Meanwhile, In China

Meanwhile, In China

A wave of headlines out of China were worth a mention on Thursday.

In what looked, in part anyway, like an effort to further Beijing’s tech crackdown, the NPC approved legislation that strengthens the party’s grip over data held by tech companies.

China has methodically turned the screws since late October, when Jack Ma made the mistake of suggesting that regulators (both at home and abroad) are stymying innovation. That transgression cost Ma dearly. Ant’s IPO was iced by Beijing and Alibaba found itself under intense scrutiny. Other Chinese tech giants were eventually swept up in what’s since morphed into a full-on regulatory assault.

The new legislation, described as a “data security law,” likely mirrors drafts released previously, although final text wasn’t immediately available. It was also contextualized Thursday via Beijing’s ongoing tech “war” with Washington. In remarks to Bloomberg, one Hong Kong-based lawyer called it “another important piece in the overall data protection regulatory jigsaw in China.”

In addition to reining in homegrown tech giants, Beijing seems intent on making it exceptionally difficult for any business (domestic or foreign) to check all the compliance boxes. That’s surely by design. After all, if you make it impossible to comply, you can always claim somebody is in violation should you need to secure leverage.

At the same time, the NPC cleared a separate piece of legislation designed to expand Beijing’s options when it comes to hitting back at US sanctions. As with the new data security law, the text of the bill wasn’t immediately available. Previously, Chinese officials promised to forge new tools to combat what one lawmaker amusingly dubbed “long-arm jurisdiction,” an oblique reference to western governments’ attempts to punish Party officials for human rights abuses in Xinjiang and Xi’s move to commandeer Hong Kong’s political system and legal apparatus. (New research summarized by Reuters this week suggests Chinese birth control policies “could cut between 2.6 to 4.5 million births of the Uyghur and other ethnic minorities in southern Xinjiang within 20 years, up to a third of the region’s projected minority population.”)

Again, there are always ramifications for corporate interests in China. In some cases, the question is simple even if the answer isn’t: Do we comply with sanctions and lose market access by running afoul of Chinese authorities, or do we chance noncompliance at the risk of irritating Steve Mnuchin (now Janet Yellen)?

Commenting at a press briefing Thursday, Commerce Ministry Spokesman Gao Feng called the Sino-US economic ties “mutually beneficial.” Liu He recently spoke to both Katherine Tai and Yellen. Although both sides are keen to avoid the “decoupling” trope, relations between the world’s two superpowers have arguably frayed further under the Biden administration.

Asked about the US Senate’s $250 billion industrial policy bill, pitched by US lawmakers as a sweeping effort to counter China’s economic rise, Gao responded as you’d expect. China, he said, is “happy to see economic development and technology advancement in other countries, but opposes linking development plans with curbing the development of other countries, politicizing economic and trade issues and engaging in zero-sum games.”

He characterized the Biden White House’s decision to review Donald Trump’s TikTok and WeChat bans as constructive.

Finally, China arrested at least 1,000 people for money laundering schemes that utilized crypto platforms and digital wallets. As usual, the official statement is hilarious when you run it through a translator. I’ll leave you with a few excerpts from China’s Public Service Ministry:

In order to avoid investigation and crackdown, fraudsters turned to virtual currency to transfer funds. Driven by illegal interests, some criminals actively provide services to scam gangs who transfer and launder money by purchasing and exchanging virtual currencies, becoming criminal accomplices themselves.

Such illegal criminal gangs usually organize personnel to register on various virtual currency trading platforms with personal bank cards and information, purchase and exchange virtual currencies in accordance with the requirements of the fraud gangs, and become “coin farmers” who help them launder money. After completing the money laundering process, “coin farmers” can obtain “commissions” ranging from 1.5% to 5%. This highly illegal income attracts a large number of people to participate, causing serious social harm.

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