What Beijing wants for the new year

Obviously, there’s no Twitter thread or Medium post where Beijing lays out its plans for 2022, but it’s still possible to gauge Chinese regulators’ attitude through policy documents and tech insiders’ observation. Spoiler alert: Don’t expect any 180-degree turns from 2021. Strict regulations are here to stay, but this time, tech companies will be more prepared.

Beijing is steadily carrying out the plans it initiated in previous years. Last year we saw Beijing draft a slew of rules that could step up its oversight on cybersecurity, privacy data and more. These rules are being formally passed now and going into effect.

• The powerful Cyberspace Administration passed two regulations, one on cybersecurity reviews and another on algorithmic recommendations, which will go into effect in February and March.
• The first regulation makes sure no Chinese tech company can list overseas without first securing approval from the state, and the second one opens a new era on how algorithms can or should be governed. Watch out, ByteDance, as the long-rumored-to-go-public company may get hit on both fronts.
• The Chinese government also unveiled the expected phase-out plan for the final year of electric vehicles subsidies and passed two regulatory lists that specify the social credit system’s scope and punitive measures. (You can read a translated version in this thread by China Law Translate.)

That’s how we expect things to go in the new year: Beijing will announce more granular restrictions in the same vein as previous ones: antitrust, privacy protection, cross-border data control. Protocol Senior Reporter Shen Lu was told the same by analysts for her 2022 preview.

• Yes, the big, abrupt changes in policy made good headlines in 2021, but they don’t mean anything until details come out on how they can be materialized in everyday regulation.
• “I anticipate regulators will contend with more technical issues, such as progressing algorithmic regulation [and] ironing out interoperability standards,” said Michael Norris, head of China Consumer & Tech Research at AgencyChina.
• We already saw this happen at the end of 2021: the November rule drafted by CAC was all about naming existing problems, mending loopholes and coordinating new regs with the old ones.

Consumer internet companies will feel the burn, while hard-tech companies can stay in regulators’ good graces. The phenomenal commercial success of companies such as Alibaba, Tencent, ByteDance and DiDi has impressed the world but also alarmed Beijing. The government will continue to shift its subsidies and favorable policies towards industries like semiconductors and smart manufacturing.

• Analyst Dan Wang wrote in his yearly review letter that Beijing much prefers the German success of cultivating high-level manufacturing talents to the U.S. model of Silicon Valley and Wall Street dominance. “Beijing … is trying to make semiconductors sexy again,” Wang said.
• Partly due to the fading favors, consumer internet companies are not doing well right now, as several of them are reportedly going through big layoffs because of slow growth and uncertain futures.
• It would be interesting to see whether these consumer internet companies will become less appealing in the job market following a winter defined by layoffs. But so far, they still command all the attention from young college graduates.

Making the MOST of China’s R&D

Since 2015, China’s Ministry of Science and Technology (MOST) has funded hundreds of research projects in bleeding-edge tech, from nanotech to semiconductors to swine flu, to enhance China’s competitiveness while also boosting national security. But what exactly does MOST see as “key” R&D? To find out, Protocol reviewed nearly 400 funded projects and grouped each into 13 broad categories:

What we found:

• The majority of projects focus on environmental protection and climate change. The Party’s focus on rural development last year renewed an emphasis on agriculture.
• The program consistently focuses on materials science and manufacturing, including research on semiconductors and optoelectronic chips for processing data.
• A slew of special projects were approved to bolster global scientific cooperation, particularly in Belt and Road countries as well as Hong Kong, Macau and Taiwan.

On Protocol | China

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Big Brother Beijing

Weibo might become state-owned soon. Bloomberg reported last Wednesday that ecommerce juggernaut Alibaba is exploring selling its 30% ownership stake in Weibo, one of China’s most influential social media platforms, to the state-owned Shanghai Media Group. According to Bloomberg, the possible changing of hands is related to the ongoing regulatory strikes to limit Big Tech’s impact on media and social media. Last year, Alibaba sold its stakes in a TV company.

