By Kevin Policarpo

 

Over four decades ago, China’s paramount leader Deng Xiaoping stated that the country needed to compete with the Western nations and develop four sectors, the “Four Modernizations.” These four goals set by Deng were designed to strengthen China’s agriculture, industry, science and technology, and defense sectors.

Today, China is a rising leader in multiple technological fields such as 5G distribution, AI (Artificial Intelligence), transportation, and e-commerce. China’s advances in AI will allow for its machines and industries to become more efficient and capable, making products more appealing and affordable.

However, there are concerns that China has gone beyond technological requirements and focused on invading privacy. This criticism is not just leveled at China and Chinese companies but also at U.S. companies such as Amazon and Facebook who are accused of “Surveillance Capitalism” whereby Internet and shopping activity is catalogued and utilized to gain intelligence on consumer activity and practices that can be packaged and sold to make money at the expense of personal privacy.

In China, the surveillance of people through AI and the Internet is used to spy on political activity and curtail human rights. There are concerns that China could use these intelligence gathering applications to spread its influence to other countries through their products and apps.

Concerning the fear of data abuse, a handful of states in the U.S. have enacted biometric-privacy laws to protect people’s data and information. The international organization Human Rights Watch states that technology companies “… have a human rights responsibility to ensure that their products and services do not contribute to human rights abuses, including violations of privacy and fair trial rights.”[1]

 

China and AI

China’s meteoric rise as a leader in AI was due to the abundance of available data and lax views on personal privacy. Both conditions make China “… fertile ground for highly profitable machine-learning applications.”[2] However, with China trailing behind the U.S. in expanding current AI capabilities through fundamental research, China could have a ceiling on the extent to which it can benefit from the AI revolution. In the 2021 AI Index, the U.S. is ranked 1^st while China is placed at 20^th. China’s current placement on the index is due to poor scores in its ICT (Information and Communications Technology) regulatory environment, “…software spending as a percentage of GDP and intellectual property receipts as a percentage of total trade.”[3]

In 2018, “… China’s State Council issued the Next Generation Artificial Intelligence Development Plan to establish China as the “premier global AI innovation center” by 2030, when it predicts that China’s core AI industry will be worth $148 billion, with AI-related fields ten times that.”[4] According to Adam Segal, director of the Digital and Cyberspace Policy Program at the Council on Foreign Relations, ‘significant economic and national security implications … are why Beijing is so driven to be a major player in AI.’[5] This drive to become the world leader in AI development allowed for China to open a dedicated AI school in September of 2018 and create an AI textbook series for primary and secondary students for classrooms in 2019. China hopes that in the future “… gleaming “AI Farms” like Mengdong’s will replace the nation’s polluting factories.”[6] Mengdong Technology Ltd. is a technology firm founded in Beijing.

 

Chinese AI Developments

         One of China’s recent accomplishments is the AI language software Wu Dao 2.0. The software was designed by the Beijing Academy of Artificial Intelligence (BAAI), which challenges visitors on its website to distinguish which classical Chinese writings were written by Wu Dao or 8^th century poets. Named after the Chinese word for “enlightenment”, Wu Dao can emulate humble types of speech and is powered by a neural network with 1.75trn (trillion) variables and other inputs.

Other accomplishments include JD.com possessing one of the world’s most advanced automated warehouses near Shanghai. Another is China’s “smart city” AI model produced by the Hong Kong based AI company SenseTime.  SenseTime’s AI model uses urban surveillance cameras to “… track everything from traffic accidents to illegally parked cars…”[7] SenseTime has been deployed in over 100 cities in China and overseas.

Leading the push for such technologies are five prominent Chinese AI companies. The largest of these is Hikvision, which has a market value of $60 billion. In second place is SenseTime with a market value of $28 billion. The remaining three are Zhejiang Dahua Tech., TransInfo Tech., and Bairong.[8]

China’s master plan to becoming a leader in AI development is being supported through multiple means, according to an analysis in The Economist. First is the “derisking” blueprint method. According to Huw Roberts, an Internet Institute alumnus from Oxford University[9]: “… the blueprint acts chiefly as a “seal of approval” which “derisks” assorted AI initiatives championed by central-government entities, local authorities and the private sector.”[10] In practice, the derisking involves doling out public money via “… tax breaks and subsidies, as in the “little giants” programme to nurture 10,000 promising startups across various sectors, including AI.”[11]

Another method of support comes from government procurement. While firms don’t disclose the amount of revenue they derive from their public-sector contracts, the shares the firms get are likely substantial. For example, Chinese central government and local officials use SenseTime’s surveillance technology to monitor anything that could be seen as illegal, even in poor rustbelt providences like Liaoning.

Finally, there is direct investment by the Chinese government. China’s central government runs several tech-investment vehicles to support AI companies. Local governments have also been creating their own investments, often giving out billions of dollars. One example is the coastal city of Tianjin, which announced a $16 billion AI fund in 2018. Government capital is plugging “… a gap left by foreign investors scared away by American sanctions against some of China’s AI darlings, which are seen as being too close to the Communist Party.”[12]

 

Roadblocks for China’s AI Industry

         Despite these accomplishments, China’s AI industry does have flaws that places it behind its competition in the West. While China is ahead of America in the sheer number of AI-related articles, “… China produces fewer peer-reviewed papers that have academic and corporate co-authors or are presented at conferences, both of which are typically held to a higher standard.”[13] China also ranks below India and America “… in the number of skilled AI coders relative to its population.”[14] These shortcomings are likely to continue hurting China’s AI goals, due to three factors.

First, China’s AI industry isn’t allocating its funding efficiently. It’s unclear how much of Tianjin’s $16 billion AI fund is actually being used. Not helping matters is a system created by Beijing which “… favors debt-fuelled (sic) spending and seldom punishes wastefulness.”[15] Zeng Jinghan of Lancaster University has documented multiple firms that falsely claim to be developing AI to acquire subsidies for themselves. Deloitte, a London-based consultancy, “… estimated that 99% of self-styled AI startups in 2018 were fake.”[16] Jeffery Ding of Stanford University notes:

“Such boondoggles not only burn through public cash, but also consume scarce human capital that could more usefully have been deployed elsewhere.”[17]

The second issue is China’s “… inability to recruit the world’s best AI minds, especially those working on high-level research.”[18] According to a 2020 study by Chicago-based think-tank MacroPolo, more than half of the world’s top-tier AI researchers work outside of their home countries. These particular researchers (including many Chinese ones) find Europe and the United States more appealing workplaces then China. While one-third of the world’s top minds in AI development come from China, “… only a tenth actually works there.”[19] This along with a shortage of non-Chinese researchers, greatly handicaps China’s capabilities in AI development.

Finally, Chinese companies have encountered difficulty in acquiring advanced computer chips that power AI. The problem is that advanced semiconductors “… are subject to restrictions on exports to China put in place by Donald Trump and extended by his successor as president, Joe Biden.”[20] While China is catching up to the U.S. “… in terms of manufacturing, it still struggles to master the specialised (sic) production tools that are essential for developing high-end chips, such as Electronic Design Automation (EDA) and Semiconductor Manufacturing Equipment (SME).”[21] With this restriction, Chinese companies could take years to catch up with their cutting-edge competitors, if they can pull it off at all.

These challenges will continue to hamstring China’s high-tech industries in the years to come. China’s AI businesses could stagnant, “…successfully rolling out relatively unsophisticated products while trailing Europe and America in paradigm-shifting developments of greater financial and strategic value.”[22] While efforts such as Wu Dao are attention grabbing, they have only improved an existing technology rather than break new ground, and no amount of Chinese taxpayers’ money will change that.

 

City of the Future

In China, the city of Yinchuan is emerging as a laboratory for China’s ambitions to become the leader in 5G technology. Over the past few years, “… Yinchuan has developed the use of high-definition CCTV capable of facial identification for public-security monitoring, smart street lighting with integrated electric-vehicle charging and advertising, and smart traffic lane management of the city’s highways.”[23] Another of the city’s novelties are trash cans that “… remotely alert authorities when they need emptying and facial-recognition-enabled payments for public transport.”[24] Yinchuan is planning to have 100 percent fiber-optic broadband coverage by 2020, “… connecting up to 1.25 million users to the high-speed network.”[25] In late 2017, “… Yinchuan, in conjunction with China Mobile and China Tower Corp, announced plans to build 6,400 5G base stations in the city.”[26]

Unlike more urbanized cities such as Shanghai and Beijing, Yinchuan is a blank canvas, which allows it to be a testing ground for smart technology and joint ventures between the city and private telecom companies. Peter Young, international partnerships manager at Future Cities Catapult states that, “The combination of ease of construction and ready access to hardware has meant that China has been able to experiment with smart cities …”[27] These advantages in construction and hardware availability are due to a “… combination of low levels of land-use regulation, state ownership of construction companies, access to capital and a strong manufacturing base…”[28]

While Yinchuan’s path to becoming a model 5G city will be fraught with challenges (including finding profitable business models and getting enough revenue to cover the costs of future projects), Yinchuan’s residents are experiencing what it is like to live in a futuristic city. One local, Boyang Xue “… had to put up with a problem that plagued most Chinese cities: roofless brick buildings that served as often-overflowing “trash stations,” where residents dumped their garbage.”[29] Nowadays, public bins send out signals to municipal authorities who send out workers to take out the trash. The focal point of the city’s wireless system is a municipal government center where data flows in 24/7 from sensors and CCTV cameras across the city. The data is sorted, prioritized, and sent out to where it is needed.

