Xi Jinping is (still) not amused with the prospect of TikTok’s US operations being forcibly sold to an American company at the behest of Donald Trump.
On Friday, sources told Reuters that Beijing would prefer ByteDance simply shut down TikTok in the US rather than divest the wildly popular video app.
The news comes two weeks after Beijing revised a list of products subject to export controls, effectively asserting Xi’s right to veto the sale, which The White House continues to insist must be completed (at least on a handshake basis) by September 15.
“Chinese officials believe a forced sale would make both ByteDance and China appear weak in the face of pressure from Washington”, Reuters said Friday, citing sources, two of whom indicated that Beijing is prepared to use the revisions mentioned above to “delay any deal reached by ByteDance, if it had to”.
Trump said Thursday he isn’t inclined to extend the deadline. “We’ll either close up TikTok in this country for security reasons, or it will be sold”, he declared, on his way to Michigan. “There will be no extension”.
Shares of Microsoft, long seen as the frontrunner for TikTok’s US operations, fell when the Reuters story broke, as did shares of Walmart.
I certainly hope the irony of all this is not lost on US readers. For three years, Trump officials accused China of taking a “by hook or by crook” approach to acquiring technology. But Trump’s August 6 executive order aimed at hastening the TikTok divestiture process, and the president’s second order on August 14 (linked to a CFIUS review), are the very definition of “forced”. Some have mused that the president’s legally dubious suggestion that TikTok’s buyers hand over a portion of the deal proceeds to the US government is tantamount to Bonanno-style extortion.
Apparently, ByteDance has explored options to circumvent Beijing’s veto power, including selling TikTok’s US operations sans the AI subject to the new export controls.
This is not a trivial matter. The TikTok gambit represents the penultimate move in Trump’s push to undermine China’s tech ambitions.
While the app itself may not represent anywhere near the national security threat allegedly posed by Huawei, and while ByteDance certainly isn’t embedded in the infrastructure of China’s police state like a Hikvision (for example), its brand recognition and Trump’s mob-style approach to the divestiture, make this a litmus test of how far Xi is willing to go in terms of letting the US publicly humiliate China.
The flip side of that, of course, will be how Trump reacts in the event Beijing decides to ice the deal for good.