Issue of the week: A crisis for China
Many big names – including TikTok – face an uncertain fate after being caught in an international crossfire
Liu Xiaoming, the Chinese ambassador to London, came out fighting this week as the UK Governmentm under pressure from the USm moved closer to banning new telecoms equipment supplied by Huawei. He said that Chinese companies, which invested £6.6bn in Britain last year, were “all watching”. Was this any way to treat a partner? Liu certainly has a point, said Emily Gosden in The Times. Huawei might grab the headlines, but “Chinese interests are interwoven across the UK economy” – from our nuclear programme to ownership of “heavy industry, pubs, property and even pizza restaurants”. It was a Chinese company (Fosun) that rode to the rescue of Thomas Cook; and another (Geely) that saved the Lotus sportscar marque. The Hong Kong stock exchange might have failed in its £32bn bid to buy the London Stock Exchange last year, but “it already owns the London Metal Exchange”.
It’s easy to understand why China’s ambassador is so rattled: the country’s leading companies are coming under pressure all around the world, said Chris Nuttall in the FT – with some, including TikTok owner ByteDance, facing outright bans. Washington is indicating that it may follow India’s example and outlaw the wildly popular video app on security grounds. Mike Pompeo, the US secretary of state, this week warned Americans they should download it “only if you want your private information in the hands of the Chinese Communist party”. ByteDance insists that Beijing has no influence on its operations (there are plenty who disagree). And perhaps not even the Trump administration would dare force a TikTok “lock-out”, given the app’s hold on US youth. But for TikTok, keeping both the US and China happy in the current tense environment “sounds like one impossible dance routine”.
“There’s no place like home. Or so they say,” said Lex in the FT. And Chinese companies listed in the US may soon find themselves homeless: “the threat of a forced de-listing looms large”. The US Senate passed a bill in May that would prevent firms which refuse to open up their books to US regulators from listing on Wall Street. America is “right to hold Chinese companies to the same regulatory standards and oversight” as others. But if the Senate bill becomes law, “Chinese companies will have no choice but to withdraw from US exchanges” – because Chinese law currently prevents an auditor’s work from being transferred out of the country. Some 194 Chinese companies, with a combined market capitalisation of $1.1trn, are currently listed on Nasdaq and the NYSE. Most aren’t big enough “to qualify for a secondary listing in Hong Kong”. Their fate, it seems, is being “stranded”.