Hello! Venture capitalist Chamath Palihapitiya’s comments on human rights violations in China have renewed a discussion about boycotting the 2022 Winter Olympics, but that’s not the only thing on Beijing’s mind. As we enter the final two-week stretch before the big event, the country is also trying to contain local omicron transmissions, with the help of technologies that we will discuss more in this newsletter. Also in this week’s Protocol China: a provincial official is being prosecuted for facilitating crypto mining, the latest CFIUS review of Chinese investment, and Tencent’s 14-hour gaming quota for the winter break.
Can QR codes + robots + surveillance tech defeat omicron?
Omicron is here. Ten Chinese cities have reported local transmission of the omicron variant of COVID-19, including Beijing, Shanghai and Shenzhen. The highly contagious variant poses a unique challenge and has some people questioning whether China may abandon its “zero-case” pandemic policy. But for now, China is doubling down on its tech-heavy pandemic control methods including QR code contact tracing, contactless robots and increased surveillance of people’s movement.
There’s a QR code for everything in China. You likely know about the “health codes” that China instated nationally in March 2020, which function as e-passports that report the real-time COVID-19 status and exposure risks. But there are many more QR codes that a Chinese person needs to keep on their phone.
- The Itinerary Pass documents which cities you’ve been to, using a cellular location tracker.
- The codes aren’t just for people: Parcels need their green QR codes too, as a delivery company started slapping QR codes on packages to reflect their disinfection history.
- Seafarers and their ships need to have separate QR codes to come into any of China’s 129 QR-code-using ports.
But all technologies can fail, despite their developers’ best intentions. Many Chinese citizens have complained about the unstable nature of QR codes and their impact, ranging from a daily annoyance to life-upending disruptions.
- Last week, the health code app in southern China’s Guangdong province crashed due to “an unusual increase” in traffic to the app, according to the 21st Century Business Herald. This incident replicated the chaos just two weeks ago in Xi’an, where a large COVID-19 outbreak triggered an extreme lockdown.
- Sometimes the app jumps the gun and determines a user is exposed to COVID-19 before it may happen. A Guangdong-based individual reported on Weibo that his health code had turned yellow (meaning “mild risk”) before he was scheduled to receive a package from abroad.
- As China’s governments continue to step up their effort to use big data for governance, the failures of health codes raise concerns about the digital competence of local governments.
And Beijing really, really doesn’t want the Olympics and omicron to tangle together. The country has created a gigantic “closed-circuit” bubble that can keep thousands of athletes, staff and journalists separate from the rest of China.
- Everyone coming from abroad is requested to install an app named “My2022” 14 days before they arrive at China’s borders. The app asks users to upload their COVID-19 status, vaccine information and more on a daily basis. But the app has also alarmed researchers due to data security loopholes.
- There are also lots of robots deployed to replace human staff and reduce transmission risks, including robots that make coffee, disinfect surfaces and nag non-mask-wearers to comply with the mask mandate, The New York Times reports.
- You can even get your lunch cooked and served by robots — that is, if you can enter the Olympics bubble.
The pandemic has boosted China’s surveillance tech industry. Responding to increased need for contact tracing and mandatory quarantines, Chinese tech companies have developed new gadgets and systems to monitor people’s movements.
- State-backed AI company CloudWalk designed a quarantine hotel management system that, among its long list of functions, analyzes surveillance camera footage to identify if any traveler or public health worker has violated the quarantine rules.
- In some cities, community workers installed smart magnetic locks on the doors of people who should be isolating at home. Every time the door is opened, the lock sends a message to notify the workers.
- These pandemic innovations fit well into China’s plan to build “smart cities,” where more aspects of daily life can be regulated with precision.
On paper, China has been a certified blockchain believer since at least 2016, when blockchain was named a “strategic, cutting-edge new technology” in the 13th Five-Year Plan. The plan called for R&D and policy initiatives to secure a “first mover advantage.” Since then, China has banned cryptocurrency trading and mining, but officials remain bullish on blockchain applications beyond digital currencies.
Still, it took a while for blockchain to stick on the radar at the powerful Cyberspace Administration of China. While CAC issued guidance for blockchain startups in 2018, it only began regularly weighing in on blockchain in 2019. Although blockchain is much more frequently mentioned now — signaling its evolution from buzzword to something more substantial — it’s still rarely the subject of CAC’s official notices. Expect more commentary from CAC in 2022 as officials and industry alike search for novel blockchain applications in business and public services.
On Protocol China
The contact-tracing app for Olympians has security flaws. “MY2022,” the app that Beijing requests all 2022 Winter Olympic Games attendees install, transmits sensitive personal data without encryption and can be used for censorship purposes, according to a security study by Toronto-based Citizen Lab. Shen Lu has more.
