Who or what is ByteDance?

ByteDance is a Chinese-owned tech giant founded in March 2012 by Zhang Yiming. Zhang Yiming is an entrepreneur who is now one of richest people in China due to the success of the company’s portfolio of apps worldwide, including short-form video platforms TikTok and Douyin (TikTok’s Chinese counterpart).

Douyin was founded in 2016 and has built up a network of over 600 million daily active users. Meanwhile, TikTok was launched in the US in 2018 after it merged with lip-sync video platform Musical.ly, which ByteDance purchased for US $1 billion. Today, TikTok has an estimated 170 million users in the US.

ByteDance also owns several popular apps within the domestic Chinese market, including Toutiao. Toutiao is a news aggregator platform powered by artificial intelligence, and has over 120 million daily active users. One of the earliest apps created by ByteDance was Neihan Dianzi, a platform that enabled users to share jokes through videos, memes or text, but which was subsequently shut down by Chinese authorities in 2018.

What does the Supreme Court’s decision mean for TikTok?

The US Supreme Court has unanimously upheld a law requiring TikTok’s Chinese parent company, ByteDance, to sell the app by 19 January 2025 or face a nationwide ban. The decision stems from national security concerns over data collection and potential foreign government influence. If ByteDance does not divest (which it has repeatedly stated it will not do), TikTok will be removed from Apple and Google app stores in the US, preventing new downloads and updates, which could eventually render the app unusable.

The White House has said that President Joe Biden will not enforce the ban during his remaining time in office, stating, “TikTok should remain available to Americans, but simply under American ownership or other ownership that addresses the national security concerns identified by Congress in developing this law.” As a result, the decision has been left to incoming President Donald Trump, who has said he plans to “save” the app (despite the ban first coming to the fore during his last term in office).

Could TikTok be banned in the UK?

While other countries, including the UK, have expressed concerns about the security of user data when it comes to Chinese tech companies, it is unlikely ByteDance will face a ban like the one suggested in the US. TikTok has recently shown a willingness to cooperate with British authorities in addressing privacy concerns after inviting parliamentary committees to visit TikTok’s offices to analyse its algorithms.

Furthermore, it has been suggested that the bans on Chinese technology products were used as leverage during the run-up to the US election in a bid to gain favour among certain voters through extensive press coverage.

Due to close relationships with both China and the US, the UK was put in a precarious position to act, although it is unlikely that the new president-elect will continue the politics of his predecessor.

Will anything change once Trump is in power?

Despite Trump’s animosity towards TikTok during his first term in office, he now seems likely to try and save TikTok. Earlier this week, the Financial Times reported that Trump ally Elon Musk could be brought in to try and negotiate the sale of the platform. The most likely action for Trump would be to enact an Executive Order postponing the ban to allow more time for a potential buyer for TikTok (or alternative workaround) to be found.

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With the US Supreme Court seeming increasingly likely to uphold a law banning TikTok over national security concerns unless parent company ByteDance sells the platform to a non China based company by 19 January 2025, many of TikTok’s 170 million US users have been preemptively downloading Xiaohongshu.

In a twist no one saw coming, content creators say they are checking out the platform as a potential alternative to share their content and maintain their communities, while others have done it to point out the irony of being able to download and use other Chinese apps just days before TikTok could be removed from US app stores.

What is Xiaohongshu?

Xiaohongshu, also known as Red or Rednote in English, began life in 2013 as an online overseas travel guide for Chinese shoppers. Often compared to Instagram (but more realistically a blend of Instagram, Pinterest, Amazon and TripAdvisor), today, the platform incorporates a range of functions, including text and image posts, videos, live streaming, and social commerce. Targeting 18-to-35-year-old Chinese urban females, the platform is known for its strong interest-based communities and high-quality, trustworthy user-generated content. It has around 300 million monthly users.

Will Xiaohongshu become more popular than TikTok?

While Xiaohongshu’s current surge in US popularity is significant, with the number of posts on the app tagged ‘#tiktokrefugee’ now well over 60,000, it is likely to be relatively short-lived. The platform was not designed with English speakers in mind (although many bilingual Chinese users have shared guides for new US users), and it will take time for creators to build up the kind of communities that they had on TikTok. Moreover, the law banning TikTok states that any “foreign adversary controlled application”, like Xiaohongshu, faces a similar ban in future. Nonetheless, the trend underscores a growing user desire for diverse social media experiences and the resilience of online communities in the face of regulatory challenges.

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Matt Sheehan is a Fellow at the Paulson Institute’s in-house think tank. Based in the San Francisco Bay Area, he was formerly the China correspondent for The Huffington Post. His recent book “The Transpacific Experiment: How China and California Collaborate and Compete for Our Future” (Counterpoint, 2019) argued that despite sometimes rocky political relations between the US and China, deep and interdependent socioeconomic exchanges were increasing, particularly in the field of tech. Here he talks more about interdependent exchange as part of the UK and China’s tech relationship, as well as where in the tech sphere the opportunities for the UK might lie in the future.

OK, let’s start with the basics – what is the Transpacific Experiment?

MS: The Transpacific Experiment is the largest ever experiment in grassroots superpower diplomacy, and it happened in California and China over the past 12 years. For decades, US-China relations mostly happened at the highest levels of government (i.e. Nixon & Mao) and multinational corporations (Apple offshoring iPhones to China). But from 2008-2018, the real action in US-China relations shifted toward the grassroots. Record-setting numbers of Chinese students, investors, technologists, and immigrants arrived on US soil, and flagship American industries like Silicon Valley and Hollywood got deeply enmeshed in China.

For decades, US-China relations mostly happened at the highest levels of government and multinational corporations. But from 2008-2018, the real action in US-China relations shifted toward the grassroots.

