President Joe Biden and President Xi Jinping appear on a screen in Beijing
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The US-China information freeze begins to thaw

Protocol China

Good morning. In today's newsletter: The "information winter" thaws, China crypto heads to Singapore, and Chinese gaming studios move in on Montreal.

A thaw in China's 'information winter'

Hours after Joe Biden and Xi Jinping held an hours-long Monday night telesummit to cool tensions, Chinese media reported the existence of a skeletal, bilateral media access agreement, negotiated prior to the meeting, that would reinstate expelled reporters and ease some onerous visa restrictions that Washington and Beijing have imposed on visiting journalists from the other country.

There are a ton of caveats, as there usually are in any agreement with Beijing.

  • Key terms in the Chinese text like "current resident reporter" (现任常驻记者) aren't defined, and the agreement's applicability to Hong Kong is unclear, making it hard to know who from the West can actually return to report in China and who can't.
  • The agreement calls for the U.S. to ease visa restrictions first, with China following suit.
  • Chinese diplomats generally prefer to enter into broad agreements, then fill in the details later, leaving substantial uncertainty and a deserved reputation for shirking on some key assurances.
  • And of course, none of this addresses major obstacles to reporting in China, from a censored internet to harassment and surveillance of reporters to intimidation aimed at Chinese people who actually talk to those reporters. Beijing prizes the appearance of symmetry, but the U.S. and China don't approach journalism in remotely the same way.

Still, the impact could be immense. As your host has argued elsewhere, the expulsion of reporters threatened an "information winter" in which the West (despite the profusion of punditry, Substacking and tweeting about China) would work with a degrading base of quality information about the rising superpower.

  • That's bad for U.S. policymakers, who rely on quality information and certainly can't expect the intelligence community to sprinkle magic dust on the problem, particularly after the gutting of CIA networks in China a decade ago.
  • It's bad for businesses the world over, which need to make intelligent investment decisions about the world's second-largest economy.
  • It's also bad for China, whether Beijing realizes it or not, as it ensures those shaping opinion on the People's Republic lack a deeper sense of connection with the country they are reporting on.

Media access matters hugely for the tech industry. Tech has both enabled and enfeebled reporting about China. And social networks ultimately need real reporting to package, repackage and monetize.

  • Tech has enabled good reporting on China where on-the-ground sleuthing just won't work. Exhibit A here is the BuzzFeed expose on Uyghur prison camps in Xinjiang using satellite imagery, a series that snagged its investigative news team a Pulitzer earlier this year.
  • Tech also enfeebles good reporting in all the ways we've become used to, with social media echo chambers frequently prioritizing thin punditry and outrage while deprecating deeper analysis.
  • Much of what powers social media is still original reporting done by journalists, or opinion pieces based on that same original reporting.

Even though China's huge market of internet users remains mostly closed off to U.S. companies, to their frustration, trends emerging from there reshape businesses here. Look at how TikTok has forced Meta to up its social game, or the way fintech players are all trying to replicate the kind of financial super apps that have sprung up in China. Everyone stands to benefit when there are clearer eyes on China.

On Protocol | China

Chinese crypto's Singapore exodus is on. With crypto trading and mining effectively banned in China, crypto companies birthed there are searching for greener pastures abroad. Many believe they've found it in the pro-business city-state affectionately known as the "little red dot," where business is often conducted in Mandarin and the Chinese approach fits right in. Shen Lu has the story.

Beijing's new stock exchange has launched. Here's what's on it. Xi announced the new exchange as a driver of innovation, but the first companies listed there are older, smaller and less tech-forward than the hype indicates. Zeyi Yang dives in with a Protocol data analysis.

China's version of Black Friday has become a joyless, endless slog. The thrill of waking up early to snag one-day deals was long ago supplanted by weeks-long presales to juice sales and GMV numbers. Plus, livestreamed ecommerce is big in China, providing a competing daily thrill for anyone with an itchy "buy now" finger. Zeyi Yang has more.


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Big Brother Beijing

DiDi plots its comeback. China's rideshare giant finally expects to relaunch its app in its home country after regulators finish a cybersecurity review of the company by year's end, Reuters reported last week. The review, which started earlier this year, has sent DiDi shares tumbling, with its apps inaccessible in all app stores since July. Reuters also reported that the company has already socked away $1.6 billion for a potential fine as result of the review, which would be the third mega-fine on Chinese tech companies this year after whoppers for Alibaba and Meituan.

Tencent reported its slowest revenue growth in over a decade thanks to a regulatory crackdown. In Tencent's third-quarter earnings posted on Nov. 10, the Chinese gaming and social media giant reported 13% revenue growth, the weakest revenue growth since it went public in 2004, according to Reuters. One sector where Tencent saw revenue decline outright: gaming. Spending by gamers categorized as minors only accounted for 1.1% of in-game revenue in China, down significantly from 4.8% one year ago.

