Good morning! Beijing announced a major policy on Monday when it decreed that families may now have up to three children. The country faces a demographic cliff after decades of a strict "family planning" policy that enforced and normalized a one-child-per-household regime. But most Chinese families don't want to have that many children anymore; to reverse the trend, the Communist Party will need to heap incentives on families — or allow mass immigration, which seems vanishingly unlikely. It's a continued smart bet that China will need to write the future of automation and elder tech if it's to win the 21st century.
In this week's Protocol | China: why China's adorable Tesla-slayer irks Beijing, Chinese workers flock to the "little red dot" and foreign influencers mint RMB.
(Was this email forwarded to you?Sign up here.)
The Big Story
China looks to strike a new tone
"Wolf Warrior" diplomacy could be coming to an end. Bloomberg News reported that during a Monday meeting with senior Party leaders, ruler Xi Jinping said that Beijing needed to get "a grip on tone" in how it communicates with the world. It could signal the gradual beginning of the end for a style of communicating that has emphasized insults, needless Twitter spats and shocking imagery that's been red meat for nationalists at home — but has done nothing to improve China's image abroad.
How to describe Beijing's wolfish approach to public diplomacy, which began in earnest last year as COVID-19 deepened the U.S.-China rift? Perhaps the best term might be coordinated Twitter trolling.
- Like most trolling, it doesn't even try to persuade; one 2020 paper by scholars at Yale University showed that efforts to badmouth the United States didn't improve China's standing, while highlighting foreign aid did build goodwill.
- By contrast, Beijing has not been a major player in successful disinformation campaigns, according to a Facebook report released last Wednesday that studied major "influence operations" on the platform from 2017 to 2020.
- The company found that China mostly sought to influence users via overt, state-affiliated outlets that could operate as "spam clusters" that "gained nearly no authentic traction on Facebook."
Public diplomacy is a technology issue. It's increasingly powered by social media, and it puts a ceiling on Chinese firms' ability to recruit — and sell — abroad. It helps explain why Chinese firms smashing global sales targets, like ecommerce maven Shein, are less than eager to talk up their origins.
Ultimately, of course, it's Beijing's actions that matter. Sentiment toward Beijing in Europe, the U.S. and much of the world has cratered since the outbreak of COVID-19, and is likely to remain negative as Beijing continues to respond aggressively to calls to open itself to an investigation of the virus's origins.
- China's program of imprisonment, indoctrination and forced labor aimed at Muslim Uighurs in Xinjiang remains a deep stain, one that no amount of diplomacy, however deft, can erase.
- Beijing continues to use the power of social media to direct Chinese-language hate campaigns at dissidents and researchers abroad who expose inconvenient truths. Those campaigns are effective at intimidating targets, but it's unclear whether they've silenced anyone.
On Protocol | China
- A day in the life of a Chinese delivery driver. Mega-apps Meituan and Ele.me have been under the microscope for subjecting their workers to high workloads and big fines, but Xiao Wu (a pseudonym) told Protocol that working for them suits him fine. Read his story, as told to Shen Lu, here.
- Meet China's adorable Tesla-slayer. Don't let the meme-worthy macaron colors fool you; Wuling's diminutive hongguan cars could be the future of electric vehicles. They're now outselling Tesla globally, mostly because of huge support among Chinese youth. But will China's government — which has its own ideas about what an EV should look and feel like — let Wuling thrive? Zeyi Yang investigates.
- Everything you need to know about NetEase Cloud Music's IPO. The young upstart in China's music industry has built a social community around music — with a comments section that people actually want to read — and is now prepping for an anticipated $1 billion Hong Kong IPO. Zeyi Yang breaks down the company's business and financials.
Big Brother Beijing
- The crusade against crypto mining continues. Energy regulators in Sichuan will convene local power plants and other relevant companies this Wednesday to examine crypto mining's (increasingly dubious) status. And as Protocol has reported, last Wednesday, Inner Mongolia drafted new regulations targeting crypto mining and even laying out penalties for some businesses that provide miners with electricity or physical venues.
- Which stocks popped after China announced its "three-child policy"? Baby-care, parenting and education. Goldlok, an electric toy maker and online education company, was among the stocks that hit upper trading limits on Monday. Shares of Ningbo David Medical, an infant care medical equipment producer, rose nearly 7%.
- China wants platforms to "just say no" to underage users. Children's Day in China was June 1, the perfect time for an amended Law on the Protection of Minors to take effect. The big change: The new law sets explicit rules for how tech companies should or should not service underage users. Gaming companies will have to block children from accessing games between 10 p.m. and 8 a.m., while livestreaming platforms may not allow users under 16 years old to register an account.
China Goes Global
- Chinese tech workers flock to the "little red dot." Chinese companies are increasingly choosing Singapore as their regional base for Southeast Asia expansion — and hiring there in droves, according to proprietary Protocol data analysis. Chinese programmers are also pouring into the country, according to tech outlet PingWest. Why Singapore? It has neither the anti-China sentiment found in the United States nor the stressful "996" wolf office culture found in China (although Singapore's no stranger to long hours). Plus, the country is actively luring tech talent with special visas.
- The foreign influencer economy is flourishing. The days are gone when a foreigner can go viral just for shouting "I love China" on camera, but foreign influencers are still having a great time on China's social media platforms, reports Chinese digital outlet Ran Caijing, with a growing number of influencers working with Chinese marketing companies to maximize their appeal. It's lucrative, but evidently not a highly competitive space; note this cringeworthy short video calling Chinese pancakes "the grandma of pizza" in broken Mandarin, which generated over three million likes on Douyin.
One Company You Should Know
China's recycling unicorn gears up for a U.S. IPO
JD.com-backed electronics reseller Aihuishou filed Friday for an IPO on the NYSE. Aihuishou, whose name roughly means "love recycled," is the largest secondhand consumer electronics trading platform in China, with a 2020 market share of 6.6% by GMV. According to Equal Ocean, Aihuishou's pre-IPO valuation is between $4 billion and $5 billion.
On Our Radar
- Alibaba Cloud is flying high. On May 28, it hosted a summit in Beijing to showcase the company's growing ambitions, including making major inroads in providing cloud services to China's biggest client: the government. Alibaba Cloud currently hosts over 50% of electronic toll collection services for Chinese highways and is used by 31 provinces and 26 government ministries. Forty Chinese cities use Alibaba's "Smart City" cloud services.
- Tencent stands accused of corrupting China's youth. On Tuesday, the Beijing Children's Legal Aid and Research Center filed a civil suit against Tencent, alleging the tech giant's hit mobile game Honor of Kings and its user community contain content that's not age-appropriate. It also accuses Tencent of failing to manage the registration and real-name authentication of underage users, which is required by Chinese law. The complaint says this laxity has led to many youngsters — especially left-behind children in rural China — becoming addicted to the game.
One More Thing
China's burned-out youth can't even 'lay flat'
Protocol told you in March that "involution" (内卷) had become a universally-recognized term in China to refer to a brutal form of business competition that actually stifles innovation. Now its grassroots countermeasure, "lie flat" (躺平), has become the next buzzword on the Chinese web. To "lie down" is to drop out of the rat race in protest against "996" work culture and oppressive social norms that push individuals to keep up with the competition. The term has become viral enough to attract censorship; Chinese web users reported over the weekend that several "lay flat"-themed groups on social network Douban had been suspended. Huang Ping, a literature professor at East China Normal University, told Shanghai-based magazine Sixth Tone that state media might be concerned about the subculture "because of its potential to threaten productivity."