Good morning. In this week’s Protocol | China: Beijing refocuses on economic growth, livestreamers pretend to be laid off, and reporters unearth a huge deal between Apple and Beijing.
Rethinking the clampdown
Beijing shared meeting notes from this week’s meeting of its 25-member Politburo, the South China Morning Post reported Tuesday. What isn’t there is as revealing as what is.
- Not mentioned: antitrust.
- Also not mentioned: the “disorderly expansion of capital.”
The regulatory mood may now be changing, at least a little. In last year's end-of-year meeting notes, those words were used, and they preceded a hyperactive 12 months for Chinese regulators, particularly when it came to clamping down on Big Tech. This new slate of notes, which again emphasizes technological “self-reliance” and name-checks supply-chain resilience, could signal that 2022 won’t have quite as many crackdowns.
This isn’t backing off; it’s baking in. With Beijing having made so many changes it viewed as necessary in 2021, authorities may be getting (relatively) satisfied with the new status quo they’ve forged.
Still, it could give comfort to foreign investors. They’re largely uninterested in whether Beijing has done the “right” or “wrong” thing, only whether China presents a stable investment environment with rules businesses can predict and rely on.
- Singapore sovereign wealth fund Temasek recently said it was holding off on investing in China “till we have a little bit more regulatory clarity in that space." The coming year could provide a bit of that.
- Other investors, of course, have been forging ahead regardless. (We’re looking at you, BlackRock).
On Protocol | China
How Hollywood lost China. U.S. films still mint a lot of cash in Chinese box offices, and U.S. IP of all kinds is far better protected than it was 20, or even 10, years ago, when China was a known haven for piracy. But that’s actually meant less exposure to U.S. content among China’s web-surfing masses, with long-term implications on how the West will be viewed and understood. Zeyi Yang has more.
Chinese ed-tech firms’ poignant pivots. With ed tech all but banned in China under Xi’s 2021 order, once-valuable ed-tech companies are scrambling to pivot, pursuing everything from agriculture to garment-making to running coffee houses. Shen Lu has the story.
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Straight from China's web
New thing: pretending to be laid off. Several Chinese tech companies, including ByteDance, are reportedly going through harsh layoffs right now. As Chinese publication Shangye Shuju Pai reported, some former tech employees have posted videos that walk through their layoff experiences, and the attention these videos got can help them launch an influencer career on social media. There’s one caveat: It’s hard to tell whether some influencers are really laid off or just faking it.
Bilibili will soon offer livestreaming ecommerce. According to Chinese tech publication 36Kr, the video platform is beta-testing a feature called “little yellow cart” that allows users to shop while watching livestreams. Bilibili also acquired a license to operate mobile payment services in November, believed to be related to its ecommerce plans.
Tencent won a government blockchain contract. A publicly available government procurement document shows that Tencent Cloud and Tencent-backed Chinese computing chips company Baecsense (yep, that’s its real name) jointly won a contract from a Beijing municipal agency to build the city government’s blockchain computing infrastructure. The contract amounts to $37.3 million.China goes global
Facebook busts a Chinese misinformation operation. Meta announced last Wednesday it had deleted over 500 Facebook accounts, Instagram accounts and chat groups used by a China-based misinformation operation, Reuters reported. The influence campaign spread claims made by a fake Swiss biologist who said the U.S. was pressuring the World Health Organization scientists studying the origins of COVID-19. Meta identified a private Chinese company, Sichuan Silence Information Technology Company, as well as individuals associated with Chinese state infrastructure companies as behind the operation.
Microsoft links hacking activities to a China-based group. Microsoft announced Monday that it had seized 42 websites from a China-based hacker group after having tracked the group since 2016. Named Nickel, the collective is said to be targeting governments, diplomatic entities and NGOs across Central and South America, the Caribbean, Europe and North America. Microsoft did not elaborate on the group’s link to China but said the hackers have been using compromised Microsoft 365 credentials to collect emails.
A major Tencent gaming studio opens another overseas branch. Tencent’s TiMi Studio, the developer behind hit game Honor of Kings and Call of Duty Mobile, is opening a new studio in Singapore, the South China Morning Post’s Josh Ye reports. It will be TiMi’s fourth overseas studio after Los Angeles, Seattle and Montreal; all three were opened in the past two years.
U.S.-sanctioned SenseTime launches a Hong Kong IPO. The facial recognition unicorn is seeking to raise $767 million on the Hong Kong Stock Exchange on Tuesday, according to Nikkei Asia. It’s a downsized IPO plan compared with SenseTime’s previous $2 billion IPO ambition.
Big Brother Beijing
When is encrypted messaging OK? When it’s made for Beijing. Party-backed tabloid Global Times reported last Wednesday that a Chinese company called Lanxin has developed an encrypted messaging and office collaboration tool for government agencies and state-owned enterprises. The platform will prohibit users from copying, taking screenshots or transferring internal documents to external apps. Lanxin’s CEO told Global Times that his company has been deployed by more than 8,000 super-large government and enterprise organizations.
Apple inked a secret $275 billion deal with China. Apple is one of the few American tech giants still prospering in China, and that is partly due to a secret deal worth more than $275 billion that Apple made with Beijing, according to a blockbuster report by The Information. Tim Cook reportedly forged a five-year agreement when he visited China in 2016 to help China develop its manufacturing capacity, train talent and fund research. One document said the deal would end in 2021 but could automatically extend to May 2022 if neither side objected.
DiDi bids farewell to the United States. As expected, China’s car-hailing giant DiDi announced last Thursday that it was planning to de-list from the New York Stock Exchange and seek a Hong Kong listing, triggering a massive sell-off of U.S.-listed Chinese stocks.
Multiple fines for Douban. It turns out, there’s a price for maintaining an online platform that still encourages (some) free discussion. On Dec. 1, the Cyberspace Administration of China announced it has fined popular social media service Douban for insufficient content moderation — the 20th time it’s done so this year. The administration also disclosed that Douban has been fined a total of $1.4 million in 2021. Back in October, Protocol | China zoomed in on the fate of one particularly popular group on Douban and how it became a target for Beijing. Douban’s not a tech giant, and even $1.4 million in penalties likely hurts.
On our radar
Alibaba reshuffles its management. In an internal letter to the company, Alibaba’s CEO Daniel Zhang announced several high-level management changes at the company. Jiang Fan, once a rising star in the company who led Alibaba’s transition into the mobile internet era, will become head of its international ecommerce arm. Trudy Dai, an Alibaba co-founder, will take control of all of Alibaba’s domestic ecommerce platforms, including Taobao, Tmall and its enterprise businesses.
One more thing
The metaverse and “lying flat” are China’s top 2021 memes. The metaverse (元宇宙) is one of the global tech sensations of 2021 (and one where China has an awful lot of advantages). The Chinese phrase “lying flat” (躺平) has become ubiquitous enough that government officials have tried (futilely) to warn against its use. So it’s not surprising that these are officially among the most popular phrases in China, according to a list of top 10 internet slang phrases of 2021 released by The National Language Resources Monitoring and Research Center, part of the country’s education ministry.