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SupChina Weekly Briefings: Jeremy Goldkorn


TikTok and Oracle; U.S. ambassador to China steps down



SupChina Weekly Newsletter
Monday, September 14, 2020

Hello, readers!

We’ve chosen five of the most important stories of the last week from and about China. There was not space to include anything about the struggles facing Disney’s new movie Mulan, which has been the target of a boycott in Hong Kong and the U.S. It’s not having much better luck in China, where viewers are finding all sorts of reasons to hate it.

If you like what we do, please consider supporting our journalism by signing up for SupChina Access. Group and corporate subscriptions are also available — please email alex@supchina.com for more info.

—Jeremy Goldkorn, Editor-in-Chief



1. TikTok rejects Microsoft, proposes to make Oracle ‘trusted technology partner.’ Will Trump be satisfied?

Illustration by Derek Zheng

ByteDance, the Beijing-based owner of TikTok, said yesterday that it “would not be selling TikTok’s U.S. operations to Microsoft,” a short notice from that company read.

  • TikTok’s source code is not for sale to any company, Chinese state broadcaster CGTN soon reported. A source told the South China Morning Post: “The car can be sold, but not the engine.”
  • This follows new rules from Beijing in late August that appeared to designate core parts of TikTok’s algorithm as “sensitive technologies.” A Caixin report (in Chinese) — apparently since deleted — said that ByteDance had “given up” selling TikTok, and this was “related to the difficulty of getting past the Chinese government’s examination.”

Instead of a sale, ByteDance has chosen Oracle as its “trusted technology partner,” the California-based company said in a statement today, confirming reports from yesterday. TikTok confirmed to NPR that it, along with Oracle, had “submitted a proposal to the Treasury Department which we believe would resolve the Administration’s security concerns.”

How would this work?

  • It will “look more like a corporate restructuring than the outright sale Microsoft had proposed,” Bloomberg reports, though it is “likely to include a stake in a newly configured American business.”
  • Oracle might host the data from TikTok videos on its own servers, Bloomberg says.
  • “TikTok will also partner with retail giant Walmart in e-commerce,” Caixin adds.

Why Oracle?

The company’s executives are very cozy with Trump. Per the New York Times:

Unlike many other technology companies, Oracle has cultivated close ties with the Trump administration. Its founder, Larry Ellison, hosted a fund-raiser for Mr. Trump this year, and its chief executive, Safra Catz, served on the president’s transition team and has frequently visited the White House…

Oracle’s relationship with the administration has drawn scrutiny. In August, a Department of Labor whistle-blower said that Mr. Trump’s labor secretary, Eugene Scalia, had intervened in a pay discrimination case involving the company.

If ByteDance is avoiding a direct sale of its technology, Beijing is less likely to object as loudly as last month, and Trump is the far more important party to please.

The irony: Trump already rejected anything less than a complete sale last month. Per New York Times columnist Andrew Ross Sorkin:

ByteDance originally was going to make Microsoft its “tech partner” (cloud host) w/minority interest early this summer. Trump administration said ByteDance needed to sell full control of U.S. business.

That doesn’t mean Trump couldn’t change his mind, especially if some of his only high-profile public supporters in Silicon Valley stand to benefit.


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2. U.S. ambassador to China steps down, doesn’t notify Beijing

Back to the campaign trail for Ambassador Terry Branstad. He is pictured above at a Donald Trump event in 2016. CC/Max Goldberg.

U.S. Ambassador to China Terry Branstad will step down effective October, according to a statement from the U.S. Embassy in Beijing. No replacement has been named. Beijing has “not yet received notification about the end of Ambassador Branstad’s tenure,” according to the Chinese Foreign Ministry.

This will leave America without an ambassador in China at a very difficult — and potentially dangerous — time in the bilateral relationship. This situation could continue until well into 2021 even if Trump is reelected.

  • “Branstad, who is 73, did not say why he was departing now,” reports the New York Times, noting that he “was a crucial early supporter of Donald J. Trump’s presidential candidacy in 2016.”
  • However, according to Fox News and a U.S. official cited by Reuters, Branstad is going to join Trump’s reelection campaign. His son is already working for the campaign.  

Branstad first met Xí Jìnpíng 习近平 in 1985, when the American was serving his first term as the governor of Iowa, and the man who is now China’s leader was an official from Hebei Province leading an official delegation to its “sister state.”  

  • The long relationship led to speculation that Branstad would have special access to Xi, or be in a position to act as ballast in the bilateral relationship. Even the Communist Party’s house newspaper, the People’s Daily, called (in Chinese) Branstad “an old friend of the Chinese people.”
  • Whether this was true or not, the relationship is now on the rocks, and there are precious few bilateral channels of communication that are still open.  

The last week has been tense

Diplomatic tensions between China and the U.S. have been high for many months, and have ratcheted up in recent days:

Why now?

Two of the most unpleasant jobs in the world right now have got to be the U.S. ambassador in Beijing and the Chinese ambassador in Washington, D.C. So perhaps Branstad has just had enough.  

But the style of the announcement — going public before informing Beijing — and its result — yet another channel of communication between the two countries shut down — seem of a piece with the State Department’s recent treatment of China. So perhaps the move is part of a grand plan for decoupling being cooked up by Secretary of State Mike Pompeo.


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3. U.S. kicks out 1,000 Chinese students for alleged military ties

A flag-raising ceremony at the middle school attached to Northwestern Polytechnic School in Xi’an, Shaanxi Province. Several Chinese undergraduate students in the U.S. who had their visas cancelled said they had previously attended this middle school. Photo via Baidu.

