Silicon Valley vs. Electronics Street: Who Should We Fear More?

China’s ambitions on the global (tech) stage

The (Interesting) Growth of Chinese Tech

It might seem like China’s science and tech scene continues to go from strength to strength. And to some extent, it does. China has rolled out plans to become a global leader in artificial intelligence (AI), autonomous vehicles, and robotics as part of its Made in China 2025 programme.

In short, China is a tech superpower worth following.

But it’s also important to have a vague understanding of how the nation has grown, because we often compare tech superpowers without considering the forces that have brought them to where they are.

First, China’s ‘Great Firewall’. The nation’s legislative and regulatory system that has shaped and controlled domestic use of the Internet. Three of the world’s biggest tech companies, Baidu, Alibaba, and Tencent, have all grown thanks to the Great Firewall because rival platforms from Facebook to YouTube to Vimeo have been blocked. Therefore, we can’t compare the growth of China’s tech scene to the more ‘organic’ tactics of the US, for instance, without taking note of the forces surrounding this growth.

This is important because it means that when Chinese tech firms were finding their feet as startups, foreign tech competitors in the form of Facebook were prevented from operating their products in this huge market. Therefore, China’s homegrown tech platforms were at an immediate advantage in acquiring domestic market share. Indeed, this absence of ‘free tech trade’ favoured the likes of WeChat, which avoided one of the typical barriers to entry most startups face: competition against existing behemoths (e.g. WhatsApp). Perhaps if WeChat had launched elsewhere, it would have been gobbled up in some form of merger.

Second, Chinese platforms’ specific features. Platforms such as TikTok and WeChat have been designed to align with specific tastes and preferences valued by the Chinese population, many of which work in contrast to Western norms. Thus the features and demands of China’s tech platforms are different, allowing engineers to handcraft these products and services for one specific market, rather than having to cover territories across the globe. This is another reason that makes it difficult to draw direct comparisons — Facebook has built a model that covers most of the world, TikTok (until acquiring Musical.ly) was limited to China.

Third, questionable tactics. The US tech scene is by no means squeaky clean (very much the opposite), but some growth strategies adopted by Chinese tech platforms would not be allowed in The Valley (even if there is a total absence of regulation). An example can be found in China’s Renren network, a platform deemed the Chinese equivalent of Facebook. But it didn’t always have this title — actually, Renren’s biggest competitor was called Kaixin001. What Renren decided to do was to purchase an almost identical URL (Kaixin.com) to Kaixin001, which allowed it to create a semi-clone and nick its users. Though Renren was charged with infringement and forced to hand over 400,000 yuan to the real Kaixin001, the damage had been done. Kaixin001 was forced to close shop.

Not all Chinese tech platforms operate under these models. But it becomes evident through examples such as Kaixin001 that before drawing comparisons between the US and Chinese tech spheres, it’s important to have a broader awareness of the factors that have led them to their current positions on the global stage.

So, what does the future look like for China?

As mentioned in the opening statement, China’s government plans spell it out for us: the nation wants to dominate the AI world. The likelihood of this happening, however, rests on the political sphere as much as it does the economic and technological. And this is why I continue to advocate greater discussion between all three domains.

A nation can have as many resources and researchers as it wants, but it also has to have a suitable (I repeat, suitable) political framework in place to allow such resources to be used to full capacity. It’s impossible to argue that there’s one correct political framework, and no, I don’t believe it’s our current form of ‘democracy’, either. At this stage, it’s worth revisiting how we even define democracy in the first place.

Instead, I believe there are structures more suitable than others, depending on the features of the nation in question. Sometimes, more than one structure will exist, and what these structures look like is the million dollar question. A suitable political and societal framework will take decades of experimentation and tweaking and adapting to even stand a chance of being sustainable. This is made all the more difficult because of how quickly technology changes.

