress, Apple chief Tim Cook visited China on the weekend, where the CEO praised China’s evolution and its long-standing ties with the iPhone maker, in keeping with local media reports.
“That basically speaks to simply how intertwined the U.S. and Chinese technological ecosystems are and have been,” said Gorman, adding that U.S. firms like Apple “depend on China for amount of their operations.”
That complicates the “decoupling of the U.S. technology ecosystems from the Chinese technology ecosystems,” she said.
“These ties are obviously really tight. It isn’t going to be a, type of, one-and-done decoupling,” said Gorman.
“It isn’t going to be particularly smooth sailing and we see that with U.S. and other multinational corporations that also have very strong ties to China.”