What’s left for China tech IPOs in 2022? After a turbulent year defined by DiDi’s IPO fiasco, Chinese tech companies are cautiously looking to return to the capital market. Zeyi Yang explains why, and highlights the most interesting Chinese IPOs you can anticipate in 2022.
A MESSAGE FROM APPIAN
Businesses need applications faster than ever before, and they need them to solve increasingly complex, sophisticated problems. This means IT teams need a more efficient way to quickly deliver powerful software and a better way to partner with their business counterparts. That’s where low-code comes in.
Coming soon from Protocol
Learn how policy is shaping tech — and how the tech industry is responding. Protocol Policy’s new newsletter is launching next week! Sign up here to get the latest info about mergers, bills, disinformation on social media, moves by tech company policy teams, action from international regulators and far more in your inbox every Monday, Wednesday and Friday.
Big Brother Beijing
A provincial official was prosecuted for facilitating crypto mining activities. Xiao Yi, former vice chairman of Jiangxi province’s Political Consultative Conference, was prosecuted on Tuesday for corruption and abuse of power, Chinese state media reported. The prosecutors said Xiao offered financial subsidies, capital investment, energy supply and judiciary protection to some crypto mining companies when he was the top party leader of a city in Jiangxi.
Big internet companies get big investment supervision. China's Cyberspace Administration plans to restrict how internet companies make and receive strategic investments. According to Reuters, the yet-to-be-released rules will require any internet platform company with more than 100 million users or more than 10 billion RMB ($1.58 billion) in revenue to apply for an approval before making or seeking any investments or fundraising. The new rules will deal a heavy blow to major firms such as Tencent and ByteDance, which are known for making generous investments to expand their business empire. Chinese tech publication 36Kr reported today that ByteDance is considering dismissing its whole strategic investment team — over 100 employees.
Beijing sets growth goals for China’s digital economy. The State Council recently issued the 14th Five-Year Plan for the development of the digital economy. The Plan proposes that by 2025, the core industries of the digital economy should account for 10% of China’s GDP, the 21st Century Business Herald reported. The digital economy made up 7.8% of the GDP in 2020. This means core industries of the digital economy will receive favorable policies in the coming years, as we explained last week.
China goes global
They are coming for Amazon and Alibaba. The second-largest ecommerce company in China, JD, and the second-largest ecommerce platform in the U.S., Shopify, have entered a new partnership. According to JD, the partnership is designed to help both sides: American sellers can source Chinese products and reach Chinese consumers more easily, while Chinese sellers can set up direct-to-consumer websites for overseas consumers. It seems a clear move to challenge Amazon and Alibaba’s dominance in cross-border ecommerce flows.
New CFIUS review on Chinese investment. The latest target of the Committee on Foreign Investment in the U.S. is an aviation manufacturing deal: The Wall Street Journal reported Tuesday that CFIUS in November started reviewing Shanghai Pudong Science and Technology Investment's (PDSTI) investment in California-based Icon Aircraft. A group of American minority shareholders, including the company’s two co-founders, urged CFIUS to look into the security concerns of PDSTI transferring aviation technology to the Chinese military.
Straight from China's web
NFT buyers in Hong Kong are being hacked and scammed. Owners of the Hong Kong-based NFT project Monkey Kingdom — think CryptoPunks, but for an Asian audience — have lost $1.3 million in a phishing-link hack. As the growing popularity of NFT in local circles meets the lack of regulation, it lets scammers and hackers run wild in the blockchain world, the South China Morning Post reported.
You only have 14 hours of gaming time left. This winter, Tencent is only allowing China’s young gamers to play 14 hours of games in a month. In a statement issued Monday, Tencent said all of its games will only be open to users under 18 from 8 p.m. to 9 p.m. daily on Fridays, Saturdays, Sundays and legal holidays — a total of 14 days — during the monthlong winter break. Tencent cited last summer’s rules from the General Administration of Press and Publication for the restrictions.
On our radar
CATL launches instant EV battery-swap services. CATL, the world’s largest battery supplier, has rolled out a battery-swap service for electric vehicles called EVOGO, which it said would allow drivers to change car batteries within 60 seconds. The battery-maker will pilot swap stations in 10 cities around China, and customers can access the battery-swapping service via an app, according to Chinese financial publication Yicai Global. Compared with charging at one of China’s 2.6 million charging stations across the country, battery-swapping is still a niche charging method even in China, let alone the U.S.
One more thing
People are already counting down the days before the Chinese New Year, which falls on Feb. 1. In this meme that went viral on Weibo, six Chinese tech workers who appear as Teletubbies have reached a consensus that any substantial work should “wait until after the New Year.” Don’t tell my boss, but I very much agree with them.