U.S. tech wants to work more with China
Good morning. This newsletter loves to look ahead. But last night's horrific shootings in Atlanta, which counted six women of Asian descent among its victims and comes amidst a wave of anti-AAPI violence across America, reminds us that the past isn't past, to paraphrase Faulkner. America's future isn't written, and it will take imagination and courage to collectively author the kind of bright next chapter this country deserves. The media certainly has a role to play. We strive to talk about China in all of its complexity, to avoid conflating Chinese people with their government, and to view the subjects of our reporting as a diverse collection of individuals, never an abstraction or a monolith. We keep these standards in mind every day, and welcome you to hold us to account.
This week in Protocol | China: U.S. tech tells Washington to cool it, Chinese state media exposes Big Tech's surveillance economy and Alibaba cozies up to Hanoi.
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The Big Story
U.S. tech still wants to work with China
A Protocol survey of 1,578 members of the U.S. tech community released March 15 delivers a clear verdict: They think Washington's China tech policies are too restrictive.
- 57% agreed or strongly agreed that "U.S. restrictions on Chinese tech companies have gone too far," while only 16% disagreed.
- 60% said U.S. tech companies should work more closely with Chinese tech firms.
- 58% agreed or strongly agreed that "a cold war with China could cripple U.S. tech companies."
Don't expect to hear the Biden administration echo those points anytime soon. China hands in the White House may feel Trump's approach to Chinese tech was ham-handed, but that's because of a lack of demonstrable results, not misaligned principles.
- Right now, the foreign policy imperative is clear: search for leverage with China.
- That means bolstering alliances, juicing the U.S. economy and de-risking supply chains. Beijing will be waiting a long time — maybe forever — for the "reset" it says it wants.
The D.C./Silicon Valley divide is as deep as ever. Washington, particularly the Pentagon, knows it needs to have a better relationship with innovative U.S. tech companies, particularly as Beijing pursues "civil-military fusion" with a corporate sector far less able to resist government's overtures.
- But policymakers and tech company employees still speak different languages, regardless of who's president. Officials in Washington are more keyed on the societywide risks tech cooperation poses, while workers in tech are focused on shipping products and making money.
- The big question is whether tech is a leading indicator here, as it often is, or a lagging one. When it comes to America's tech future, Washington is starting to call more of the shots.
Beijing claps back. China's Foreign Ministry and state-backed tabloid Global Times both name-checked the Protocol survey. They appeared to welcome the results and used them to make broad arguments — many of which our readers may not agree with — about U.S. restrictions on China being wrong-headed.
- Our survey also showed that 46% of respondents believe Huawei should be banned from the U.S., something Beijing didn't mention.
On Protocol | China
- Chinese companies are increasingly designing their own microchips. It's partly a response to U.S. restrictions on semiconductor sales, and it has everyone from ecommerce giant Alibaba to appliance-maker Gree getting in on the action. It will take years before these investments bear fruit, but it will help China get closer to Beijing's goal of "semiconductor independence" instead of importing $350 billion worth of chips every year. Zeyi Yang dives deeper.
- "Private traffic" is China's new obsession. The buzzword is now on the lips of tech CEOs nationwide as it gets ever more expensive to chase an ever smaller group of new internet users. Big tech companies like Alibaba and Pinduoduo are increasingly pinning their hopes on "sticky" traffic via private platforms like WeChat. But the strategy has huge risks. Shen Lu explains.
- One of the companies behind Xinjiang's surveillance state preps to go public. AI company Megvii is still posting losses and pouring cash into R&D; all the more reason to tap Shanghai's Nasdaq-like STAR Market in an IPO. Shen Lu has everything you need to know about the company that landed on the Commerce Department's Entity List late last year.
Big Brother Beijing
- On the Ides of March, Chinese state media goes for Big Tech's jugular. Each year, China state TV hosts a 3/15 consumer rights gala, bringing consumer fraud cases to the attention of the masses — in prime time. This year's target was Big Tech. Four separate exposés hit on tech gone wrong: the abuse of facial recognition technology, online job platforms selling personal data, malicious apps targeting seniors and fraudulent online ads. The Financial Times reports the Alibaba-backed UC browser, whose ad algorithm was accused of prioritizing private hospitals instead of renowned public hospitals, has already been pulled from app stores.
- The law is catching up with the platform economy. On Monday SAMR, China's top market regulator, released a new set of administrative measures aimed at ecommerce platforms. One new rule attracting attention mandates the country's increasingly popular shopping livestreams be recorded and archived for at least three years for potential inspection.
Meet the "new fund citizens," or xīnjīmín (新基民)
Millennials and Gen Z are China's next generation of investors, and they eschew "stock stir-frying" or chǎogǔ (炒股). Instead, they learn personal finance from key opinion leaders, influencers who push less-risky mutual funds. What they want to avoid: diē mā bùrèn (跌妈不认), experiencing a plunge so dizzying they're rendered unable to recognize their own mothers.
Protocol's Joe Williams sits down with Honeywell CEO Darius Adamczyk for a discussion on his influential leadership of the industrial icon and what's next in the company's digital overhaul.
Straight From China's Web
- Every Chinese tech company wants to be a mobile wallet. Alipay and WeChat Pay have dominated China's mobile payment market, but a slew of competitors outside the circle of titans are edging in. ByteDance, Bilibili, Kuaishou, Pinduoduo and Ctrip are among the huge-but-not-hugest tech firms that have either recently launched their own mobile payment functions or applied for mobile wallet trademarks or licenses, according to WeChat blog "Things on the Internet." Mobile payments offer a huge market: By 2025, over $81 trillion worth of RMB is expected to flow through Chinese third-party payment platforms. (That's not a typo.)
- A massive facial recognition dataset hits the academy. In early March, researchers from Tsinghua University and Shanghai-based private company XforwardAI released a paper detailing a new, public data set called WebFace260M. It contains 4 million unique identities and 260 million faces used to train facial recognition models. It's the largest publicly available dataset of its kind, and the authors expect it to help "close the gap between academia and industry."
China Goes Global
- NetEase launches an audio-based app for Japanese gamers. It's called Kumoo, according to Tech Planet, and it sounds like Discord on steroids. It allows users not only to chat, find teammates and build teams, but it also integrates with data in NetEase's own games to allow users to find partners at specified experience and skill levels.
- Alibaba gets friendly with Hanoi. Tech outlet 36Kr reported March 16 that Alibaba has signed a Memorandum of Understanding with the Vietnamese government to deepen their partnership in ecommerce, and has already held its first offline ecommerce summit in Vietnam. The event was part of Alibaba's Spring Thunder initiative, which aims to help small and medium-sized Chinese businesses digitally transform and sell into new markets.
- New Horizon Health finds new horizons. The Hangzhou-based, Hong Kong-listed, cancer-screening market leader just signed an agreement with British-Swedish multinational pharmaceutical giant AstraZeneca. One of the shared priorities is to promote New Horizon Health's early screening product for colorectal cancer inside and outside of China, 36Kr reports.
One More Thing
Middle-aged listeners mint a new chart-topper
The most popular song of 2020 was "Shepherd of the Koktokay," one young Chinese listeners have scarcely heard of, but that their parents love. Tencent News reports that middle-aged fans spread the song so widely on platforms like Douyin and Kuaishou that it was ultimately ranked the year's most popular in Tencent's 2020 Entertainment Whitepaper. Have a listen here. This writer enjoys it, but then again, he turned 41 last year.