#China takes aggressive steps, claims ability to block TikTok sale

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The Chinese Communist Party is taking aggressive action to protect its tech industry in response to moves by the Trump administration to protect American tech companies and consumers from Chinese espionage and data harvesting.

The Chinese Communist Party says it has a right to block the sale of technology abroad after Beijing enacted new export restrictions that could throw a wrench into the sale of TikTok operations in the US, according to a report on Thursday.

President Trump threatened to ban TikTok in the US by November unless Beijing-based ByteDance, its owner, sells to an American company.

Among the companies looking to gobble up ByteDance’s operations are Microsoft, Walmart and Oracle.

But the Chinese Ministry of Commerce placed a hurdle in the sale’s path last week when it added 23 items to a list of technologies that require Beijing’s approval, including artificial intelligence and algorithms that are critical to TikTok’s trendy video service.

Gao Feng, the spokesman for the Ministry of Commerce, said the new regulations do not target any specific companies.

“If related enterprises are transferring technology abroad during trade, investment or technical cooperation that fall under the regulations, they are advised to immediately consult provincial-level commerce department offices and handle that in accordance with the law,” he said during an online briefing, Bloomberg News reported Thursday.

But ByteDance founder Zhang Yiming is now weighing his options and may use Beijing’s involvement to delay any deal, the report said.

At the same time, China is planning on ratcheting up its semiconductor industry domestically by increasing research, education and financing for the industry, to counter restrictions put in place by the Trump administration, Bloomberg reported.

Chinese President Xi Jinping has vowed to spend $1.4 trillion over the next five years on technology including wireless networks and artificial intelligence.

“The Chinese leadership realizes that semiconductors underpin all advanced technologies, and that it can no longer dependably rely on American supplies,” Dan Wang, technology analyst at research firm Gavekal Dragonomics, told Bloomberg.

“In the face of stricter US restrictions on chip access, China’s response can only be to keep pushing its own industry to develop.”

A set of measures are expected to be presented to top-level Communist Party officials in October.

China, which imports more than $300 billion worth of integrated circuits each year, relies on US-made chip design tools and patents in its semiconductor sector.

But the US government has stopped dozens of Chinese companies from buying parts from American companies, including ByteDance and Tencent, the company that owns WeChat.

The Trump White House has also pressured allies not to do business with or buy equipment from Chinese technology giant Huawei Technologies.

Relations between Washington and Beijing have frayed over the coronavirus pandemic, China’s treatment of pro-democracy protesters in Hong Kong and trade policies that Trump said take advantage of American companies.

According to an analysis by Bloomberg Economics, ending the flow of trade and technology between the world’s two biggest economies would hurt China more than the US.

China’s potential growth rate would fall to about 3.5 percent in 2030 if it decouples with the US, down from the current estimate of 4.5 percent if relations remain unchanged, it found.

But if the US could get its allies — Japan, South Korea, Germany and France — on board and have them cut ties, China’s potential growth could plummet to 1.6 percent in 2030.