(Bloomberg) — Now that President Joe Biden has approved legislation that could exclude TikTok from the U.S. market, Beijing must decide how best to retaliate against an attack on the world’s most valuable startup.
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The legislation approved Wednesday would give Chinese parent company ByteDance Ltd. almost a year to sell the video sharing platform before facing an outright ban. At a daily press briefing hours earlier, China’s Foreign Ministry reminded reporters of the commitment trade officials made last month to take “measures to resolutely safeguard its legitimate rights and interests.”
President Xi Jinping’s government has so far shown restraint in responding to U.S. trade restrictions during a hawkish election campaign. The Communist Party’s moderation was aided by Biden’s choice of largely symbolic actions, such as tariffs on metals of which China exports little to America.
Taking TikTok – or its Chinese owner – out of the United States could call this calibration into question. Last year, officials showed a willingness to respond in kind to a U.S. campaign to hinder Beijing’s access to advanced semiconductors, for example by launching an investigation into U.S. memory chip maker Micron Technology Inc.
“China is keeping options open at the moment,” said Xiaomeng Lu, director of the geotechnology practice at Eurasia Group. But she said that if TikTok exhausts its legal options and has to leave America, “some American tech brands could risk becoming the collateral damage of this cycle of retaliation.”
Beijing’s internet restrictions have already forced most U.S. social media companies out of the Chinese market, such as Meta Platforms Inc. and Snap Inc., narrowing the list of potential targets for a tit-for-tat response. Any Chinese action would likely try to avoid harming its own economy, as policymakers grapple with a housing crisis that is weighing on growth and weak domestic demand.
The intensifying trade tensions come as Secretary of State Antony Blinken arrives in China this week to voice U.S. concerns about Chinese companies’ support for Russia’s war machine. The Biden administration has threatened Beijing with sanctions against its banks if they support the Kremlin’s campaign in Ukraine, a move that risks undermining US cooperation with China in other geopolitical hotspots such as the Middle East and China. North Korea.
Another consideration would be optics, after foreign investment in China fell to a 30-year low in 2023. Xi visited San Francisco to woo American CEOs in November and rolled out the red carpet at the leaders in Beijing this year, as officials step up their efforts. efforts to stimulate feeling.
“If they sanction U.S. companies, it could intensify U.S. companies’ concerns about their activities there,” said Wei Zongyou, a professor of U.S. security and foreign policy at Fudan University in Shanghai. “This means it is likely that further restrictions and sanctions will be imposed on businesses…