 

AI Surveillance

         China’s developments in robotics, e-commerce and AI have a darker side. Public security officials in the Chinese autonomous region of Xinjiang have developed a program straight out of science fiction, which can pull information from financial and health records, vehicle checkpoints and police intelligence to identify people who would commit crimes in China’s Xinjiang region.[30] At Tiananmen Square in Beijing, robots armed with stun guns patrol crowds of tourists, ready for use by officers remotely controlling them. In the provincial capital of Zhengshou in Henan Province, robots that resemble Daleks from Doctor Who roam the high-speed train station, using “… facial-recognition software to help officers identify suspects, interact with customers and answer their questions.”[31] Other examples include facial-recognition sunglasses that pick out fake IDs and identify wanted criminals and a fully automated police station driven by AI tech developed by Tencent.

These new AI technologies “… which could help fix weaknesses in China’s public security infrastructure, have also sparked concerns of misuse.”[32] However, these developments also highlight key factors in China’s lead in policing AI, namely the heavy investments in these technologies that “… as a single-party state, it can marry that technology with policing while facing fewer questions than its democratic counterparts.”[33] While most initiatives are currently small scale, AI and robotics are beneficial for the Chinese Communist Party (CCP) due to their vast population and their relatively under skilled and undermanned police force.

China’s heavy development in AI policing is also being adapted for unconventional military warfare as part of their push to be the world leader in AI development and use by 2030. AI could become a key pillar for the new Cold War brewing between China and the U.S. on trade, technology, and geopolitical influence. In various nations from America “… to Russia and American allies like Israel, military researchers are embedding AI into cybersecurity initiatives and robotic systems that provide remote surgical support.”[34]

In addition, Mary Cummings, director of the Humans and Autonomy Laboratory at Duke University and one of America’s first female naval fighter pilots points out:

“The future of AI in military systems is directly tied to the ability of engineers to design autonomous systems” that can demonstrate the ability to act and react on their own with the level of sophistication that humans bring through their knowledge and reasoning.”[35]

While the U.S. Department of Defense’s Defense Advanced Research Projects Agency (DARPA) has struggled to develop a drone that can transport troops, Cummings says, China is believed to have designed a commercial drone that can transport passengers. “The tech space is clearly leading the charge, and the military is playing catch-up,” says Toby Walsh, a professor of artificial intelligence at Sydney’s New South Wales University.[36]

 

Huawei & 5G

         China has also made major strides in rolling out 5G coverage across the country and beyond.

Swedish networking giant Ericsson predicted that there would be 190 million 5G subscriptions across the world with China being a driving force. Patrick Cerwall, Ericsson’s head of strategic marketing insights stated: “China has continued to really drive hard the uptake of 5G in terms of rollout for the networks, having devices in shops and making sure that people are then upgrading with good packages.”[37]/[38] 5G was supposed to go mainstream in 2020 but the spread of COVID caused delays.

While China suffered from the outbreak first, most areas of the country recovered with people going back to work and shopping in stores. Increasingly, 5G is becoming a must-have for Chinese shoppers. Cerwall stated that the majority of 5G subscriptions in 2020 will come from China. Meanwhile, 5G subscriptions in the U.S. and Europe will be less than what Ericsson predicted in November.

Cerwall, however, expects that areas outside of China will recover and overall 5G subscriptions will reach the company’s predictions by 2025. While the amount of China’s population that has access to 5G is higher than expected, North America will catch up within a year or two, he says. He believes that 5G will be everywhere by 2025 and that his company “… also found that fixed wireless will grow over the next five years.”[39] By the end of 2025, Ericsson predicted “… about 25% of total mobile network data traffic will come from fixed wireless access…”[40] Today, there are 50 million fixed wireless connections in the world with Ericsson predicting that it will grow to 160 million.

China’s lead in 5G distribution is due in part to companies such as Huawei Technologies which is the world’s largest telecom equipment maker.[41] Huawei, which is headquartered in Shenzhen, China, is a technology corporation that creates and sells telecommunications equipment, smart devices, and consumer electronics.

One example of China’s 5G lead is in setting up 5G antennas around Mount Everest. Huawei stated that “… the new super-fast data speeds on Everest will be used for “smart tourism”—with high-definition video streaming and virtual reality experiences for digital tourists to “visit” Everest from anywhere in the world.”[42] Huawei also stated that the new 5G network will help scientists and mountaineers (for the latter, it will provide better communication for rescues).

China has been developing this technology on Everest from Tibet, including infrastructure to make getting to base camp much easier alongside high-end guide services moving over to China’s side and 5G telecom service. The developments help to “… demonstrate the legitimacy of China’s power in Tibet, and it further turns the impoverished nation into a capital of globalization.”[43]

Huawei, the second biggest smartphone marker in the world, took the title of world’s largest telecommunications equipment provider from Ericsson in 2012. Huawei “… is also the world’s biggest maker of 5G phones, with a 36.9% market share equating to 6.9 million 5G-enabled smartphones shipped in 2019.”[44]

In terms of 5G developments, other countries have gone on to ban Huawei from setting up their 5G infrastructure. These nations include the United States which has called the company an agent of the Communist state though “Huawei denies it spies for China and has said the United States wants to frustrate its growth because no US company could offer the same range of technology at a competitive price.”[45] U.S. firms are barred “… from tapping an (Federal Communications Commission) $8.3 billion … government fund to purchase equipment…”[46] Australia banned Huawei from supplying equipment for a 5G mobile network, which was part of a deal “… to lay undersea cables to bring high-speed internet to the Solomon Islands and Papua New Guinea, but in 2018 Australia decided to fund and build the infrastructure itself.”[47] In New Zealand, service provider Spark was blocked from using Huawei 5G in 2018. This decision was due to New Zealand being “… a member of the Five Eyes intelligence-sharing network together with Australia, the United States, Britain, and Canada…”[48] In Canada, officials are reviewing the security implications of 5G networks and have not decided on allowing Huawei to provide equipment for them. The European Union declared in January 2020 that “… countries can either restrict or exclude high-risk 5G vendors from core parts of their telecoms networks, a move targeting Huawei but falling short of a US call for a complete ban.”[49]

Whether Huawei is a security risk is unclear as the UK’s MI5 suggested that Huawei’s role in 5G infrastructure could be kept to non-core parts of the network. The arguments against Huawei were more about politics then cybersecurity concerns, as the vulnerabilities in Huawei’s kit were much like other hardware and software solutions.[50] However, the Washington Post reviewed over 100 Huawei PowerPoint presentations that were marked as “confidential”. These presentations showed “… Huawei pitching how its technologies can help government authorities identify individuals by voice, monitor political individuals of interest, manage ideological reeducation and labor schedules for prisoners, and help retailers track shoppers using facial recognition.”[51]

The entire debate concerning Huawei is based on the growing tensions between China and the West. Amidst this debate, “Huawei has gone on record to state that it would “rather shut the company down” than maliciously violate the trust of its customers.”[52] This issue of trust between China and the West is center stage, with Huawei being a supporting actor in this play. It is not Huawei’s kit that is the issue, but “… it is about whether “we” trust China any more than we trust Russia when it comes to state surveillance and broader cyber-warfare capabilities.”[53]

China’s push for high-speed internet in the Himalayas may be an effort to strengthen its hold on Tibet and further militarize the Tibetan-Nepalese border. Professional climber Conrad Anker states that while the high-speed data will provide opportunities for Tibetans, a possible “… downside is the loss of cultural identity that could come with the stream of media on the internet.”[54] This is concerning to Tibetans as they have struggled to preserve their traditions and religion under China’s rule. In addition, their internet is censored by the Chinese government “… and it’s rife with alternative facts designed to hide the history of Tibet’s sovereignty before 1950.”[55]

A July 2020 report in Slate charges that:

“China’s Himalayan border is heavily militarized, and a big focus of the military activity is capturing refugees. Near Cho Oyu, the sixth-highest mountain in the world (18 miles west of Everest), a military base specifically intended to capture and sometimes kill refugees sits at 16,000 feet with a view of Nangpa La (an icy pass over the border between Tibet and Nepal). These surveillance efforts could be aided greatly by a high-mountain 5G network. In 2006, climbers on Cho Oyu filmed Chinese border guards firing assault rifles at Tibetans trying to flee China by crossing Nangpa La. Kelsang Namtso, a 17-year-old nun, was shot and killed. The footage shocked the world. But it wasn’t an isolated act. In Jonathan Green’s book about the incident, Murder in the High Himalaya, the Dalai Lama said, “They have been killing and shooting like this for years!” Green wrote of the Dalai Lama’s frustration that the West has long ignored bloodshed in Tibet.