The Party ousts senior provincial officials for supporting crypto mining. The CCP has expelled a former Jiangxi provincial official for violations of Party discipline that include "introducing and supporting enterprises conducting crypto mining activities against governmental policies," the Party's Central Commission for Discipline Inspection announced on Nov.13. On Tuesday, Bloomberg reported that a spokesperson of the National Development and Reform Commission said the top economic planner was considering punitive measures on state-owned enterprises involved in crypto mining.

Straight from China's web

Buying EVs with one click. Will car buyers decide on a purchase, sight unseen? Wuling, the Chinese automaker recently known for its tiny, adorable electric vehicles, believes the answer's yes. Auto brands in China used to only sell coupons on ecommerce sites because test drives were an essential part of the car-buying experience. But this Singles' Day, Wuling piloted direct sales of its EV models on Douyin, the short-video service that has increasingly ventured into the ecommerce realm. In the end, Wuling sold over 100 cars in full, each around $5,000, Chinese publication Securities Times reported Tuesday.

Bilibili is crowdsourcing content moderation. Who moderates the millions of "bullet chat" comments that stream onto China's popular video service Bilibili? 56,000 volunteers plus an AI system, the company said in a blog post. The crowdsourcing experiment started in 2017, when Bilibili formed the "Discipline Committee," whose volunteers collectively decide what's appropriate. But Bilibili is receiving less organic feedback from the committee these days, while its growing popularity calls for yet more moderation, the company said. Therefore, this year the company instituted an AI system that identifies controversial cases, distributes them to the committee and trains the machine with feedback from these volunteers.

New Oriental's hard way out. Looks like New Oriental's pivot from tutoring to agriculture ecommerce had a bumpy start. Shortly after Yu Minhong, founder and CEO of the erstwhile tutoring giant, announced the company would pivot to focus on the agriculture business, Yu's stream on Douyin was temporarily shuttered for reasons unknown. A party-owned paper also published an op-ed calling Yu's livestream move merely "chasing quick cash." But apparently agriculture ecommerce is not New Oriental's only strategy to find a new business model: The company has also recently registered new entities to teach coding and to make robots.

An independent Chinese-language site embraces Web3. Matters, a decentralized Chinese-language publishing network based on blockchain technology, recently launched the Traveloggers project, selling 1,500 NFT avatars that will allow their owners to independently launch resilient sites, turning their work into a part of the Ethereum blockchain as a public ledger and selling it. Within 10 days after listing its avatars, Matters sold over 400 of them, each worth 0.06 ether. Independent Chinese-language media has long been under siege, squeezed by both governmental censorship and Big Tech algorithms. Some publications, like Matters, believe they can only survive by relying on decentralized tech.

China goes global

Temasek suspends investments into Chinese internet companies. Concerned about Beijing's internet crackdown, Rohit Sipahimalani, chief investment strategist of Singapore's sovereign investment fund, told Nikkei Asia in an interview published Monday that the company is waiting "to deploy more capital till we have a little bit more regulatory clarity in that space." Overall, Temasek says it's optimistic about China's broader tech industry. Sipahimalani said the firm will continue to invest in areas like medtech, biotech, electric vehicles and renewable energy that are "in line with government policy and continue to see a huge amount of opportunity."

TikTok and Douyin are the world's most-downloaded non-gaming apps. What regulatory crackdown? The latest Sensor Tower analysis found that TikTok and its Chinese original Douyin collectively saw a world-beating 57 million downloads globally this October. Instagram ranked No. 2 for new installments, earning 56 million downloads last month.

Montreal is Chinese gaming studios' new favorite city. MiHoYo, the Chinese gaming studio behind hit game Genshin Impact, announced Friday it has opened a new office in Montreal, with the goal of onboarding 100 employees over two years and creating a brand new AAA (i.e., major) game. This move makes miHoYo the third major Chinese gaming company to set up studios in the Canadian city, following NetEase in 2019 and Tencent this past July, drawn in part by Montreal's favorable taxation policies.

JD comes for Amazon's lunch. JD, China's second-largest ecommerce operator, is planning to increase its overseas investment, JD Retail's new CEO Xin Lijun told CNBC. Compared to Alibaba, JD has emphasized more first-party sales and the buildout of its own logistics network, earning it the nickname of "the Amazon of China." Now, it's coming for its American peer; Xin said JD is conducting "further strategic analysis in Vietnam and Europe" as potential expansion targets.

One more thing

Singles' Day isn't just a slog; its numbers are slowing. China's annual year-end shopping extravaganza felt different this year. Sales growth was the slowest since its 2009 inception, and instead of its usual consumerist pitch, this year's Singles' Day marketing focused more on sustainability, which regulators like. Chinese consumers seem to have tired of promotional gimmicks and tightened their purse strings in a slowing economy. An analysis by Party-controlled English-language outlet Sixth Tonedescribed a pervasive negative view toward capital shared among the country's youth. "It's no wonder, then, that they have greeted the heavy-handed [reining] in of the country's internet giants over the past year with more applause than boos."

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