January 19, 2022
Photo: VCG/VCG via Getty Images
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.
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.
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.
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.
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.
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.
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.
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.
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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.
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.
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.
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.
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.