Good morning. Last Wednesday, we told you to "expect the number of headlines about the U.S.-China relationship to proliferate" with everyone in Washington back from August vacation. A day later, news broke that President Joe Biden had held a 90-minute phone call with Chinese ruler President Xi Jinping (although no in-person summit appears to be in the offing). The U.S. public then learned on Tuesday that Gen. Mark Milley, the highest-ranking officer in the U.S. military, had phoned his Chinese counterpart twice between October 2020 and the 2021 presidential inauguration to assure him that the U.S. would not attack China as part of Donald Trump's effort to cling to power. Seems the humble Trans-Pacific telephone connection continues to be used in crucial, if sparing, ways.
In this week's Protocol China: a revolution in charitable giving, an anti-fraud app blocks foreign content, and Gen Z crushes on Chinese big tech.
The Big Story
Chinese charity looks a lot like Chinese big tech
Time was, charitable giving was a mere trickle in China, leading to unfounded stereotypes of China's people as charity-averse. That's no longer the case in a wealthier nation, according to reporting published today from Protocol's Zeyi Yang.
- Instead, tech megalith Tencent has transformed charitable giving with a once-a-year bonanza called 99 Giving Day.
- It's all carried out on Tencent's charity platform, a "mini-app" within the WeChat ecosystem, and is backed by hundreds of millions of parent company renminbi that are used to match user donations.
Tencent's charitable efforts are a double-edged sword. Obviously, the huge donations are welcome. But just like with news and information sites on social media, or sellers on ecommerce platforms, nonprofits now have to bend over backwards to game, and serve, platform rules.
- Nonprofit workers often spend a chunk of each year preparing for the day-long flurry of giving, honing their project pitches and reaching out to friends and contacts so they're ready to give when the starting bell sounds.
- The more nonprofits try to game the rules, the more arcane the rules on matching become, exhausting their staff and making it harder to know how much revenue will come in during the annual rush.
And donations end up going to a handful of causes. In 2020, a mere four organizations received over one-third of all donations from the big day.
- Educational charities often take the lion's share, with rights advocacy and policy advocacy organizations fighting for what's left.
- Donors get online "donation certificates" they can use to showcase their generosity to their friends; so naturally, name recognition (and the perception of government backing or approval) help, making the (comparatively) rich, richer.
But Beijing is getting what it wants. Tencent's efforts are taking on some of the heavy lifting involved in directing citizen funds into worthy causes, sparing Beijing the headache while allowing government an easier way to monitor who's fundraising for what.
- Organizations championing causes disfavored in this political moment, like LGBTQ+ rights, have had to repackage their funding drives as anti-bullying or family togetherness projects — or they risk getting booted off the platform.
Could a charitable platform like this pop up in the United States? After all, Chinese consumer tech trends often prefigure U.S. consumer tech trends these days — think livestreaming ecommerce, DTC online sales or mobile gaming, all areas where China leads.
- But when it comes to private charitable giving, the U.S. already has a thriving space, one governed by institutions, habits and tax rules that have long been locked into place.
- There's not enough of a direct business upside for Facebook or Amazon to throw resources at this.
- And speaking of arcane rules: Washington's efforts to build any sort of "common prosperity" are more likely to come via changes to the tax code than anything else.
On Protocol | China
China's big tech companies are forming unions. Really? TL;DR, they're not as worker-friendly as you might think. Protocol's Shen Lu unpacks how worker unions in China serve government interests, and explains why now is a great time for tech companies to seem pro-worker while still retaining most of the control.
A MESSAGE FROM CHECKOUT.COM
Over the last two years, many retailers have seen the benefit of investing in new, flexible payments. Despite the low-hanging fruit this opportunity presents, our research shows 60% of ecommerce merchants globally do not feel they receive enough payment insight to allow them to innovate their models. So how can businesses turn their ships around before it's too late?
Big Brother Beijing
- RIP, link-blocking. China's powerful tech regulator, the Ministry of Industry and Information Technology, announced Monday that it will penalize companies that prevent users from accessing content on rival platforms. Many of China's internet giants — frequently the biggest link-blocking offenders — were quick to publicly back the new guidelines against this long-hated practice. This pronouncement comes amid a public feud between Tencent and ByteDance in which Tencent blocked ByteDance's video application Douyin from WeChat. Who's likely to benefit? Analysts say it's the ecommerce companies: Alibaba's Taobao, ByteDance's livestreaming ecommerce arm, and vendors of "private traffic."
