What TikTok and Tesla tell us about pragmatism in the US and China
When Washington looks at China, it tends to see an ideological, interventionist, authoritarian superpower that favours its own companies while subverting foreign rivals. When it looks in the mirror, Washington sees the US as a pragmatic, capitalistic, democratic superpower that champions free speech and robust competition.
When it comes to the narrow treatment of TikTok in the US and Tesla in China, however, those stereotypes appear to have blurred. It is the US that is becoming more dogmatic while China is becoming more pragmatic.
President Joe Biden has signed a law that will ban TikTok from US platforms unless its Chinese parent company ByteDance sells the business to an approved buyer. In a rare display of bipartisan unity, Congress argued that ownership of the video-sharing platform by a Chinese-related company endangered national security. Who knew that Zach King’s flying wizard tricks or Bella Poarch’s lip-syncing videos were so worrisome?
TikTok provides a slick short-form video service used by 170mn Americans and 7mn businesses, much to the annoyance of US rivals such as Instagram, YouTube and Snapchat, which have doubtless been dripping poison in politicians’ ears. It has also gone to great lengths to try to convince US lawmakers that users’ data is safe and free from foreign manipulation.
Over nearly three years, it has spent $1.5bn on building a ringfenced data infrastructure in the US in partnership with Oracle.
Nevertheless, there remain some strong reasons for banning TikTok. The first is the principle of reciprocity. Beijing has previously blocked US social media apps, including Facebook, Instagram and X, in China so it can hardly object if Washington strongarms TikTok. The company also admits that China-based ByteDance employees have accessed some TikTok data in the US for operational purposes. A recent FT report highlighted how ByteDance had tightened its grip over TikTok’s US operations over the past two years.
Moreover, TikTok has only reinforced congressional fears about political interference by campaigning so energetically against the ban. Researchers have found that, compared with Instagram, there is a tendency for content on TikTok about Taiwan and Ukraine to be downplayed while videos that chime with official Chinese and Iranian views are boosted.
“We assess a strong possibility that content on TikTok is either amplified or suppressed based on its alignment with the interests of the Chinese government,” concluded a report published last December by the Network Contagion Research Institute at Rutgers University. TikTok said at the time: “The report uses a flawed methodology to reach a predetermined, false conclusion.”
But US aggression towards TikTok contrasts with China’s accommodation of Tesla. Last Sunday, Elon Musk met China’s premier Li Qiang and clinched a favorable agreement with the tech giant Baidu to access its mapping and navigation systems.
Tesla’s chief executive’s grand ambition is to turn the company from a hardware into a software powerhouse. Autonomous driving will be critical to that transition and having access to Chinese data will help. If Tesla could apply autonomy across a vast fleet of cars “it might be the biggest asset value appreciation in history”, Musk gushed on Tesla’s latest earnings call.
Why Musk should play nice with China is clear. Why China should reciprocate, given its concerns about the security risks of Tesla’s Chinese fleet, is not so obvious, especially when domestic electric-vehicle manufacturers such as BYD see the US company as a deadly rival. But there may be good pragmatic reasons for wooing Tesla.
Analysts suggest Beijing is keen to reignite foreign investment, which has fallen to a 30-year low. Tesla, which sank more than $2bn on building a gigafactory in Shanghai in 2019 and now has 1.6mn cars on Chinese roads, could contribute to reversing the trend. Tesla’s investment has also stimulated the development of China’s own EV industry. And reaching an understanding with Tesla on data security in connected cars may help nullify concern when China sells its own EVs abroad.
Whatever their rhetorical posturing, it is perhaps naive to expect consistency in the policy positions of Washington or Beijing. Naked self-interest is normally a better guide to any nation’s actions, meaning both countries are sometimes flexible on points of principle. Wherever they can, the US and China adhere to the power law identified by the Greek historian Thucydides centuries ago: “The strong do what they can and the weak suffer what they must.”
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