There’s no way to know for sure what China has planned for its high-speed network in the Himalayas. Improving communications for climbers, researchers, and tourists is certainly part of it. But what other strategic purposes these 5G stations serve can only be assumed from China’s repressive and domineering record in the region. If these political implications can be validated, then it means the climbers and tourists this new technology is outwardly marketed… are merely pawns on China’s complex geopolitical chessboard.”[56]

The Slate report goes on to say that:

“Approximately 2,500 Tibetans try to flee China every year to join their leader the Dalai Lama in India where he has been in exile since 1959. In India, the Dalai Lama encourages refugees to educate themselves on their Tibetan culture, something that is not possible in Tibet, where people are imprisoned for flying Tibetan flags, singing Tibetan songs, or voicing support for the Dalai Lama. Meanwhile, China has provided incentives for Han Chinese migrants to move to Tibetan cities, further solidifying Chinese dominance in the region. The Dalai Lama has called it “cultural genocide … Developing infrastructure and amenities, including the 5G stations on Everest, serves China’s goal of Tibetan erasure. China has had a great interest in developing rural parts of Tibet since the ’90s, when it started investing billions of dollars to build roads, hotels, malls, railways, mines, and military stations to exploit resources in the region and force Tibetan herdsmen out of their rural and nomadic lives.”[57]

India has also expressed concern about the Himalayan 5G stations as 5G would allow for elevated levels of data transfer for battlefield communications and connecting to military AI and machines. China’s border along the Himalayas is heavily defended and monitored.

Validating this concern is the report that Nokia maybe replacing Huawei equipment in India, according to a Reuters report on March 11, 2022:

“Nokia (NOKIA.HE) is in talks to replace Huawei (HWT.UL) 4G radio equipment from parts of Vodafone Idea’s (VODA.NS) telecom network in India, in one of the largest swap deals for the Finnish company, three sources familiar with the matter said.

The deal will see Nokia deploying 12,000 5G-ready radio sites and 4,000 small cells in Vodafone Idea’s network in India’s capital Delhi, the sources said.

Telecom operators in India have been reducing their dependence on Huawei after certain security concerns and Vodafone Idea’s move is a blow to Huawei’s prospects in the country, telecom experts said, adding more operators may choose to replace the Chinese company as supplier.”[58]

 

Transportation

The Chinese ride-hailing service, Didi Chuxing took over Uber’s business in China in a $35 billion dollar deal. In exchange for its operations in China “… Uber will receive 5.89 percent of the newly merged firm’s assets, which is equal to a 17.7 percent economic interest in Didi Chuxing.”[59] Uber CEO Travis Kalanick stated on Facebook:

“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”[60]

Uber found it difficult to expand in China as Didi was dominating the market. Meanwhile, Didi was gaining “… worldwide attention after receiving $1 billion in investment from Apple, and later secured more than $7 billion in total.”[61] While the deal appears to represent Uber giving up on its Chinese venture, “… its investors will take a stake in the newly merged alliance with Didi, and Uber as a whole will be able to stem the massive losses it’s been suffering in the region.”[62]

In 2019, Didi Chuxing was looking to expand its global operations into Costa Rica and Japan. In Tokyo, the Chinese company set up Didi Premium which used “… luxury vehicles including Tesla, Lexus and Mercedes Benz, and is expected to expand to other big Japanese cities, Reuters reported Tuesday, citing a company source.”[63] Didi had established itself in Japan with services in Osaka, Kyoto, and Nagoya since 2018. Lin Li, Didi Japan’s Vice President talked about Didi’s presence there with China’s Xinhua Press Agency in October, stating “… that Didi Japan has the largest market share and highest rates of user satisfaction in Osaka.”[64] Didi also announced “… the official launch of its ride-hailing service in Costa Rica, its first foray into Central America.”[65]

 

Weaponizing TikTok & WeChat

There are concerns that China is weaponizing TikTok, echoing U.S. government concerns of Huawei’s growing influence and the fear of corporate espionage. TikTok is an app that allows users to produce content such as mini-videos, micro-blogs, music, lip sync videos and comedy. TikTok has grown into the world’s most popular app, having approximately 1.1 billion users around the world as of February 2021.[66] Initially, the app was named Douyin and was released by Chinese app developer ByteDance in 2016. It competed with another app called Musical.ly which focused on “… user-generated videos that combined popular songs with videos from the users (often called Musers).”[67] Douyin was later rebranded as TikTok for better international appeal and grew to over one hundred million users within a year. In late 2017, Musical.ly was acquired by ByteDance for $800 million and later merged with TikTok.

TikTok has come under suspicion because the app collects biometric identifiers and biometric information. China’s government “… has called on its biggest tech companies, including ByteDance, to “open up the data they collect from social media, e-commerce and other businesses,” according to journalist Lingling Wei.”[68] With millions of new users every month across the U.S. alone, ByteDance could give China an enormous amount of data. Recently, ByteDance “… released a “smart homework lamp,” with two built-in cameras, that monitors children as they study.”[69]

U.S. officials are worried about the amount of information China is collecting via apps such as TikTok. The U.S. has banned smartphones from Chinese companies such as Huawei but “… U.S. corporations are buying powerful computers called servers made by Chinese companies, and nearly all the smartphones that Americans buy are made in Chinese factories.”[70] Due to the mistrust that Americans have toward China, it is difficult for Americans to identify which goods from China are actual economic/national security threats and which ones are imaginary threats.

As WeChat, China’s leading social media platform is expanding into the markets of its regional neighbors, China is turning the app into a weapon of information influence. This would allow WeChat’s parent company, Tencent to “… wield propaganda power by blocking politicized messages.”[71] WeChat’s various “… payment solutions with its communication tool has fueled its popularity in other countries.”[72]

While the growth of the app in nearby regions is growing China’s soft power “… it is also sparking concerns about the emergence of a sophisticated propaganda and regional influence tool for Beijing.”[73] British public diplomacy expert Gary Rawnsley argues that WeChat “… may serve a role similar to other tools such as CGTN, China’s global TV network.”[74]     These concerns are due to Tencent’s track record on censorship and privacy, with the Chinese government collecting deleted WeChat messages from Tencent’s servers and concerns that WeChat is sharing private data with the Chinese government, and WeChat being used to spin propaganda. Concerns for WeChat’s expansion “… comes at a time when China is increasingly locked in tense ties over its overlapping periphery — in seas and in the mountains — with neighbors like India and Japan.”[75]

Bhutan, a region located in the Doklam plateau is a wild card in the ongoing dispute along the Sino-Indian border. China and India have been vying for control of the area:

“China is vying for greater influence in the country that has long relied on India for its economy and security. And while there’s no evidence to suggest WeChat can influence Bhutan’s … parliamentary elections the way Facebook was allegedly used in the U.S. in 2016, some analysts have articulated concerns over inadequate security features that leave the app vulnerable to fake news dissemination.

But the drivers of WeChat’s spread appear set to outstrip those concerns for now.

Ling Fang, a Beijing-based IT manager, travels frequently to Japan, Thailand and Hong Kong[76], and it’s clear that she prefers businesses in those countries that accept WeChat payments over those that don’t. “Convenience is the most important thing,” she says. That sentiment is hard to ignore for many. China sends a quarter of all tourists visiting Japan — more than any other nation. Last December, Japan’s Hokkaido Airport became the world’s first to have terminals connected to the WeChat Pay system.”[77]

WeChat started as a simple messenger platform, but has now “… become the home screen for many Chinese smartphone users, as almost every function can be completed from inside the app.”[78] Other popular apps in China such as JD.com, DiDi and Meituan, have mini programs on WeChat and Tencent “… takes a small slice of revenue from each of these mini programs, and also provides the payments platform.[79] WeChat is the only app in China to have over 1 billion active users, with WeChat Pay having over 900 million users and has become the most popular payment service in the country.[80]

In terms of key statistics, WeChat’s social network revenue was 108.2 billion RMB in 2020, had 1.24 billion active users in early 2021, has 3.2 million mini programs on its platform, and had forty-five billion messages sent back and forth every day in January 2019. Tencent earned $73.9 billion in 2020 and the mini programs in WeChat earned them 1.6 trillion RMB in 2020.[81] WeChat ranked in fifth place in the world’s leading social networks, with Facebook being in first place with 2.9 billion users.[82]

 

E-Commerce

         China’s largest electronics companies, Baidu, Alibaba, and Tencent (also called BAT), have provided large investments for AI companies as well as developing and using AI themselves. While each of the three companies “… has a main area of expertise—Alibaba in e-commerce, Tencent in social networking, and Baidu in search and information indexing—they are also challenging one another head-on across dozens of industries.”[83] BAT’s involvement shows how important all three companies are to China’s goal of becoming a global leader in AI development by 2030.