- An anti-fraud app is also an anti-foreign app. For months, app download charts in China have been dominated by a state-developed app: the National Anti-Fraud Center. It's supposed to help users block scam calls and report fraud, but a recent investigation by the Financial Times found that the app also labels foreign news websites like Bloomberg as "dangerous" and notifies the police if a user visits them. At least two users were called by the police to ask why they visited these websites. The Chinese government has been heavily pushing the adoption of this app, making it mandatory for government employees and even parents of schoolchildren.
Straight From China's Web
- Heavy censorship engulfs China's most prominent #MeToo case. On Tuesday, Beijing's Haidian People's Court ruled against Zhou Xiaoxuan, who sued well-known TV host Zhu Jun over sexual harassment, dismissing her claim for "insufficient evidence." Online discussions about the case were heavily censored: Weibo suspended and deactivated dozens of accounts discussing the case, and many nationalist influencers stopped attacking the plaintiff for fear of losing their accounts.
- China's Gen Z is still crushing on Big Tech jobs. A survey of over 2,700 college students in China, conducted by a media organization affiliated with the Communist Youth League, shows that 64% of Gen Z students want to work in "the internet industry" after graduating. The top three employers (across all industries) they want to work for are ByteDance, Alibaba and JD. Over 67% of those surveyed think they will make an annual salary of one million RMB (over $155,000) in their first decade of work.
- Political wars have moved onto Wikipedia. The Wikimedia Foundation announced Monday it had banned seven Chinese users and suspended the administrative access of 12 more over "infiltration" and "exploitation." In July, the Hong Kong Free Press reported that mainland Chinese Wikipedia editors were threatening to report their counterparts in Hong Kong to authorities over political disputes. "Some users have been physically harmed," Maggie Dennis, VP at the Wikimedia Foundation, wrote in the statement, but she added Wikimedia believes no personal information has been exposed.
China Goes Global
- Ximalaya officially withdrew its U.S. IPO plans on Thursday, the South China Morning Post reported. Days later, it submitted its prospectus to the Hong Kong Stock Exchange instead. Reuters reported back in May that Chinese regulators, including the Cyberspace Administration, requested the change.
- Chinese streaming shows are gaining popularity in Africa thanks to StarTimes, a Beijing-based company that provides TV infrastructure in over 30 African countries. As U.K.-based The Times reported, one of the crowd favorites is "The Untamed," a fantasy TV drama adapted from a successful gay romance novel that was a mainland hit in 2018. Meanwhile, China's entertainment industry is moving in the other direction as it clamps down on the practice of adapting gay novels.
- China's overseas influence campaign has fizzled out. Yes, there is a pro-China network of fake social media accounts in the U.S. But its attempts to mobilize Americans have so far foundered, The Wall Street Journal reported. According to U.S. security firms, thousands of inauthentic accounts on Facebook, YouTube, Twitter and other platforms have urged Asian Americans to protest against racism and unsupported allegations about the engineering of COVID-19. "The most significant features of this network remain its scale and persistence, in spite of low engagement levels," Shane Huntley, director of Google's Threat Analysis Group, told the Journal.
One More Thing
Zhihu flubs its mid-Autumn mooncakes
The Mid-Autumn Festival is next Tuesday, and people across China are readying their waistlines for the guilty consumption of high-calorie mooncakes. One pro tip: Stay away from the ones handed out by Zhihu, China's popular Q&A website. As part of an industry tradition, Zhihu gave a box of mooncakes this year to its influencers and business partners. But the food company that Zhihu outsourced to made an error, using too much maltitol in order to make "low-sugar" mooncakes, which caused many people to experience diarrhea after consumption. After it became an unappetizing online meme, Zhihu apologized publicly and recalled all the cakes.
Thanks to Theo Lebryk for contributing research.
Correction: An earlier version of this story misstated one instance when Gen. Mark Milley phoned his Chinese counterpart. This story was updated on Sept. 15, 2021.