TikTok, Hong Kong and More U.S.-China Flashpoints
A demonstrator at a rally to petition the U.S. Congress to pass the “Hong Kong Human Rights and Democracy Act” in the Central district of Hong Kong, China, on Sept. 8, 2019. (Photographer: Kyle Lam/Bloomberg)

TikTok, Hong Kong and More U.S.-China Flashpoints

An incumbent superpower and a rising one are finding coexistence increasingly difficult. Jockeying for position in a changing world, the U.S. and China are facing off on all sorts of issues, most -- but not all -- involving economic rather than military might. As the U.S. prepares for a change of leadership, here’s a rundown of flashpoints, some with significant real-world consequences and others that for now are mostly symbolic.

TikTok and WeChat

IMPACT: Significant
DISPUTE: The video-sharing app TikTok, owned by the Chinese company ByteDance Ltd., is hugely popular in the U.S., especially among teens. WeChat, owned by Tencent Holdings Ltd., is widely used by Chinese and U.S. companies to conduct business. U.S. officials say there’s a potential security threat if the apps are used for propaganda or if the Chinese government uses collected data to create profiles of Americans. U.S. platforms including Facebook Inc. and Twitter Inc. have long been barred from mainland China due to its censorship.
CONSEQUENCES: President Donald Trump signed executive orders to ban U.S. residents from doing business with TikTok or WeChat, but those have been blocked in the courts. Trump also pushed TikTok to sell its U.S business to an American company. Oracle Corp., partnered with Walmart Inc., appeared to have the winning bid, but that agreement appears to be in limbo as well. President-elect Joe Biden, who takes office on Jan. 20, has promised to review security risks surrounding such apps and said he would work with “fellow democracies” to develop global rules on cybertheft, data privacy and artificial intelligence. China, which called Trump’s demands equivalent to theft, has said it could block the sale or any transfer of TikTok’s powerful algorithms. The U.S. has also moved to cut China’s access to advanced semiconductors, driving Beijing to prioritize building its own chip industry and attaining technological self-reliance. Days before his term expires, Trump signed another order that would ban U.S. transactions on eight Chinese payment apps.

Hong Kong

IMPACT: Significant
DISPUTE: China promised that Hong Kong would have “a high degree of autonomy” after it took back the city from the British in 1997. The U.S., as a result, granted a special trading status that helped Hong Kong to prosper as an international financial center. At the end of June 2020, the Chinese government imposed a tough new national security law on the city, following a year of pro-democracy protests, prompting Trump to declare the special status revoked.
CONSEQUENCES: Although Trump stopped short of applying the same tariffs to Hong Kong exports as the U.S. does to those from mainland China, the revocation of some special privileges jarred Hong Kong’s image as a stable base for multinational companies. The U.S. has sanctioned more than two dozen Chinese officials and their allies in Hong Kong, including the city’s leader, Carrie Lam, who said she lost access to basic banking services. (Global financial institutions could face U.S. penalties if they knowingly do business with sanctioned individuals.) China has hit back with sanctions on U.S. officials and members of Congress and new travel restrictions on American diplomats. Biden, who referred to Chinese President Xi Jinping as “a thug” during a Democratic primary debate, has vowed to be tougher with China on human rights and to convene a “Summit for Democracy” to combat authoritarianism.

Spying

IMPACT: Significant
DISPUTE: The U.S. accuses China of increasing the scale of spying and influence operations, including using Chinese scholars in the U.S. to gain access to cutting-edge technology. The FBI and Department of Homeland Security warned in May that hackers working for the Chinese government were trying to steal research on coronavirus vaccines and treatments. China has called such charges slanderous and denied involvement in cyberattacks.
CONSEQUENCES: The State Department ordered the Chinese consulate in Houston to close in July. Two days later, China demanded that the U.S. close its consulate in the southwestern city of Chengdu. The U.S. imposed new restrictions on Chinese diplomats in the country, and China responded in kind. The Trump White House said it would suspend entry for thousands of post-graduate students and researchers deemed to have ties with China’s military schools. Biden has pledged greater focus on such issues as intellectual property theft and also threatened new sanctions.

Huawei

IMPACT: Significant
DISPUTE: The Trump administration designated Huawei Technologies Co. and ZTE Corp. as national security threats, saying use of their gear would make communication networks vulnerable to spying. They deny the charges, and China says the U.S. is trying to suppress the development of Chinese companies. (ZTE is a shadow of its former self, in part due to previous U.S. pressure.)
CONSEQUENCES: The U.S. is making headway in pressing allies to steer clear of Huawei equipment for fifth-generation (5G) mobile networks. It has moved to deny Huawei access to U.S. technology, making it difficult for the company to design and produce its own chips. Biden has said he supports the Huawei ban. The U.S. also is seeking the extradition, from Canada, of a high-ranking Huawei executive on charges related to alleged violations of U.S. sanctions on Iran. China has said that it, too, will take measures against foreign companies that undermine its interests.