During China’s 24-hour Singles’ Day in 2019, Alibaba Group hit a record of $38.4 billion, beating out Amazon’s haul in the previous quarter.[84] Originally a shopping season that celebrates people who aren’t in relationships, Singles’ Day was turned into a major shopping event on November 11, 2009, becoming “… the world’s biggest online sales fest, dwarfing Cyber Monday in the United States which took in $7.9 billion last year.”[85] Singles’ Day has been replicated “… at home and abroad, with Singles’ Day promotions found at rivals such as China’s JD.com Inc and Pinduoduo Inc as well as South Korea’s 11thStreet and Singapore’s Qoo10.”[86]

JD.Com is a Chinese e-commerce company headquartered in Beijing with $114 billion in revenues in 2020.[87]  Pinduoduo is an e-commerce company focused on agriculture. In 2019, 12 million farmers provided consumers with fruits and vegetables through the company’s e-commerce network.[88]

In 2019, Singles’ Day promoted 1,000 brands during its livestream, including Apple Inc, L’Oreal SA, and Fast Retailing Co Ltd’s Uniqlo. CEO of Kung Fu Data, Josh Gardner stated that “Traffic from livestreaming is easy to convert into transactions…”[89] Tmall, a Chinese-language website for online retail, stated “… it expects over 500 million users to make purchases this year, about 100 million more than last year.”[90] Tmall has also been emphasizing promotions to target rural areas and lower-tier cities within China.

China’s Jingdong and Alibaba ranked as the 2^nd and 3^rd largest companies in the world, with Amazon in first place. Founded in 1998, Jingdong or JD.com started online trading in 2004. Today, Jingdong delivers goods through their “… high tech delivery system, comprised of robots, AI, and a fleet of drones.”[91] Currently, they are planning to construct “… drone airports, flight training and even flight control for drones who deliver goods.” As of 2020, their market capital was at $115.96 billion, their revenue was at $114.97 billion, and they had 310,000 employees working at the company.[92]

Alibaba Group Holding Ltd. specializes in e-commerce, retail, technology, and the Internet. Jack Ma founded the company in 1999, starting out with his wife and a friend to make websites. Its headquarters is in Hangzhou, China. Since then, Alibaba has grown to become the “… world’s largest retailer of present-day, operating in more than 200 countries.”.[93] As of 2020, their market value listed at $619.84 billion, their revenue reported as $71.99 billion, and they have 117,600 employees.[94]

 

Minimizing Jack Ma

         Jack Ma was removed from his executive position due to China’s crackdown on Alibaba in August, 2021. China’s Central Commission for Discipline Inspection conducted an anti-corruption investigation which brought down Hangzhou’s party secretary Zhou Jiangyong whose family had been associated with scandals involving Alibaba’s subsidiary Ant Group. This is the latest blow against Alibaba following the abrupt suspension of Ant Group’s $37 billion initial public offering (IPO) in November 2020, causing more financial issues for the company. Both Alibaba and Jack Ma were under pressure due to Ma’s “… defiant attacks on the financial regulators of China…”[95] In the past, Ma has criticized China’s regulatory system “… as being outdated and risk averse, an obstacle to the high flying, innovative tech firms that he said could bring banking to poor populations and smaller businesses that are otherwise locked out of traditional finance.”[96] The crackdown is also said to be part of China’s efforts to have more government control in the economy and lower economic inequality. This also involved a conflict with the Peoples Bank of China (PBOC):

“While PBOC is trying a market-friendly solution, Alibaba and its leader’s own words and deeds turned things into a bad direction. It is widely reported that Alibaba refused[97] to share customer information with the government, an uncooperative attitude that would certainly be interpreted by the monetary authority as arrogant and threatening. In addition, as already noted, Jack Ma publicly accused the Chinese government of overregulation over the financial sector, tempting PBOC to impose some real regulations. All these developments worsened the innate conflict between Alibaba and PBOC, which finally boiled over when Alibaba wanted to further consolidate its grip on the financial sector by through (sic) Ant Group’s IPO.”[98]

These events have caused Ma to disappear from public life as Alibaba’s market value drops, with Beijing continuing its economic crackdown.

 

Video Games

Another industry in which China is a leader is video games. While video game companies focus on building up franchises and characters from concepts, Tencent has invested in, and/or purchased major game makers. Tencent owns Riot Games, which is the studio that created League of Legends and its spin off game Teamfight Tactics. Tencent also “… owns a substantial portion of Epic Games (specifically, a 40% stake[99] ) — the North Carolina-based company behind “Fortnite,” the Epic Games Store, and the software suite that powers a huge portion of gaming (Unreal Engine).”[100] In addition, Tencent owns most of the Finnish mobile game developer Supercell (81.4% of the company according to Forbes)[101] (which made Clash of Clans, Clash Royale, and Brawl Stars) and has minority stakes in Activision and Ubisoft. Tencent is also the main company that allows the video game industry to access China. Finally, “… Tencent operates WeGame — the Chinese equivalent of Steam, the world’s largest PC gaming storefront.”[102] This is incredible when you consider that Tencent Games is one division of the main company. This allows Tencent to make “… riskier bets and make bigger investments than Nintendo, and its failures have far less direct of an impact on the overall business.”[103]

Tencent’s video games division which generates over a third of their revenue “… saw growth of 31% to 37.30 billion yuan ($5.26 billion) as people sought entertainment at home and used online multiplayer games to spend virtual time with friends.”[104] PlayerUnknown’s Battlegrounds and Honor of Kings “… topped mobile games revenue globally in March, analytics firm Sensor Tower said, reinforcing Tencent’s status as the world’s largest gaming firm by sales.”[105] The average revenue per user of China’s mobile games increased “… from 62.9 yuan in Q4 to 85.2 in Q1 as a result of limited offline entertainment options, Jason Zhou, an analyst with Guotai Junan Securities, calculated.”[106] The official name of China’s currency is the renminbi and the yuan is the basic unit of account of Chinese currency, but its also a synonym of the renminbi in international contexts.

 

Tencent Challenges Alibaba & JD

         With its incredible success, Tencent is expanding into e-commerce, producing products which will allow it to compete with Alibaba and JD.com. The company launched Minishop, which “… will allow a vendor to create an e-commerce mini-program inside WeChat using Tencent’s tool instead of relying on expensive developers.”[107] The company also stated that “… merchants won’t be charged for opening a virtual store and there will be no service charges either, potentially allowing smaller businesses to create WeChat shops.”[108] In addition, Minishops will support livestreaming, and provide merchants with “… order management services, transaction, logistics and after-sales support.”[109]

With the growing COVID pandemic in 2020, Tencent’s stock jumped up nearly 14.38% in 2020.[110] Tencent’s multiple businesses (especially its video games division) is paying dividends while singular companies like Amazon are behind. China Renaissance analyst, Alex Liu stated that “… strong deferred revenue was likely for the rest of the year and new titles, including Dungeon and Fighter Mobile, would deliver robust growth.”[111] James Mitchell, Chief Strategy Officer, and Senior Executive Vice President at Tencent[112], said that the pandemic caused businesses to focus on serving business online, which Tencent catered to.

Tencent’s overall revenue increased to 108.07 billion yuan ($15.24 billion), and their net profit rose to 28.90 billion yuan by the end of March 2020.[113] The company’s online advertising rose 32% “… with gaming and education-related ads on WeChat and its other apps helping it to buck a broader advertising downturn as the global economy reels from the pandemic.”[114] Their social media advertising revenue grew 47%, highlighting a shift in behavior due to the lockdowns, while their media ad revenue fell by 10% due to lower revenues from its video and news platforms.[115]

Tencent’s advantages “… lie in its already-massive user base plus its potential access to data, experts told CNBC.”[116] They also have WeChat Pay, which has a function called “Moments” which allows users to post videos, website links, and pictures. This feature would allow Tencent to target users with ads or other content that fits with their individual interests. The CEO of Web Presence In China (WPIC), Jacob Cooke states that:

“For instance, the platform would be able to recommend e-commerce products similar to what they see in offline purchases that consumers make via WeChat Pay.”[117]

Pedro Yip, head of retail and consumer goods practice for management consulting firm Oliver Wyman’s Hong Kong office stated in an email that “Moments” would give Tencent better insights on consumers to enhance their range selection and create a true, personalized recommendation on products for individual users.