Your QR code is not available right now. Amid the ongoing COVID outbreak in Chinese city Xi’an, the health code, which was once lauded as China’s main tech innovation against COVID, twice failed its real-world test. Breakdowns of the city-operated system disrupted the lives of 13 million residents, who rely on this dynamic QR code to prove their negative status and avoid quarantines. The second breakdown happened right when top officials from Beijing were visiting Xi’an to inspect the local pandemic control efforts.

Delivery worker activist was released from detention. Ten months after he was arrested by police in Beijing, the Chinese delivery worker and activist Chen Guojiang was reportedly released. While the exact reason for his arrest has never been revealed, Chen is known for organizing delivery workers against platform exploitations. On Jan. 3, Chen posted a video on WeChat where he can be seen walking on the street. The video caption reads, “I’m doing ok. How are you?”

China goes global

Chinese censorship has a long arm. An investigation by The New York Times found that Chinese authorities have used sophisticated investigative software and private data markets to track down and muzzle overseas Chinese nationals. Authorities not only go after high-profile dissidents but also hunt down ordinary people with small followings who voice their criticism of the Chinese government on Twitter or Facebook. Their families still in China are also harassed by the police as a silencing tactic, the NYT found.

Kindle’s possible exit from Chinese markets. The first Big Tech rumor of 2022 in China is whether Kindle, the Amazon reading device, is going to wave goodbye to the country. The speculation started when all but one Kindle model became out of stock on the official online store, which Amazon’s customer representative explained to Chinese media as only an inventory issue. But people are right to be skeptical, as Chinese publication BJNews reported that Amazon already laid off Kindle’s China-based hardware development team in November and is pondering a total retreat.

Tesla is not afraid of one more controversy. As most multinationals carefully navigate the topic of Xinjiang to avoid being confronted by either U.S. or Chinese governments, Tesla is sure not afraid of controversies. The electric vehicle company opened a new showroom in Xinjiang, where massive human rights violations against ethnic minorities have been reported. The move earned Tesla and Elon Musk plenty of warm welcomes on Chinese social media, where Tesla was compared to companies like Walmart that recently stopped sourcing products from the region.

Straight from China's web

ECNY gets a public app. China’s central bank on Tuesday released a trial app across app stores for its central bank digital currency, or eCNY, inching closer to a full rollout. The app allows users to manage, circulate and exchange eCNY, which was previously only available to people included in closed trials. But don’t get too excited if you are not in the 11 designated trial cities: The app still uses GPS to determine whether a user is eligible to participate in the trial.

Xiaomi’s new phone raises privacy concerns. Chinese smartphone maker Xiaomi last week released its new operating system, MIUI 13, which boasts an anti-fraud feature. According to Chinese tech publication IThome, this integrated feature is enabled by a platform developed by the Ministry of Public Security. The platform has access to private user data and can alert users of suspicious calls or apps. Some Chinese users feel protected by the app, but others are concerned about potential government surveillance. Some online chatter about the concerns appears to have been censored, according to China Digital Times, an independent site tracking Chinese censorship.

Mixed feedback to China’s first metaverse attempt. On Dec. 27, Baidu, the Chinese search engine and AI company, officially released its metaverse platform XiRang — which the company calls “the first Chinese-made metaverse product.” Baidu also hosted its annual AI industry conference (“China's first-ever metaverse technology symposium”) on the platform. But the graphics and user experience of the app have been poorly received, resulting in an average rating of 2.3 on Apple app store.

New year, new influencer

While we say goodbye to the livestream queen Viya, social media has come up with a new, rather unconventional influencer for 2022: Li Zhaoxing, China’s former foreign minister. The 81-year-old ex-official debuted his influencer career on Bilibili, China’s popular video platform, and has already accumulated 125,000 followers since Jan 1. In the 7-minute video he posted, Li talked about his experience as a foreign ministry spokesperson and his work mantra: “Don’t lie. And don’t tell the whole truth.”