On May 29, 2020, the White House issued a proclamation that any Chinese graduate student in the U.S. with even a vague connection to “military-civil fusion” in China was at risk of losing their visa.

What was less clear is how many students might end up being affected — one official estimate was “at least 3,000” of the approximately 360,000 Chinese students in the country.

  • Universities at the time were “deeply concerned that the order could lead to vast overreach, wrongly shutting out students whose work is non-military,” the LA Times reported.

Last week came news that over 1,000 visas had been canceled as of September 8, a U.S. State Department spokesperson confirmed to Reuters.

  • The acting head of the U.S. Department of Homeland Security, Chad Wolf, said in a speech that the Trump administration was “blocking visas for certain Chinese graduate students and researchers with ties to China’s military fusion strategy to prevent them from stealing and otherwise appropriating sensitive research,” but did not elaborate further.

Which students have been affected?

The affected students seem to have mostly been studying math- and science-related subjects.

As of this writing, 66 affected students appear to have anonymously added information about their cases to a QQ spreadsheet (in Chinese). That spreadsheet confirms the Reuters report and adds more information:

  • Some are undergraduate students, who either transferred to the U.S. in the middle of their studies or never attended a university in China.
  • Others graduated from military-affiliated universities in China, including the Beijing University of Posts and Telecommunications, Harbin Institute of Technology, and Northwestern Polytechnical University.

What happens next?

China could retaliate with visa cancellations of its own, just as it continues to do in response to every restriction on Chinese journalists in the U.S. The Chinese Foreign Ministry last week condemned the student visa cancellations as an act of “outright political persecution and racial discrimination,” and said, “China reserves the right to make further reaction” (EnglishChinese).

More importantly, Chinese students are losing faith in the openness of the American political and academic system, and this move — amplified by its opacity — will accelerate that process.

See also on SupChina: Chinese international students feel unwanted in the U.S. — and back home, and End of an era? A history of Chinese students in America.


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4. Human rights groups protest Beijing 2022 Olympics

Illustration by Derek Zheng

From February 4 to February 20, 2022, China is scheduled to host its second Olympic Games — this time, the Winter Olympics. Oddly, the location is slated to be the same as the 2008 Summer Olympics: Beijing, where it does not snow very much.

Prepare for controversy: Human rights groups are organizing increasingly large protests against China’s hosting of the Olympics, citing the crackdown in Hong Kong and, especially, the plight of the Uyghurs in Xinjiang.

  • “Over 160 human rights advocacy groups have delivered a joint letter to the chief of the International Olympic Committee (IOC) calling for it to reconsider its choice to award China the 2022 Winter Games in light of Beijing’s human rights record,” Reuters reports.

Meanwhile, criticism of China’s treatment of Uyghurs and overall human rights record is getting louder.

Will anything change in China as a result of these complaints?

Probably not. Beijing did not soften its approach in Hong Kong despite significant international backlash, and when it comes to Tibet, Xinjiang, and other nominally autonomous regions with significant numbers of ethnic minorities — like Inner Mongolia most recently — the current Chinese leadership seems set on coercive assimilation, even at high costs.

The IOC, for its part, told Reuters that its selection of Olympics venue “does not mean that the IOC agrees with the political structure, social circumstances or human rights standards in its country.”

What to watch for: Any indication that multiple countries, particularly the U.S. and its allies, might boycott the next Beijing Olympics. That possibility should not be ruled out. One indication of the sentiment in Washington, D.C.: The Washington Post editorial board wrote earlier this month that it does not believe China has the “moral standing to host the 2022 Winter Olympic Games.”

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5. A brutal exposé of inhumane working conditions at food delivery companies

An exposé (in Chinese) published by Chinese magazine Portrait on September 8 details the exploitative and dehumanizing working conditions faced by Chinese delivery workers on a day-to-day basis.

  • The piece is based on a six-month investigation and cites a number of current and former delivery workers, and management staff at major food delivery companies.
  • According to the article, food delivery workers are often given an unreasonably short amount of time to complete orders, and are expected to ride recklessly and break traffic rules.
  • The heart of the problem, the article argues, is that food delivery workers are actually slaves to faceless algorithms, designed to put company performance above the well-being of workers, without factoring in uncontrollable variables like weather and real-time traffic conditions.

Last week, Meituan and Ele.me — the top two food delivery services in the country — responded with open letters to the public, vowing to make significant changes in how they assess employees’ performance and to treat them with more respect.

  • Meituan announced (in Chinese) that it would improve its algorithm to prioritize its drivers’ safety and add eight more minutes to the estimated time for each delivery for the sake of unforeseen factors. It also promised better benefits for its workers and their families.
  • While Meituan was widely applauded for its practical measures, Ele.me shot itself in the foot with what’s seen by many as an insincere response. In a vaguely worded statement (in Chinese), Ele.me asked its customers to be more patient with their orders. The only concrete measure mentioned in its response, though, was to add a feature that allows users to voluntarily extend wait time by five or 10 minutes.

China’s food delivery economy has grown significantly in the past few years. Backed by Chinese tech giant Tencent, Meituan went public in Hong Kong in 2018, raising $4.2 billion in its initial public offering. Meanwhile, Ele.me, which was fully acquired by Alibaba in 2018, reported a considerable rise in gross merchandise value (GMV) this year

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