In terms of video games, Tencent has become the largest video game company in the world:

“… Tencent is a conglomerate run by one of China’s wealthiest businessmen: Ma Huateng, better known as Pony Ma.”[118] Tencent works in various forms of media, from video games to movies, to investing “… in music services, or comic books, or e-commerce.”[119]

 

New Companies Challenge BAT

         With the power and reach of Tencent and Alibaba, it is difficult to imagine any competitors matching or even surpassing them. However, their massive growth has cost them their agility with their large amount of employees, and “… their ability to understand and respond to niche groups of consumers has diminished with size and scale.”[120]

Niche e-commerce companies such as Moguije (which became a stock listed fashion retailer) and XiaoHongShu (a platform aimed at 18 to 35-year-old Chinese females looking to find luxury projects from outside of China) have grown to have company values in the billions. Outside of e-commerce, Meituan, an up and coming ‘superapp,’ can perform “… location-based services ranging from food delivery, taxi hailing, and movie tickets to travel services.”[121] Another competitor is ByteDance, which produced TikTok. Currently, TikTok is the world’s highest valued startup “… with 20% of their 500 million users based outside of China.”[122] The success of these small companies despite the existence of Alibaba and Tencent is simple. They build competition by serving niche groups of “… consumers or businesses much better than their larger competitors.”[123]

 

Challenge to Facebook

Facebook, which had been the global leader in sharing photos, videos and links, “… now wants to be a force in messaging, commerce, payments and just about everything else you do online.”[124] This is a reaction to WeChat becoming “… the centerpiece of digital life in China, where people use it to order movie tickets, subway passes, food delivery and rides.”[125] This effort to make Facebook into a platform for everything “… could ultimately threaten established services such as Snapchat, Yelp, Venmo, eBay and even Apple and Amazon.”[126]

However, there are multiple issues for Facebook to overcome. One such issue is “… restoring user trust, following a string of privacy failures that includes the sharing of personal information from as many as 87 million users with a consulting firm affiliated with Donald Trump’s campaign.”[127] Roger Kay from Endpoint Technologies Associates stated that:

“People came to Facebook for a particular thing. Offer them a different thing, and they’re likely to re-evaluate whether they want to be there at all.”[128]

Facebook CEO Mark Zuckerberg announced “… that Facebook will now emphasize ways for small groups to communicate in a truly private fashion.”[129] These efforts include scrambling all messages in WhatsApp, Instagram Direct, and Messenger so that Facebook cannot read them, and having messages disappear after a set amount of time. Zuckerberg also said Facebook will “… build more ways for people to interact on top of that, including calls, video chats, groups, stories, businesses, payments, commerce, and ultimately a platform for many other kinds of private services.”[130]

With WeChat’s activities in various areas such as e-commerce, retail, paying bills, etc., Facebook is looking to emulate the same capabilities. While Facebook requires linking with bank accounts or services like PayPal, using its own digital currency could be attractive for users in Asia and Africa due to limited access to banking services. Gartner analyst Avivah Litan says:

“… entering credit card details on a phone is cumbersome, and businesses often lose customers before they complete orders. If Facebook can integrate payments into messaging, it can keep users within Facebook and convince advertisers they’re more likely to complete sales.”[131]

 

China Targets Automakers

At the same time, China is acquiring foreign technology to build electric cars. This transfer has allowed China to gain the technology and expertise to develop their various industries. In terms of advances in the automotive industry, China recently developed the world’s first 3D-printed car, the LSEV (Low Speed Electric Vehicle). This success was due to a “… joint venture between Chinese plastics manufacturer Polymaker and Italy-based X Electric Vehicles (XEV)…”[132] Any past improvements to China’s transportation sector “… relied on huge state-owned firms reverse-engineering foreign brands and selling them in the Chinese market for a fraction of the price, frequently inviting lawsuits and ridicule for its approach at overcoming a shortage of homegrown innovation talent.”[133]

Recently, China’s state-owned companies are “… collaborating with foreign companies and educational institutions through joint ventures or are simply acquiring niche international firms to get the external expertise they still need.”[134]

In late 2017, Chinese automotive company Zhejiang Geely Holding Co. (whose diverse transportation links include Volvo, Lotus, and the Boston-based Terrafugia)[135], was able to accelerate the development of project TF-2. TF-2 is “… Terrafugia’s modular road and air multiplatform system — essentially a new generation of flying cars.”[136]

A video shows how the concept might work for flying commuting:

https://www.youtube.com/watch?v=4o-x-p7NbPI [137]

In early 2018, EHang, Inc. partnered with Austrian aerospace group FACC to develop an autonomous passenger drone. In July 2018, China’s Aviation Industry Corporation worked with Airbus to develop a joint research lab “… to develop nano-composite materials for future aviation projects.”[138]

For years, China was accused of co-opting popular vehicle designs. The alleged appropriated designs included the Landwind X7 (which had several similarities to the Jaguar Land Rover according to Jaguar Engineer Ian Cullum), and the Chinese SCEO (which, according to BMW, was a copy of its X5 and accused Shuanghuan Auto, of such design theft). In fact, China’s “copying” reached a point in 2016 where “… U.S. marshals closed down stalls of Chinese auto manufacturers at the Las Vegas SEMA Show, after tip-offs suggesting the firms were looking to steal designs.”[139]

In addition to allegedly copying cars, China has been accused by Japan and European companies of copying their high-speed trains and train coaches:

“Beyond cars, Japan has accused China of copying its Shinkansen model for high-speed trains that now race between major Chinese cities. And European companies that shared designs of their high-speed train coaches with China before bidding for the project found Chinese firms entering the contest against them with offers that were copies of their plans.”[140]

Attracting Tesla to China

These allegations are pertinent considering China’s cooperative venture with Tesla. The goal of Tesla’s CEO Elon Musk is to have Tesla electric cars manufactured in China. This coincides with China’s growing automotive industry and push to become a major player in the development and production of electric cars. Reportedly, China offered “… Mr. Musk’s company cheap land, loans, tax benefits and subsidies. It even allowed Tesla to run its own plant without a local partner, a first for a foreign automaker in China.”[141] This deal is similar to one with Apple in which Tesla will outsource components of its Model 3 and Model Y cars to China. Tesla’s agreement with China allowed the U.S. company to use China’s adroit manufacturing supply chain and large car market to expand its business. This effort was Beijing seeking to create “… the catfish effect: Toss an aggressive fish into a pool so that the established denizens will swim harder.”[142]

The executives and engineers of China’s auto industry believe that transitioning to clean energy vehicles “… presents a similar opportunity as mobile internet did in the last decade, when Chinese companies created powerful platforms such as the mobile messaging app WeChat and the short video app TikTok.”[143] This cooperation has benefited both sides as Tesla’s Shanghai factory sourced more components from Chinese suppliers than from its Fremont (California) factory utilizing North American suppliers, thus increasing the benefit to China. Tesla stated its “… Shanghai factory bought 86 percent of outsourced Model 3 and Model Y components within China in the fourth quarter of 2020, compared with 73 percent for Tesla cars made in its California factory.”[144]/[145] Tesla’s stock price more than doubled as its production ability grew. The company’s value was $817 billion as of March, 2022.[146]

Musk has been complimentary of China as it is “… imperative to his electric vehicle company, saying it’s a ‘global leader in digitalization.’”[147] He notes that China spends substantial amounts of resources and efforts to apply the latest digital technologies in various industries. These statements acknowledge Tesla’s efforts to improve its reputation following a slew of negative press, facing “… regulatory scrutiny around its privacy and a handful of recalls in China.”[148] Musk stated that Tesla set up a data center in China to centralize all data generated from their business in China “… including production, sales, service and charging.”[149]

China’s partnership has also caused the stock for Tesla’s Chinese suppliers and other electric vehicle markers to rise. Among these companies was LK Group, which manufactures casting machines and machine tools. Headquartered in Hong Kong and founded by Liu Siong Song, LK Group started by producing machines to help factories to make cheap toys and watches. Later, Song would supply equipment “… for General Motors, and he acquired Idra, an Italian casting equipment maker, for about $5 million.”[150] In 2019, Tesla commissioned the world’s largest casting from LK, which “… Mr. Musk described as about the size of a small house, can make the rear body of a car consisting of a single piece, reducing the number of individual components and reducing costs.”[151]

Tesla Supports China’s Electric Car Component Makers

Tesla’s alternate method of producing cars “… could do for Chinese electric vehicle makers what Apple did for the … smartphone industry.”[152] Tesla’s alternate method is producing the parts and software for their cars in house, with their superior command of technology and their own supply chain supporting their infrastructure. Chinese companies supplied Apple’s iPhone by working with local brands, allowing them to copy Apple’s methods and create their own versions. By comparison, copying Tesla’s cars will be more difficult for China’s electric car makers and suppliers as they lack the necessary computer chips and the knowledge to create them. Chinese car companies lack the design experience that companies like Tesla possess. This prevents LK from producing more casting machines.

This lack of design experience led to thousands of Chinese-produced Model 3s and Model Ys lacking the quality of their American competitors.