This really shifted the centre of gravity in the relationship. It pulled it away from DC and Beijing and spread it across college campuses, neighbourhoods and companies around the country. This had a big impact in many parts of the US, but California was really the centre of the action, with the highest number of students, home buyers, investors, and both technological and cultural connections.

I call these interactions an “experiment” because we’d never seen this kind of deep, multi-faceted engagement between two superpower competitors, and we didn’t know how it would play out. Would those face-to-face interactions bring these countries closer together, or drive them apart? From 2008-2016 things looked promising on some fronts, but you also saw real frictions emerging at the grassroots. In the past four years, those local frictions bubbled up to the national level, and they ended up driving a huge wedge between the US and China.

In the tech competition/collaboration between the US and China, where, if anywhere does Europe and the UK sit?

Europe and the UK together are currently the other big players in the global technology ecosystem today, and as US-China relations have deteriorated, it’s put Europe in a really interesting position. There’s clearly been a major evaluation of relations with China, but European countries still haven’t embraced the really bare-knuckle and highly confrontational approach of the US. That gives Europe and the UK a new kind of leverage in dealing with both China and the US on tech issues.

European countries still haven’t embraced the bare-knuckle and highly confrontational approach of the US. That gives Europe and the UK a new kind of leverage in dealing with both China and the US on tech issues.

Right now China is looking around and realising doors are closing on its tech companies in many parts of the world. As much as President Xi is driving a techno-nationalist agenda, I think there’s also a real recognition that China still relies on advanced countries for crucial parts of its tech stack, especially semiconductors and research partnerships. That opens the door for Europe and the UK to use its leverage to try and exact meaningful concessions from China on certain fronts, such as greater access for companies like Ericsson to China’s 5G market.

But, while doing that, these countries have to keep a close eye both on their own national security interests, and also try to limit any potential fallout with the US over engagement with China.

Tech has become very Balkanised very quickly. As you say in your book, is it inevitable that American companies will lay claim to the US, Europe, and most developed countries, while Chinese companies will end up owning their home market and exerting influence across large swaths of the developing world?

Two years ago, I think there was a strong case for those respective spheres of influence. But the past two years have been a real roller coaster, and a lot has changed in just the past four months.

First, the emergence of TikTok proved that Chinese apps could rise to the top in countries around the world, including the US. At the same time, a large number of Chinese apps were gaining on their US peers developing countries, and had overtaken US apps in downloads in India. That looked very promising for Chinese companies, but it really unraveled over just the last few months. After a border clash in June, India banned TikTok along with hundreds of other Chinese apps. Just weeks later, the White House began talking about blocking TikTok, forcing TikTok into negotiations to sell its US business off.

On the surface, this looks great for US companies like Facebook, who were very anxious about Chinese competitors. But at the same time, I think there are real dangers ahead for US companies abroad. This urge to block foreign competitors from one’s own tech markets is gaining real traction worldwide. Right now China is in the crosshairs, but don’t be surprised if those crosshairs are turned on US apps in the future.

With governments (US, UK, France, India, Canada etc) rejecting Huawei and suspicious of other Chinese tech firms, does this mean that there is little to no future for cooperation between China and the West in the technology sphere?

I don’t see Huawei as the death knell for collaboration between China and the West. The connections between these tech ecosystems were really deep and multi-faceted for years, with flows of people, money and research knitting them together. Over the past four years those investment ties have been severed, and there’s a lot more pressure put on Chinese technologists in the US as well.

But academic researchers still fiercely defend the open and international nature of their work, and so I don’t see those ties getting fully severed. You’ll see less direct commercial interactions, but you also see people in the West paying much more attention to Chinese tech, trying to learn from its successes and avoid pitfalls like the expansion of China’s surveillance state.

In your conclusion, you seem perhaps more optimistic than most that a new, younger generation of innovators both in China and in America/Europe may find ways to cooperate. That was written in 2019 – how are you feeling in autumn 2020?

Things have really deteriorated faster and more dramatically than I and most people foresaw. It looked like that deterioration might have slowed up after the Phase I trade deal was signed in January, but that was immediately followed by Covid and things went into freefall. Things are more tense than ever at the national level, and those actions have put a lot of new constraints on what people do at the more grassroots level.

But at the same time, you still see people at the local level in both countries recognising that the other side has something important to bring to the table. California continues to lead the way in working with China on climate change, and in computer science labs at Stanford and Berkeley you still have Chinese, American and other international students working together every day. These grassroots interactions are not going back to the kind of free-for-all we saw before 2018, but they are still planting a lot of seeds that will shape things for decades to come.

But hey, I’m an optimist by nature, and there’s still plenty of time for things to get way worse.

What’s your prediction for US-China relations over the next year or so?

The US election is clearly the biggest variable in this equation. The fundamental dynamic of the two countries won’t change next year, but the election could shape just how volatile that dynamic is.

China will always see the US as attempting to stifle its rise, but how aggressively China responds to that will depend in part on what they see coming out of the US

Regardless of that outcome in the US, I think China is beginning to realise what a big hole they’ve dug themselves in to internationally. We’ll see attempts to mend fences with other countries, and just turn down the temperature in US-China relations. I think we’ll see both countries essentially take a breather while they formulate a longer-term strategy for dealing with each other.

Going forward, China will always see the US as attempting to stifle its rise, but how aggressively China responds to that will depend in part on what they see coming out of the US. On the US side, you see a mirror of that situation. China is now fundamentally seen as a formidable rival, but how you deal with that rival depends a lot on their actions.

Over the next year, both sides will start to feel each other out, looking for points of leverage and piecing together a medium-term strategy for this new landscape.

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