TikTok tit-for-tat? Beijing has no obvious answer to Trump’s app ban

August 3, 2020, 3:44 PM UTC

Tit-for-tat retaliation has colored the U.S.-China feud in recent years. The U.S. closes a Chinese consulate? Beijing can do that, too. The Trump administration cracks down on employees of China’s state-run media and Beijing expels U.S. journalists from the mainland. The trade war was a months-long exercise in the two superpowers hurling tariffs back and forth. But when it comes to the U.S.’s potential ban of Chinese-owned TikTok, Beijing is running low on means of payback.

On Friday, U.S. President Donald Trump said the U.S. would “immediately” ban the video sharing app TikTok from the U.S. due to data security concerns. The U.S. argues that TikTok presents a national security risk because it could funnel American user data directly to the Chinese government, an allegation that TikTok and its Beijing-based owner ByteDance deny.

Over the weekend, the Trump administration appeared to walk back the threat of a ban, as top government officials met with Microsoft as Microsoft considered a takeover of TikTok. At the same time, U.S. Secretary of State Mike Pompeo said on Sunday that a potential ban could extend to other Chinese apps like WeChat, the messaging app owned by Chinese tech giant Tencent.

On Monday, ByteDance CEO Zhang Yiming said in a leaked email to his employees that ByteDance was involved in “preliminary discussions with a tech company” in the U.S. but didn’t know “exact details” of the potential “end solution.”

At this point, TikTok seems destined for ownership by a U.S. company or to be subject to an outright U.S. ban. Either way, the Trump administration’s action against the company marks an escalation in already deteriorating U.S.-China relations. Ordinarily, Beijing has met such measures with an equal, proportionate response. But China’s ‘Great Firewall’ already blocks nearly all American social media platforms from operating on the mainland’s Internet, meaning Beijing has a limited arsenal as it considers how to retaliate.

Tit-for-tat relations

In its souring relations with the U.S., “China has a clear strategic line of resistance without escalation—as long as that remains possible,” said Greg Austin, a senior fellow for cyber, space, and future conflict at the International Institute for Strategic Studies in Singapore.

The trade war, for example, began in July 2018 when the U.S. placed 25% tariffs on $34 billion worth of Chinese imports. Beijing immediately responded with its own 25% tariffs on $34 billion worth of American imports. More recently, Beijing responded to U.S. sanctions against Chinese officials alleged to have committed human rights violations with its own sanctions against several prominent U.S. lawmakers.

But with tech, and especially a social media platform like TikTok, Beijing seems to have few options for a proportionate response because it’s long banned major U.S. social media platforms like Facebook, Twitter, and Instagram from operating within its borders.

“China frankly has limited firepower in its response [to the TikTok ban] economically,” said Shaun Rein, managing director of China Market Research Group in Beijing.

Some American tech companies like Apple and Microsoft derive some revenue from the Chinese market. Apple, for example, relies on China to both make and sell its computers and iPhones. Microsoft’s LinkedIn is one of the few America social media platforms that is not banned in China since its site there is separate from its U.S. platform; it operates as a separate joint-venture company called LinkedIn China.

Rein doesn’t expect Beijing to go after Apple or Microsoft because “the leadership of both companies have followed the law and been respectful of the government.”

He said that Beijing’s response to a TikTok ban could instead target the operations of tech firms like Google, Amazon, eBay, or Cisco that have relatively small operations in China.

Google’s platform, for example, is blocked in China, but the company still operates research and data centers in China, and Chinese companies advertise on its platform abroad. And while Amazon recently shut down its marketplace to third-party Chinese sellers, the company still has a website in China that allows Chinese consumers to purchase goods from abroad.

At least in the short term, Beijing is focused on its economic recovery from the coronavirus pandemic and “wants to show it is still open for investment from American firms,” Rein said. In fact, China’s vice president for commerce last week reassured U.S. companies that they are still welcome in China. “China doesn’t want to punish American companies,” Rein said, but it “won’t back down” from the U.S. either.

Under the surface

Ultimately, Beijing could deliver its reprisal by accelerating its shift away from American tech, an initiative that’s already underway.

Austin says firms like Microsoft and IBM “occupy a central place” in China’s tech infrastructure. He says that U.S. backlash against Chinese tech has already prompted China to speed up efforts to reduce its reliance on these firms over the last six months. The TikTok episode could further incentivize Beijing to pursue technological independence. That, in and of itself, could “hurt the ability of U.S. tech companies to sell into China,” Rein said.