A Chinese media outlet investigated the matter and accused Tesla’s Shanghai Factory “… of sacrificing build quality for high production volume in order to satisfy demand.”[153] One supplier admitted that their company: “’simply can’t make enough parts that meet the quality standard. It’s stressful.’ Not surprisingly, this individual wished to remain anonymous. The Chinese report also said Giga Shanghai is operating like a ‘sweatshop’ where workers must work long hours. And now Tesla VP of China, Grace Tao, has responded to these accusations:

“In strict accordance with Chinese laws and regulations, there is no phenomenon of ‘lowering quality for production.”[154]

Reducing Congestion Via Bicycles

 With traffic congestion being a major issue, municipal governments have been trying multiple methods to put people on bikes again. Among these efforts were the bicycle rental company Ofo and Mobike. Mobike set up rental stations in Shanghai, offering 299 yuan (via mobile payment) for users to ride their bikes. Ofo originally started in Peking University and later spread out to other campuses. Users wanted a cheap way to go through town and experience the freedom of cycling and for China’s government “… the bike-share boom was both an opportunity to become a world leader in climate change and also harkened back to a happier, simpler, and more harmonious time when China was the kingdom of bicycles.”[155]

However, cyclists were mostly using the sidewalks due to the continual car traffic and haphazardly parked their bikes, which clogged the sidewalks. In Beijing and Shanghai in 2017, “… there were parts of the city where streets resembled urban obstacle courses made of bikes that citizens had to clamber over and maneuver around.”[156] Eventually, the start-ups began to falter with “… instances of people not being able to recover their deposits from bike companies that went bankrupt, ominous foreshadowing for things to come for Ofo in 2018.”[157] Soon local authorities began to fine cyclists for riding on the sidewalk and bike-share companies could be fined for improperly parked bikes. The whole situation was akin to an economic bubble with a fast boom and bust period.

Mobike was “… acquired by Tencent-backed Meituan Dianping, an online-to-offline e-commerce and food delivery super-app, itself a product and survivor of the tumultuous tech landscape and the brief fad for coupon services.”[158] This new financial stability allowed Mobike to continue through today, though its bike fleet has diminished in size. In the meantime, Ofo “… was suffering dire cash flow problems, struggling to pay suppliers and keeping operations afloat, and concentrating all its efforts on putting out fires rather than growing the business.”[159] Ofo switched its focus to the domestic market (displaying their lack of financial reach and a real plan), and missed opportunities to merge with Mobike and be acquired by Didi and stands on the brink of financial ruin. Despite Ofo’s self-imposed financial situation, there are some companies that are continuing the bike-share business. This shows that there was “… always going to be a small audience for cycling—but it turned out to be a bad dream to build giant firms on.”[160]

 

China’s Growing Technological Supremacy

         Dr. Graham T. Allison, a professor of government at Harvard University states that “… treating any technology connected to China as a major crisis may itself be a risk to U.S. safety and strength.”[161] This issue confronting America is how should they approach important inventions that could come from nations that don’t necessarily share similar values as America in the future. For the last half century, the U.S. produced the most essential global technologies including computer chips, personal computer software, apps like Google, Facebook, Amazon, etc. In the future, China might play a huge role “… in online entertainment, electric vehicle technology, green energy and computer chips.”[162] Holding back such technologies isn’t possible as it could cause the U.S. to fail regarding important innovations. In addition, treating every Chinese app or software as a threat could cause American companies to lose focus on the actual, serious risks from China such as cyberattacks that steal vital and proprietary information from American companies and government sectors.

Allison argues that it could be easier for U.S. companies to compete against Chinese technology and

“… has proposed what he called a Million Talents Program to help promising foreign students stay in the U.S. and start tech companies.”[163]

David E. Sanger, a White House and national security reporter for the New York Times wrote that “… U.S. policy toward Chinese technology can appear incoherent from the outside because sanctions against Chinese firms are often announced piecemeal and Biden administration officials haven’t yet detailed a broad philosophy behind their actions.”[164] Sanger also notes there isn’t any singular policy that encompasses the U.S.’s objectives for regulating Chinese technology. The U.S. is working to boost its homegrown technologies such as “… computer chips, artificial intelligence and quantum computing before China builds dominant industries of its own.”[165] In addition, the U.S. wants to protect its citizen’s personal information and officials are concerned about “… Chinese companies such as Huawei or China Telecom controlling information across U.S. communications networks.”[166] This is part of the issue for the U.S. in figuring out which Chinese companies to block out or let in. As technology becomes more global, “… the U.S. will need to play better offense by investing in America while not automatically fearing every technology coming from China.”[167]

FBI Warns of Chinese Technology Thefts

FBI director Christopher Wray has accused “… Beijing of stealing American ideas and innovation and launching massive hacking operations.”[168] This rebuke of the Chinese government was given days prior to the start of the 2022 Winter Olympics in Beijing. Wray explained that:

“When we tally up what we see in our investigations, over 2,000 of which are focused on the Chinese government trying to steal our information or technology, there’s just no country that presents a broader threat to our ideas, innovation, and economic security than China…”[169]

He also stated that China’s economic espionage is not just harmful in pulling its companies ahead by using illegally gained technology, but that they cause grief for American workers and companies.

China’s government has denied the U.S.’s accusations, saying that “… Americans have ‘made groundless attacks’ and malicious smears about Chinese cyberattacks.”[170]

In 2014, the U.S. Justice Department “… indicted five Chinese military officers on charges of hacking into major American corporations.”[171] The next year, both countries made a deal at the White House “… to not steal each other’s intellectual property or trade secrets for commercial gain.”[172] In the following years, the U.S. continually leveled accusations at China regarding hacking and espionage. These accusations include charging “… Chinese hackers with targeting firms developing vaccines for the coronavirus and with launching a massive digital attack of Microsoft Exchange email server software and blacklisted a broad array of Chinese companies.”[173] Wray also recounted that “… a Chinese intelligence officer … was convicted of economic espionage for targeting an advanced engine by GE that China was working to copy.”[174]

In 2018, the U.S. Justice Department made an effort to “… protect academic research and innovation at American colleges and universities…”[175] While the effort was formed to counter economic espionage and protect against research theft “… critics have accused investigators of scrutinizing researchers and professors on the basis of ethnicity and of chilling academic collaboration.”[176]

Currently, the China Initiative is being reviewed by the Justice Department.

Human Rights & COVID Restrictions

Xie Yang, a human rights lawyer, was put under quarantine as his health code app went from green to red while going through airport security. He resisted going into quarantine as he “… accused the authorities of meddling with his health code to bar him from traveling.”[177] Xie believed that the Chinese Communist Party found the best model for controlling people, through the possible manipulation of his health app before he was detained in January 2022.

The COVID pandemic gave Chinese leader Xi Jinping “… a powerful case for deepening the Communist Party’s reach into the lives of 1.4 billion citizens, supporting his vision of the country as a model of secure order, in contrast to the ‘chaos of the West.’”[178] As China was able to hone its power to track and control people:

“… turning their sharpened surveillance against other risks, including crime, pollution and “hostile” political forces.”[179]

This degree of control of the Chinese population could only be accomplished through the increased use and advancement of technology.

The health code app is the main foundation of China’s anti-Covid efforts. This code allows local authorities to generate user profiles “… based on location, travel history, test results and other health data.”[180]  The code’s color determines if the holder has permission to enter buildings or public areas, enforced by officials to quarantine citizens or restrict where they can go. This code has allowed Chinese tracers to plot out where Covid carriers were previously, allowing them to stop infection chains, such as what happened in the city of Hangzhou in 2021.

While this technology and the governments intrusions have been generally supported by the public, there are concerns about China abusing this system or using it in other ways. The new health monitoring systems have been utilized to flush out criminals and opponents to the government and tracking them down via their health codes. The health code system is mandatory, as residents cannot enter public areas. Use of the new system has increased the country’s tracking capabilities.

Recently, Chinese authorities “… have expanded their definition of close contact to include people whose cellphone signals were recorded within as much as half a mile of an infected person.”[181]  In some cases, the health code was used to stop critics from working or petitioners from traveling to Beijing or other cities to lodge complaints about officials. In the city of Hangzhou, officials have used cameras to check if residents were wearing masks and monitored power consumption to check if residents were sticking to quarantine orders. Officials in Luoyang installed sensors on doors to notify officials if the quarantined residents were going out:

“By focusing on technology and surveillance, “Chinese officials may be neglecting other ways of protecting lives, such as expanding participation in public health programs, wrote Chen Yun, a scholar at Fudan University in Shanghai, in a recent assessment of China’s response to Covid.

The risk, Ms. Chen wrote, is that ‘a vicious cycle arises: People become increasingly marginalized, while technology and power increasingly penetrate everywhere.’”[182]

China has also used its increased surveillance capabilities to support their millions of people who keep an eye on sections of different communities. These people keep tabs on residential complexes and their residents. Beijing has ordered the police, and both internet and telephone companies, to share the travel history of citizens with the community workers to decide whether residents are potential carriers. Acceptance of the health measures has made the task of tracking easier for the grid workers.

Local governments across China assured people that their health code data would not be abused. However, “… many Chinese people assume that the authorities can acquire whatever information they want, no matter the rules.”[183] Former journalist Zan Aizong states that “… the expansion of surveillance could make it even easier for the authorities to break up dissenters’ activities.”[184]

Conclusion

         In conclusion, China’s developments in these technological areas are increasing both its presence and its influence around the world. The use of AI will allow for increased efficiency in the areas of surveillance and responses by officials in real time. The development of more infrastructure for 5G will allow for improved connectivity across the country, allowing for Chinese apps to spread out further. The development of electric, 3D printed cars and autonomous vehicles will grow China’s automobile industry. With its goal to become a world leader in various fields by 2030, China could become a dominant force in the global economy and leave the United States and other countries behind.

