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Saturday, Sep 19, 2020

From 5G to TikTok, 2019 was a tumultuous year for tech as the US and China squared off over a host of issues

Amid the trade war, tech tensions flared in 2019 as the US accused Chinese companies of being national security threats and of breaching human rights

It has been a tumultuous 12 months for many Chinese technology giants, including telecoms behemoth Huawei Technologies and TikTok owner ByteDance, both of which are at the centre of increased Sino-US tensions. We have taken a look at how some of these tensions might play out in 2020, but before we leave 2019, here is a round-up of some of the key developments in the past year:

US-China tech war caught fire

The US Commerce Department extended its trade blacklist, known as the Entity List, that bans firms from buying American-origin technology without explicit permission in the form of a licence.

New to the list this year were more than a hundred Chinese entities, including Huawei, surveillance device makers Hikvision and Dahua, and artificial intelligence unicorns like SenseTime and Megvii. Huawei was added to the list on national security grounds, which the firm contests, while the surveillance and AI firms were sanctioned for breaches of human rights after allegations that China used the company’s surveillance technology in its crackdown on Uygur and other ethnic minorities in Xinjiang.

Huawei, the world’s largest telecoms equipment supplier and second biggest smartphone vendor, made headlines late last year after chief financial officer Meng Wanzhou was arrested in Vancouver at the request of Washington on charges of bank fraud.

Being added to the Entity List has meant Google closing access for Huawei to Android operating system updates and several popular apps, such as Gmail.

Ren Zhengfei, the billionaire founder of Huawei, broke years of silence and talked to more than 20 mainstream foreign media outlets in 2019, defending the company’s compliance and technology record. Despite the export ban imposed in May, the Trump administration has permitted US companies to keep selling certain products to Huawei, which it says is intended to minimise disruption for its US customers.

China seeks to reduce reliance on foreign suppliers in its supply chain

In response to the US trade ban and Google cut-off, Huawei unveiled its self-made operating system Harmony OS as an alternative to Android. The telecoms giant aims to make the system the world’s most advanced for the next generation of smartphones and IoT applications although many analysts are sceptical about how it will be received by overseas customers.

Also this year, Huawei revealed a new cutting-edge chip to serve the needs of big data processing and reduce reliance on imported technology from the US.

Other Chinese tech companies also made progress on self-developed tech. Chinese e-commerce player Alibaba revealed its own AI inference chip, and researchers at Tsinghua University developed a hybrid chip which takes us one step closer to a future filled with humanlike “thinking machines”. The achievement reflects the accelerated pace of development in China in the fields of AI and semiconductor design.

Alibaba is the owner of the South China Morning Post.

TikTok achieves overseas success only to face US backlash

TikTok, the short video sharing app, has become a global hit since its launch in 2017. The app, owned by Chinese company ByteDance, was the seventh-most downloaded app of the 2010s, topping YouTube and Twitter, according to recent a report by App Annie.

But the popularity of TikTok has drawn attention from lawmakers and regulators in different countries. Washington has launched a national security review of ByteDance’s US$1 billion acquisition of US social media app Musical.ly, which was later absorbed into the TikTok app, after several US senators voiced concerns over privacy and censorship issues.

ByteDance, which runs TikTok in international markets only and its counterpart Douyin as a separate app for the China market, has repeatedly denied being influenced by Beijing and said that the content and moderation policies of TikTok are led by a US-based team.

5G gets its commercial start

Fifth-generation (5G) mobile telecommunications technology enables data to be transferred at a speed that is roughly 20 times faster than existing standards and is considered as a technology crucial to reaping increased economic benefits from connecting billions of devices and building new services in the future.

China’s 5G infrastructure development efforts have been pushed forward amid the protracted trade war with the US. The country’s three largest telecoms network operators have all launched 5G tariff plans after having been granted commercial 5G licences this year, signalling major new investments in the world’s largest mobile market.

As a company that has the most patents in the field, Huawei has seen the US balk at adopting its 5G network equipment and pressure its allies to follow suit and ban the use of Huawei systems. Nevertheless, it unveiled a US$2,600 foldable 5G handset as it seeks to compete with the likes of Apple in the high-end segment of the market.

Hong Kong protests, disinformation and censorship

The months-long protests in Hong Kong, which shifted from an anti-extradition bill demonstration into one with broader demands, has led to an information war between the US and China. American social media giants Twitter and Facebook shut down hundreds of accounts alleged to be part of a Chinese government-backed, coordinated campaign to sow political discord in Hong Kong. China, for its part, has denounced foreign intervention in its internal affairs.

Apple removed a Hong Kong protest map app that tracked protests activities from its App Store and Google removed a mobile game that allowed people to play as Hong Kong protesters.

China catches up in basic research; quantum computing hits milestone

Google said in October that it achieved ‘quantum supremacy’ after it used a quantum computer to solve in minutes a complex problem that would take today’s most powerful supercomputer thousands of years to crack, according to a paper published in science journal Nature. But its rivals, such as IBM researchers, said Google’s statement about “supremacy” was misleading.

The US is still leading technological advancement but China is quickly catching up. Reports indicated that China has narrowed the gap with the US and in fields like AI, Beijing is expected to overtake the US in five to 10 years.

Notorious 996 work culture and labour rights

Chinese tech companies are leapfrogging Western peers but, according to some critics, this is at the cost of sacrificing employees’ personal life. The country’s infamous “996” work culture, where staff are expected to be in the office from 9am to 9pm, six days a week, was reported to be getting worse this year amid hiring freezes and a cooling off in China’s hot tech industry.

Programmers even launched an anti-996 movement on Github. Alibaba founder Jack Ma, along with other entrepreneurs such as JD’s founder and chief executive Richard Liu, defended long working hours, saying such a schedule had helped China’s new tech giants grow into what they are today.

However, one 35-year-old former Huawei employee claimed that he was wrongly detained for 251 days after he negotiated a severance package with the company after 12 years of working flat out at Huawei. The employee was later released from custody because the prosecution concluded that “the criminal facts were unclear and the evidence insufficient.”

In response, Huawei said the former employee had every right to sue the company over the case.

E-commerce grows with new trends

Despite all the worries over slowing global growth amid the trade war, the year-end shopping sprees showed there was still huge momentum in two of the largest consumer markets in the world. Consumers from China’s smaller cities helped lift Alibaba to a new Singles’ Day record of 268.4 billion yuan (US$38.4 billion) in sales on November 11.

Meanwhile, US shoppers spent nearly US$17 billion online in total during Black Friday and Cyber Monday sales, the highest in history.

Marketing through live streaming has become the “new sexy” for e-commerce in China, and the country’s smaller cities proved a new growth driver as big cities cooled off.

The year also saw Alibaba’s Ma hand over his executive chairman role over to Daniel Zhang.

Blockchain wins Xi’s endorsement

Chinese President Xi Jinping publicly called for more research and investment into blockchain technology, lighting a new fire under the industry after a period in which cryptocurrencies and related activity had been squeezed in the country.

Finally, China is now on a fast track to launch a digital currency, although the central bank has not made up its mind whether to adopt blockchain or not. Meanwhile, Facebook is still trying to convince the White House to approve its Libra cryptocurrency.


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Milton Friedman
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