Washington: President Donald Trump’s sudden decision late Thursday to restrict two popular Chinese social media services from the United States has created confusion about how broad the bans on doing business with China could ultimately be.
That confusion may be part of the point.
Citing national security concerns, the Trump administration announced that it would bar people and property within US jurisdictions from carrying out “transactions” with WeChat and TikTok, the two Chinese-owned apps, after 45 days. But the White House did not define what those transactions included, leaving companies bewildered about whether they may be forced to fundamentally change their business within a matter of weeks.
Stoking this kind of uncertainty is something that the Trump administration has not been apologetic about in the past. Some White House advisers see it as a feature rather than a bug of their policy process, arguing that the risk of further crackdowns will dissuade US companies from operating in China.
That, they said, is a good thing because Chinese policies like “civil-military fusion” have undermined the ability of both Chinese and US companies to operate independently in China.
“Mobile apps like TikTok and WeChat that collect your personal or business information and that can track, surveil or monitor your movements put you and your family in the crosshairs of an Orwellian regime,” Peter Navarro, White House director of trade and manufacturing policy, said in an interview. He posed a question to mothers in the US: “It’s 10 p.m. Does the Chinese Communist Party know where your children are”
Navarro acknowledged that some multinationals might oppose the measures but said that “the American public is tired of the corporate greed that, before the Age of Trump, sent our jobs overseas and now endangers our national security and privacy.”
Critics countered that the Trump administration’s unpredictable actions threaten to compromise the secure business environment that the United States is known for, in which rule of law prevails and the government rarely interferes in the market.
“The government inserting this much uncertainty into the business landscape and into the user landscape is deeply problematic,” said Matt Perault, a professor of Duke University’s Center for Science & Technology Policy.
On Friday, TikTok, which is owned by Chinese internet conglomerate ByteDance, said in a statement that it was “shocked by the recent executive order, which was issued without any due process.”
It said it had sought to work with the US government for nearly a year but instead found the White House “paid no attention to facts, dictated terms of an agreement without going through standard legal processes, and tried to insert itself into negotiations between private businesses.”
A spokesman for Tencent, the parent company of WeChat, which is widely used in China and around the world as a messaging and payments app, said it was “reviewing the executive order to get a full understanding.”
The Trump administration has steadily ramped up its actions in a broader economic and geopolitical fight with China, starting with a trade war that put tariffs on hundreds of billions of dollars of Chinese products in 2018 and 2019. It also introduced restrictions on other kinds of Chinese technology, including clamping down on exports to Chinese telecom giant Huawei.
The sudden, vaguely worded order from the White House on Thursday night, which came without further explanation or a media briefing, followed a familiar model for some of the other policy announcements on China from the Trump administration. Many have left multinational companies in suspense for days or weeks about the specifics.
With policy moves like tariffs and export controls, the Trump administration wielded uncertainty as a source of leverage, using it to frighten companies into compliance and leaving themselves room to back down or escalate the situation.
The executive orders on WeChat and TikTok leave the determination of what constitutes a “transaction” up to Secretary of Commerce Wilbur Ross. According to the language of the orders, Ross will make that determination in 45 days, meaning it would not be clear to businesses what will be included in the ban until it actually goes into effect.
“It may be that it won’t be nearly as bad as people might fear,” said Jason Waite, a partner at the law firm Alston & Bird, adding that the administration might discover legal or practical concerns with putting the order in place in the interim. “It is a 45-day surprise.”
People familiar with the deliberations said administration officials clearly intended to target the presence of WeChat and TikTok on the Google and Apple app stores, cutting off downloads and updates for the Chinese apps. It is unclear if the restrictions could affect other parts of the Chinese companies’ sprawling portfolios and business dealings, particularly for Tencent.
The order appears to bar transactions with Tencent or its subsidiaries that are specifically related to WeChat. That suggests it would not affect Tencent’s sprawling investment relationships and business dealings with companies such as Tesla; Snapchat owner Snap; the NBA; Activision Blizzard, the maker of the video game World of Warcraft; and Epic Games, the maker of Fortnite.
But many US companies, including Visa, Mastercard and Starbucks, have more direct partnerships with WeChat in China to use its payment platform and e-commerce functions. Whether those kinds of activities would be barred in China or around the world, or whether phone-makers like Apple would be allowed to sell mobile phones installed with WeChat, remain up in the air.
“The Trump administration has left itself a lot of wiggle room in terms of what is covered, how quickly prohibitions will be carried out, and how the order will be enforced,” said Scott Kennedy, a China expert at the Center for Strategic and International Relations.
Other Chinese tech companies could find themselves as the next target of the Trump administration. US officials viewed the executive orders on TikTok and WeChat as a template that could be applied to other Chinese companies, and some have discussed whether services like Alibaba’s Alipay pose a similar national security concern, according to people with knowledge of the matter.
“There’s definitely a chilling effect,” said Samm Sacks, a fellow in cybersecurity policy and China’s digital economy fellow at New America, a think tank. But she said that companies like Alibaba and Tencent had long understood the risks of operating in the United States.
“This latest move may have come as a surprise, but their real growth strategies have never focused in the US,” she said. “They’ve always known it was a hostile environment.”
Ana Swanson c.2020 The New York Times Company