 

FOOTNOTES

[1] Ghlionn, John Mac, TikTok Is China’s Trojan Horse, Published 16 June 2021, nationalreview.com, https://www.nationalreview.com/2021/06/tiktok-is-chinas-trojan-horse/

[2] Hao, Karen, Three charts show how China’s AI industry is propped up by three companies, Published 22 January 2019, technologyreview.com, https://www.technologyreview.com/2019/01/22/137760/the-future-of-chinas-ai-industry-is-in-the-hands-of-just-three-companies/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[3] Davies, Naomi, Index shows US is winning the AI race – but for how long?, Published 10 November 2021, investmentmonitor.ai, https://www.investmentmonitor.ai/ai/ai-index-us-china-artificial-intelligence,   

[4] Campbell, Charlie, ‘AI Farms’ Are at the Forefront of China’s Global Ambitions, Published 1 February 2019, time.com, https://time.com/5518339/china-ai-farm-artificial-intelligence-cybersecurity/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[5] Ibid.

[6] Ibid.

[7] The Economist, In search of mastery, Published 22 January 2022, economist.com, https://www.economist.com/business/2022/01/22/can-china-create-a-world-beating-ai-industry

[8] Ibid.

[9] Oxford Internet Institute, Huw Roberts, https://www.oii.ox.ac.uk/people/profiles/huw-roberts/

[10] https://www.economist.com/business/2022/01/22/can-china-create-a-world-beating-ai-industry

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] He, Tian, When the chips are down: Biden’s semiconductor war, Published 27 July 2021, lowyinstitute.org, https://www.lowyinstitute.org/the-interpreter/when-chips-are-down-biden-s-semiconductor-war

[22] https://www.economist.com/business/2022/01/22/can-china-create-a-world-beating-ai-industry

[23] Halder, Ben, THE ROAD TO CHINA’S GLOBAL 5G DOMINATION IS HERE, Published 21 October 2018, ozy.com, https://www.ozy.com/around-the-world/the-road-to-chinas-global-5g-domination-is-here/89333/

[24] Ibid.

[25] Ibid.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] Ibid.

[30] Halder, Ben, China Turns to Robotic Policing, Published 30 May 2018, ozy.com, https://www.ozy.com/around-the-world/china-turns-to-robotic-policing/86559/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[31] Ibid.

[32] Ibid.

[33] Ibid.

[34] Egbejule, Eromo, WHICH MILITARY HAS THE EDGE IN THE A.I. ARMS RACE?, Published 18 July 2020, ozy.com, https://www.ozy.com/the-new-and-the-next/which-military-has-the-edge-in-the-a-i-arms-race/358014/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[35] Ibid.

[36] Ibid.

[37] Tibken, Shara, COVID-19 isn’t slowing down the 5G rollout — at least not in China, Published 16 June 2020, cnet.com, https://www.cnet.com/tech/mobile/covid-19-isnt-slowing-down-the-5g-rollout-at-least-not-in-china/?utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_medium=email&utm_source=Campaigner&utm_term=OZY

[38] Ibid.

[39] Ibid.

[40] Ibid.

[41] https://www.techradar.com/news/huawei-is-still-the-worlds-biggest-telco-equipment-vendor-at-least-by-revenue

[42] Schneider, Ari, The World’s Highest and Fastest Cell Service Could Have Geopolitical Implications, Published 29 July 2020, slate.com, https://slate.com/technology/2020/07/mount-everest-5g-china-tibet-nepal-border.html?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[43] Ibid.

[44] Winder, Davey, Huawei, 5G And Security: An Essential Guide, Published 29 January 2022, forbes.com, https://www.forbes.com/sites/daveywinder/2020/01/29/huawei-5g-and-nation-state-security-an-essential-guide/?sh=33d267211d66

[45] Reuters, Huawei UK 5G Ban: How the Chinese Brand Is Faring Around the World, Published 14 July 2020, gadgets.ndtv.com, https://gadgets.ndtv.com/telecom/news/huawei-uk-5g-ban-boris-johnson-telecom-network-involvement-around-the-world-2262713?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[46] Ibid.

[47] Ibid.

[48] Ibid.

[49] Ibid.

[50] https://www.forbes.com/sites/daveywinder/2020/01/29/huawei-5g-and-nation-state-security-an-essential-guide/?sh=271495301d66

[51] Dou, Eva, Documents link Huawei to China’s surveillance programs, Published 14 December 2021, washingtonpost.com, https://www.washingtonpost.com/world/2021/12/14/huawei-surveillance-china/

[52] https://www.forbes.com/sites/daveywinder/2020/01/29/huawei-5g-and-nation-state-security-an-essential-guide/?sh=271495301d66

[53] Ibid.

[54] Ibid.

[55] Ibid.

[56] https://slate.com/technology/2020/07/mount-everest-5g-china-tibet-nepal-border.html?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

 

[57] Ibid.

[58] Mukherjee, Supantha, Roy, Abhirup, “EXCLUSIVE Nokia set to replace Huawei gear in parts of Vodafone Idea’s India network – sources” Reuters, March 11,2022, https://www.reuters.com/business/media-telecom/exclusive-nokia-set-replace-huawei-gear-parts-vodafone-ideas-india-network-2022-03-11/#:~:text=STOCKHOLM%2FMUMBAI%2C%20March%2011%20(,familiar%20with%20the%20matter%20said.

[59] Byford, Sam, Uber is selling its China business to dominant local rival Didi Chuxing, Published 1 August 2016, theverge.com, https://www.theverge.com/2016/8/1/12339950/uber-didi-chuxing-china-merge

[60] Ibid.

[61] Ibid.

[62] Ibid.

[63] Yi, Ding, Didi Expands Global Footprint With Taxi-Hailing Services in Japan, Costa Rica, Published 20 November 2019, caixinglobal.com, https://www.caixinglobal.com/2019-11-20/didi-expands-global-footprint-with-taxi-hailing-services-in-japan-costa-rica-101485213.html

[64] Ibid.

[65] Ibid.

[66] Daniel, What is TikTok? Why Is It So Popular?, Published 1 September 2021, brandastic.com, https://brandastic.com/blog/what-is-tiktok-and-why-is-it-so-popular/

[67] Ibid.

[68] https://www.nationalreview.com/2021/06/tiktok-is-chinas-trojan-horse/

[69] Ibid.

[70] Ovide, Shira, America’s Chinese Tech Conundrum, Published 8 February 2022, nytimes.com, https://www.nytimes.com/2022/02/08/technology/china-us-tech-policy.html#:~:text=Dr.%20Allison%20told%20me%20that,China%20while%20elevating%20America’s%20own.

[71] Halder, Ben WECHAT, CHINA’S WEAPON OF MASS PROPAGANDA? Published 11 October 2018, ozy.com, https://www.ozy.com/around-the-world/wechat-chinas-weapon-of-mass-propaganda/88709/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[72] Ibid.

[73] Ibid.

[74] Ibid.

[75] Ibid.

[76] Coca, Nithin, HONG KONG IS FIGHTING BACK AGAINST A MANDARIN LANGUAGE INVASION, Published 1 July 2018, ozy.com,  https://www.ozy.com/around-the-world/hong-kong-is-fighting-back-against-a-mandarin-language-invasion/87198/

[77] https://www.ozy.com/around-the-world/wechat-chinas-weapon-of-mass-propaganda/88709/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[78] Iqbal, Mansoor, WeChat Revenue and Usage Statistics (2022), Published 11 January 2022, businessofapps.com, https://www.businessofapps.com/data/wechat-statistics/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email#:~:text=WeChat%20counts%20over%20one%20billion,in%20terms%20of%20social%20media.

[79] Ibid.

[80] Ibid.

[81] Ibid.

[82] https://www.businessofapps.com/data/wechat-statistics/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email#:~:text=WeChat%20counts%20over%20one%20billion,in%20terms%20of%20social%20media

[83] Hao, Karen, Three charts show how China’s AI industry is propped up by three companies, Published 22 January 2019, technologyreview.com, https://www.technologyreview.com/2019/01/22/137760/the-future-of-chinas-ai-industry-is-in-the-hands-of-just-three-companies/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[84] https://www.reuters.com/article/us-singles-day-alibaba-sales/alibabas-singles-day-sales-hit-record-38-billion-growth-slows-idUSKBN1XK0HD?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[85] Ibid.

[86] Ibid.

[87] https://corporate.jd.com/home

[88] https://m.pinduoduo.com/en/company

[89] Ibid.

[90] Ibid.

[91] Pajović, Stefan, 8 Largest eCommerce Companies in the World and No, Alibaba is Not the Largest Chinese eCommerce, Published 30 June 2021, axiomq.com, https://axiomq.com/blog/8-largest-e-commerce-companies-in-the-world/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[92] Ibid.

[93] Ibid.

[94] Ibid.

