Chinese-owned social media giant TikTok finalized its transfer to a group of U.S. investors on Jan. 22, forming a new joint venture. President Donald Trump personally thanked Chinese President Xi Jinping for approving the deal. But experts criticized the move, which had been in the works for over a year, as a win for ByteDance, TikTok’s parent company in China.
What happened
ByteDance still owns just under 20% of the venture and “will continue to manage e-commerce, advertising and marketing on the new U.S. platform,” according to CNN.
Although Oracle – one of the U.S. investors – will oversee all U.S. users’ data, it’s unclear whether ByteDance or the Chinese government will retain any control over the platform’s prized algorithm. The House Select Committee on China will pursue this key question and conduct rigorous oversight, said Chairman John Moolenaar, a Republican from Michigan. Senator Ed Markey, Democrat of Massachusetts, called for Congress to “ensure that any arrangement truly protects national security.”
In fact, Congress has previously banned Tik Tok entirely from the United States, only for the administration to issue an executive order last year that essentially ignored the congressional ban.
Less than a week after the TikTok deal was finalized, on Jan. 28, China also confirmed the purchase of advanced H200 microchips from U.S.-based technology behemoth NVIDIA. The move came two weeks after the U.S. approved the sales. These immensely powerful chips, which can’t yet be produced domestically in China, are used to train AI models. The sale reflects yet another reversal by the second Trump Administration, overturning a previous ban on selling to our top global technological competitor.
Why it matters
The famous 19th century British statesman Lord Palmerston observed that the British Empire had “no eternal allies or perpetual enemies,” while it was only British interests that were “eternal and perpetual.” The Trump Administration’s approach toward China seems to have followed only the first part of Lord Palmerston’s adage. China is neither a perpetual ally nor a perpetual adversary, but our interests regarding Beijing change like a weathervane, often within a single week.
The policy reversals come at a high cost to U.S. national security.
The same week the decisions on TikTok and the chip sales were made, the administration also released its National Defense Strategy. That document noted that “China and its military grew more powerful in the Indo-Pacific region, the world’s largest and most dynamic market area, with significant implications for Americans’ own security, freedom, and prosperity.” The NDS also said the United States should be “deterring China in the Indo-Pacific through strength, not confrontation” – language that is largely consistent across multiple administrations since the turn of the century. Within a single week, the U.S. government simultaneously called to contain China and also handed it the tools to outcompete us.
Key takeaways
The United States and China are in an arms race for technological supremacy in the 21st century. The stakes are high. Entrepreneur and administration ally Elon Musk warned that China will eventually “far exceed the rest of the world in AI compute.”
We shouldn’t be helping the authoritarian regime in Beijing to achieve technological supremacy over the free world. Instead, we should set consistent policies that keep prized technologies in the United States and encourage domestic innovation that propelled the United States to be the preeminent economic and military global power.
