The quick shift in sentiment shows the complications of concluding an agreement that is about much more than finding a proper valuation for an addictive video app that has enthralled teenagers around the world. It also has big ramifications for how the world’s biggest economies handle security threats related to new technologies that will drive growth over the next few decades.
For China, the political stakes are similar to the marathon trade talks that ended with a phase-one deal in January. Any agreement that makes it look like the Trump administration forced China’s hand could hurt President Xi Jinping, who has repeatedly hailed the Communist Party‘s emergence as a great power in contrast to the humiliations suffered under colonial powers centuries ago.
“Beijing basically doesn’t want to set a precedent where the US can be allowed to unilaterally flex in this way,” said Kendra Schaefer, head of digital research at the Trivium consultancy in Beijing. “Having some role to play in the decision balances things out a bit.”
Over the weekend, Oracle Corp and Walmart Inc agreed to take 20% of a new US-based entity called TikTok Global that would ringfence the app’s international operations and data, said to be worth up to $60 billion. ByteDance Ltd appeared to get most of what it wanted, including getting to keep the valuable artificial intelligence algorithms for its short-video app.
That appeared to appease both Donald Trump, who declared victory and called off a ban on TikTok, as well as China’s most nationalistic media. Hu Xijin, the influential editor-in-chief of the Party-run Global Times, said the deal was “still unfair but it avoids the worst result.” On Wednesday, two of China’s most prominent state-backed media mouthpieces denounced the deal.
“What the US has done to TikTok is almost the same as a gangster forcing an unreasonable and unfair business deal on a legitimate company,” the state-run China Daily wrote in a Wednesday opinion piece. Hu from the Global Times tweeted that Beijing likely wouldn’t approve the current agreement as it endangered China’s national security. The saga has sparked “complete disbelief” among Chinese leaders, said Gao Zhikai, a former diplomat and translator for late leader Deng Xiaoping who is now chair professor at Soochow University.