[95] Chen, Canghao, The Real Cause of China’s Alibaba Crackdown, Published 9 September 2021, thediplomat.com, https://thediplomat.com/2021/09/the-real-cause-of-chinas-alibaba-crackdown/

[96] He, Laura, China’s ‘unprecedented’ crackdown stunned private enterprise. One year on, it may have to cut business some slack, Published 3 November 2022, cnn.com, https://www.cnn.com/2021/11/02/tech/china-economy-crackdown-private-companies-intl-hnk/index.html

[97] Wei, Lingling, Chinese regulators try to get Ant Group to share consumer credit information, Updated 7 January 2021, cn.wsj.com, https://cn.wsj.com/articles/%E4%B8%AD%E5%9B%BD%E7%9B%91%E7%AE%A1%E6%9C%BA%E6%9E%84%E8%AF%95%E5%9B%BE%E8%AE%A9%E9%A9%AC%E4%BA%91%E7%9A%84%E8%9A%82%E8%9A%81%E9%9B%86%E5%9B%A2%E5%85%B1%E4%BA%AB%E6%B6%88%E8%B4%B9%E8%80%85%E4%BF%A1%E7%94%A8%E4%BF%A1%E6%81%AF-11609894587

[98] https://thediplomat.com/2021/09/the-real-cause-of-chinas-alibaba-crackdown/

[99] https://wraltechwire.com/2021/09/10/china-tells-tencent-40-owner-of-epic-games-to-break-from-profit-focus/#:~:text=%5BTencent%20owns%2040%25%20of%20Cary,%2C%E2%80%9D%20according%20to%20the%20report.

[100] https://www.businessinsider.in/slideshows/miscellaneous/the-biggest-game-company-in-the-world-isnt-nintendo-160its-a-chinese-company-that-has-a-piece-of-everything-from-fortnite-to-league-of-legends/slidelist/70850151.cms#slideid=70850154

[101] Perez, Matt, Tencent Buys Majority Stake in ‘Clash Of Clans’ Developer Supercell, Published 23 October 2019, forbes.com, https://www.forbes.com/sites/mattperez/2019/10/23/tencent-buys-majority-stake-in-clash-of-clans-developer-supercell/?sh=c01abe91c39b

[102] Ibid.

[103] Ibid.

[104] Li, Pei, & Goh, Brenda, China’s Tencent wins on lockdown gaming boom, Published 13 May 2020, reuters.com, https://www.reuters.com/article/us-tencent-results/chinas-tencent-wins-on-lockdown-gaming-boom-idUSKBN22P1BU?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email.

[105] Ibid.

[106] Ibid.

[107] Kharpal, Arjun, Tencent launches new online shopping feature in WeChat app, in a challenge to rivals Alibaba and JD, Published 16 July 2020, cnbc.com, https://www.cnbc.com/2020/07/16/china-tech-giant-tencent-launches-new-online-shopping-feature-in-wechat-app.html?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[108] Ibid.

[109] Ibid.

[110] Li, Pei, & Goh, Brenda, China’s Tencent wins on lockdown gaming boom, Published 13 May 2020, reuters.com, https://www.reuters.com/article/us-tencent-results/chinas-tencent-wins-on-lockdown-gaming-boom-idUSKBN22P1BU?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[111] Ibid.

[112] James Mitchell, crunchbase.com, https://www.crunchbase.com/person/james-mitchell-1a2b

[113] https://www.reuters.com/article/us-tencent-results/chinas-tencent-wins-on-lockdown-gaming-boom-idUSKBN22P1BU?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[114] Ibid.

[115] Ibid.

[116] https://www.cnbc.com/2020/07/16/china-tech-giant-tencent-launches-new-online-shopping-feature-in-wechat-app.html

[117] Ibid.

[118] Gilbert, Ben, The biggest game company in the world isn’t Nintendo – it’s a Chinese company that has a piece of everything from ‘Fortnite’ to ‘League of Legends’, Published 27 August 2019, businessinsider.in, https://www.businessinsider.in/finance/the-biggest-game-company-in-the-world-isnt-nintendo-160its-a-chinese-company-that-has-a-piece-of-everything-from-fortnite-to-league-of-legends/articleshow/70850159.cms

[119] Ibid.

[120] Greeven, Mark J., Wade, Michael R., Emerging from the shadows: The new Chinese giants aiming to unseat Alibaba and Tencent, February 2019, https://www.imd.org/research-knowledge/articles/emerging-from-the-shadows-the-new-chinese-giants-aiming-to-unseat-alibaba-and-tencent/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[121] Ibid.

[122] Ibid.

[123] Ibid.

[124] Associated Press, Facebook wants to be America’s version of China’s WeChat, Published 13 March 2019, nypost.com, https://nypost.com/2019/03/13/facebook-wants-to-be-americas-version-of-chinas-wechat/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[125] Ibid.

[126] Ibid.

[127] Ibid.

[128] Ibid.

[129] Ibid.

[130] Ibid.

[131] Ibid.

[132] Halder, Ben, FROM COPYCAT TO INNOVATOR: HOW CHINA PLANS TO WIN THE TRANSPORT RACE, Published 9 January 2019, ozy.com, https://www.ozy.com/around-the-world/from-copycat-to-innovator-how-china-plans-to-win-the-transport-race/91294/

[133] Ibid.

[134] Ibid.

[135] Geely, Our Brands, http://zgh.com/our-brands/?lang=en

[136] Ibid.

[137] https://www.youtube.com/watch?v=4o-x-p7NbPI

[138] https://www.ozy.com/around-the-world/from-copycat-to-innovator-how-china-plans-to-win-the-transport-race/91294/

[138] Ibid.

[139] Ibid.

[140] https://www.ozy.com/around-the-world/from-copycat-to-innovator-how-china-plans-to-win-the-transport-race/91294/

[141] Yuan, Li, In China, Tesla Is a Catfish, and Turns Auto Companies Into Sharks, Published 30 November 2021, nytimes.com, https://www.nytimes.com/2021/11/30/business/china-tesla-electric-cars.html

[142] Ibid.

[143] Ibid.

[144] Ibid.

[145] https://www.tesla.com/ns_videos/2020-tesla-impact-report.pdf, p.19

[146] https://companiesmarketcap.com/tesla/marketcap/

[147] Bursztynsky, Jessica, Elon Musk praises China, says Tesla will continue to expand investments there, Published 26 September 2021, cnbc.com, https://www.cnbc.com/2021/09/26/musk-praises-china-says-tesla-will-expand-investments-in-country.html

[148] Ibid.

[149] Ibid.

[150] https://www.nytimes.com/2021/11/30/business/china-tesla-electric-cars.html#:~:text=New%20New%20World-,In%20China%2C%20Tesla%20Is%20a%20Catfish%2C%20and%20Turns%20Auto%20Companies,competitive%20threat%20to%20traditional%20rivals.&text=Forty%2Dtwo%20years%20ago%2C%20Liu,make%20cheap%20toys%20and%20watches.

[151] Ibid.

[152] Ibid.

[153] Traugott, Jay, Tesla Accused Of Using Defective Parts In China, Published 2 January 2021, carbuzz.com, https://carbuzz.com/news/tesla-accused-of-using-defective-parts-in-china

[154] https://carbuzz.com/news/tesla-accused-of-using-defective-parts-in-china

[155] Huang, Frankie, The Rise and Fall of China’s Cycling Empires, Published 31 December 2018, foreignpolicy.com, https://foreignpolicy.com/2018/12/31/a-billion-bicyclists-can-be-wrong-china-business-bikeshare/?utm_term=OZY&utm_campaign=daily-dose&utm_content=Tuesday_01.18.22&utm_source=Campaigner&utm_medium=email

[156] Ibid.

[157] Ibid.

[158] Ibid.

[159] Ibid.

[160] Ibid.

[161] Ovide, Shira, America’s Chinese Tech Conundrum, Published 8 February 2022, nytimes.com, https://www.nytimes.com/2022/02/08/technology/china-us-tech-policy.html

[162] Ibid.

[163] Ibid.

[164] Ibid.

[165] Ibid.

[166] Ibid.

[167] Ibid.

[168] The Associated Press, FBI director says the threat from China is ‘more brazen’ than ever before, Published 31 January 2022, npr.com, https://www.npr.org/2022/01/31/1077174231/FBI-DIRECTOR-SAYS-THE-THREAT-FROM-CHINA-IS-MORE-BRAZEN-THAN-EVER-BEFORE

[169] Ibid.

[170] Ibid.

[171] Ibid.

[172] Ibid.

[173] Ibid.

[174] Ibid.

[175] Ibid.

[176] Ibid.

[177] Buckley, Chris, Wang, Vivian, & Bradsher, Keith, Living by the Code: In China, Covid-Era Controls May Outlast the Virus, Published 30 January 2022, nytimes.com, https://www.nytimes.com/2022/01/30/world/asia/covid-restrictions-china-lockdown.html?campaign_id=9&emc=edit_nn_20220130&instance_id=51721&nl=the-morning&regi_id=171402196&segment_id=81167&te=1&user_id=b567ce2227579aa573a67ab9c7e07c62

[178] Ibid.

[179] Ibid.

[180] Ibid.

[181] Ibid.

[182] Ibid.

[183] Ibid.

[184] Ibid.