Corporate developments in the US and China this month tell a clear story of superpower separation. The US blacklisting of SenseTime, a leading Chinese artificial intelligence company, and a decision by Didi, China’s answer to Uber, to delist from the New York Stock Exchange share the same antecedents. As strategic mistrust intensifies at state level, corporate China’s fundraising bonanza on Wall Street is being brought to a close. This is no small thing: according to the US-China Economic and Security Review Commission, there were 248 Chinese companies listed in the US as of May this year, worth a total of $2.1tn.
Such listings, to varying degrees, appear vulnerable — thanks to the deep-rooted nature of the suspicion that is throwing superpower ties into the freezer. Both Beijing and Washington are seized by a desire to decouple, especially where strategic interests and sensitive data are in play. Didi, which in June launched the biggest listing by a Chinese company in the US since Alibaba in 2014, incurred the wrath of Chinese regulators who worried that the ride-hailing company’s vast trove of mapping and other sensitive data might fall into foreigners’ hands.
The US decision to blacklist SenseTime this month was also driven by security concerns. Washington added SenseTime to a list of 59 Chinese defence and surveillance technology companies that President Joe Biden in June banned Americans from investing in. The impact of SenseTime’s inclusion was swift. Within days, the Chinese company said it would postpone the $767m initial public offering in Hong Kong and issue a revised prospectus before reviving the offering “soon”.
At the heart of Washington’s move is an understandable antipathy towards US investors supporting a company that is enmeshed in China’s “military industrial complex”, and which the US accuses of enabling human rights abuses against Muslim Uyghurs in northwestern Xinjiang province.
Much more difficult is to know where such concerns should end. China is deploying a “whole-of-society” effort to attain leadership in AI. It has launched a “civil-military fusion” strategy under which even private companies can be ordered to hand over key technology and data to serve the aims of the People’s Liberation Army. The effect of such broad and opaque Chinese policies is to enable US suspicion towards all but the most low-tech companies, widening the cleavage between America Inc and corporate China.
All this is feeding the conservative urges already evident in Beijing’s treatment of the debt-laden property developer Evergrande. It is notable that the slow unravelling of one of China’s biggest privately owned enterprises is being orchestrated by state actors. Four out of seven seats on a committee set up to manage Evergrande’s risks are held by representatives of state-owned companies controlled by central government or regional governments in southern Guangdong province.
Thus, a vision of China’s future is taking shape. A mutual decoupling is emphasising China’s turn inward and its elevation of state actors to form a bulwark against both domestic vulnerabilities and mistrusted foreign forces. A Fortress China is under construction.
The momentum behind this regrettable metamorphosis is strong. But Beijing should remember the extraordinary success of the last four decades was built, to a large degree, on an “open door” policy with the outside world. The influx of investment, technology and knowledge from overseas helped mightily in its ascent. With a rebound from recent protectionist tendencies, it could continue to do so in future.
Source: Economy - ft.com
