Trade War

Newsletter 205 - March 17, 2024

Welcome to the 205th edition of Trade War.

The US moves one step closer to banning TikTok following a House vote ordering its Chinese parent ByteDance to divest. And Beijing’s foreign ministry spokesman accuses Washington of showing the “logic of a bandit.”

Despite a modest deficit target, Chinese stimulus plan may be the largest proposed since 2020. And New Quality Productive Forces beats out High-Quality Growth in the party slogan sweepstakes.

State news agency calls Xi Jinping a market reformer on par with paramount leader Deng Xiaoping. And online nationalists turn their ire on domestic brands, attacking China’s largest bottled water company.

• China central bank’s “monetary multiplier” may be losing steam

• Taiwan’s defense minister confirms US special forces on outer islands

• And Beijing and Pyongyang’s “deep mutual distrust is palpable”

TikTok ban moves through House

The U.S. moved one step closer to banning TikTok following a House vote Wednesday ordering Chinese parent company ByteDance to sell off the wildly popular video sharing platform within 180 days. The final vote of 352 to 65 included support from both Republicans and Democrats.

“There’s a lot of noise,” TikTok chief executive Shou Zi Chew said Thursday, calling the vote “very disappointing.”

Next up the Senate must decide when and if to vote on the bill. Despite his office having recently launched its own TikTok account to appeal to younger voters, U.S. president Joe Biden has said he will sign the bill if it passes both houses.

“While Chew maintains that he does not know what TikTok has done wrong, a number of people inside ByteDance feel let down and deceived by the chief executive and others involved in devising a strategy that has opened the door to the app becoming the successor to Huawei, the Chinese telecoms giant largely drummed out of the US market over national security concerns,” reports the Financial Times.

“Our strategy was wrong,” says one ByteDance employee. The company’s general counsel, “went into a black box, played defensive and failed to come up with a more proactive strategy.” For his part, TikTok chief Chew “was stubborn or oblivious about what was coming.”

Presidential candidate Donald Trump recently said he opposes a ban, in part because he thinks it would benefit Facebook, which banned him for two years.

The company’s plan now is to “kick the can” down the road until, it hopes, Trump wins the White House in 2025, says another person familiar with ByteDance’s inner workings.

“Logic of a bandit”

On Thursday, Chinese foreign ministry spokesperson Wang Wenbin said the U.S. vote on TikTok “runs contrary to the principles of fair competition and international economic and trade rules,” reports Singapore-based CNA.

“If so-called reasons of national security can be used to arbitrarily suppress excellent companies from other countries, then there is no fairness and justice at all,” Wang said.

“When someone sees a good thing another person has and tries to take it for themselves, this is entirely the logic of a bandit.”

A helpful reminder

“After you hear all this whining about market access and freedom of speech from the PRC, this graphic is a helpful reminder,” writes AEI Foreign Policy nonresident fellow Eric Sayers.