The Relevance of Currency Wars

China has announced its global intentions on multiple occasions. And although perhaps unrelated at first glance, shifts in currency markets suggest that these are serious announcements. For starters, the yuan is gaining traction as a possible future reserve currency to rival the dollar. Although this is likely to come at the expense of China’s historically closed capital markets and centralised structure, if it manages to remove the US from its throne, then this shift might turn out to be one that’s worthwhile.

But thinking about what’s happening in the global financial market and applying it to the tech sector — that is to say, if China really does want to dethrone the US — should President Xi Jinping consider revisiting his stance on censorship and surveillance? Is China’s authoritarian regime compatible with its ambitions to become a global tech superpower?

Again, I’m not sure what the answer is right now. But what I do know is that the Chinese government is consistently pushing for mass innovation to avoid a repeat of its microchip disaster. Search ‘Chip Wars’ (in your favourite search engine) and you’ll see how China has lagged behind nations such as the US, South Korea and Taiwan in the production of microchips and semiconductors. These are tiny electronic components, but they are capable of changing the world. Add to this China’s slowing economic growth and the mass exodus of talent to the US, and we can understand why the government has shoved $1.5 billion straight into the heart of Zhongguancun, otherwise known as ‘Electronics Street’. Jinping is desperate to create the perfect environment for domestic incubators in order to nurture and retain homegrown startups, which will in turn convince the world that China can go at it alone and still thrive.

But stepping away from what President Xi Jinping wants, it’s interesting to see how the Chinese people respond to their regime. In addition to the aforementioned ‘mass exodus of talent’ (i.e. lots of people moving out of China in pursuit of greater opportunities), a collective desire for freedom can be traced back to 2010 when Google announced through its search engine that the search results in Google.cn were being blocked due to censorship rules. This put censorship into the spotlight, which meant that the CCP faced a public outpouring of disapproval. Though the government didn’t budge, this nevertheless marked a pivotal moment in China’s public opinion toward Internet regulation and monitoring.

So, where do we go from here?

In light of the above, I have a few more questions:

Do we want China to emulate the tactics of the US tech scene? Given that Facebook continues to wrap itself up in data breach after data breach, is a US-inspired model even desirable?

Or has China’s Great Firewall set a certain precedent for how global platforms should be treated in the future? Could this be helpful in curbing the increasing monopolisation of the sector?

In other words, could we take a leaf out of China’s book in our fight against tech as the new frontier of power?

These are all extreme questions, but food for thought (I hope).

Final Thoughts: Can the EU save the day?

If China does indeed continue to prioritise innovation, the CCP will continue to oversee this process. Perhaps less so than before, but chances are the lines between government and tech platforms will remain blurred — that’s just the essence of the Chinese regime.

From whatever nation we view it, we have entered an era of surveillance. China’s framework might prove that tech platforms can indeed exist (and thrive) outside of Western democracies and tech hubs, but that doesn’t mean it’s the perfect model.

If anything, it’s arguably more dangerous. Tools used to facilitate mobile payments, basic online purchases, and your bog standard searches only serve to reinforce authoritarianism, as the government can now work in conjunction with platforms such as WeChat to first acquire and then use this data to consolidate their model of surveillance. This model is more powerful than that of Facebook or Google, which, for the most part, remain independent from the US government (a controversial topic in itself, but one for another post).

Therefore, though we speak about the US tech scene on a daily basis thanks to our precious Facebook, should we perhaps be focusing on the rise of a model that combines the features of authoritarian control with corporatism and mass surveillance instead? Though I still don’t know what the answer is, I will say that the idea of a system with almost zero distinction between government and tech — and thus minimal accountability — is pretty frightening.

And then there’s the EU… can European allies work together to provide the perfect balance between the extremes of the US and China? Are we indeed doomed to the rumoured ‘Splinternet’?

So many questions, so much time. Would love to know your thoughts below.

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Thanks so much for reading! Interested to hear your thoughts, so please do leave them below if you’d like to. All feedback welcome. :)