Media

IMPACT: Significant
DISPUTE: The Trump administration views most if not all Chinese media outlets as extensions of the Communist Party. China says its media outlets promote international understanding.
CONSEQUENCES: The U.S. and China have taken actions to expel or limit the stays of each other’s reporters, with the Trump administration designating some Chinese media companies as foreign missions, a move denounced by Beijing. China has demanded that certain U.S. media outlets submit detailed information on personnel and assets. It kicked out American reporters in Beijing from the New York Times, Wall Street Journal and Washington Post. The Times said it would relocate some of its Hong Kong-based staff to Seoul.

Tariffs and Trade

IMPACT: Significant
DISPUTE: What started in 2018 with U.S. tariffs on imported washing machines and solar panels escalated into a two-year trade war that, at its peak in 2019, was adding levies to almost $500 billion in products shipped between the two nations. U.S. leaders accuse China of unfair trading practices including subsidizing domestic companies and appropriating intellectual property; China insists it plays by global trade rules and says the U.S. is trying to curb its development.
CONSEQUENCES: A partial trade-war truce called in early 2020 has held up, although risks are growing. Senior U.S. and Chinese officials reaffirmed their commitment to it in late August. Biden has mocked Trump’s “phase one” deal as “hollow” but said he would leave it in place while he fully reviews U.S.-China policy. He said during a primary debate that he would insist on renegotiating “pieces” of a Pacific trade pact before deciding whether to rejoin. (Trump withdrew from it as one of his first official acts.)

Chinese Companies

IMPACT: Potentially significant
DISPUTE: China has long refused to let American regulators examine audits of Chinese companies, even those traded on the New York Stock Exchange or Nasdaq, as is required under a U.S. law meant to protect investors. China’s accounting firms, including affiliates of giants like Deloitte, Ernst & Young, PwC and KPMG, argue that Chinese law bars them from sharing audit work papers because they may contain state secrets. Meanwhile, the Trump administration accuses China of exploiting its access to U.S. capital to beef up its military and security apparatus.
CONSEQUENCES: Lawmakers in Washington laid the groundwork to delist major Chinese companies from U.S. exchanges if their audits remain off-limits to American inspectors. Chinese firms would have at least three years to comply. Trump is expected to sign the legislation before he leaves office in January. The measure also would require foreign companies to disclose if they’re controlled by a government. Separately, Trump signed an order barring American investments in firms owned or controlled by the Chinese military. (The New York Stock Exchange said Jan. 6, after days of confusion, that it would delist three Chinese telecommunications giants, and major banks removed some of their investment products from the Hong Kong exchange.) Others blacklisted are China National Offshore Oil Corp. and Huawei Technologies Co. and Xiaomi Corp. Biden has threatened to block companies that steal U.S. technology from accessing the U.S. market and financial system. China pushed back with vaguely worded new rules intended to protect its companies from foreign sanctions.

Xinjiang

IMPACT: Potentially significant
DISPUTE: China says it’s fighting separatism and religious extremism among the Uighurs, a Muslim ethnic group living primarily in the far-western region of Xinjiang. As many as 1 million have been interned in camps the government calls “voluntary education centers” in recent years. The U.S. and others say China is committing massive human rights violations.
CONSEQUENCES: The Trump administration blacklisted Chinese technology companies, including video surveillance firms, that it said were implicated in human rights abuses in the region. In early 2021 it banned imports of cotton products and tomatoes from the region over what it said was the use of forced labor. Four Chinese officials linked to the region have been sanctioned, limiting their travel to the U.S. and blocking any financial ties. While largely symbolic unless any of them hold assets outside China, the move was significant in that it included a top member of China’s ruling Communist Party. China has retaliated with similar sanctions against U.S. officials including Senators Marco Rubio and Ted Cruz. Biden has called China’s actions “genocide” and called for a united international stand against the campaign.

Travel

IMPACT: Potentially significant
DISPUTE: Fraying relations have led to increased distrust over the treatment citizens may receive on each other’s soil, leading to travel advisories.
CONSEQUENCES: In September, the U.S. urged Americans to reconsider travel to China including Hong Kong, citing Covid-19 and “arbitrary enforcement of local laws.” That followed a July security alert from the U.S. Embassy in Beijing warning that Americans living in or traveling to China may face arbitrary arrest. The U.S. also has restricted travel visas for members of the Chinese Communist Party. China’s tourism ministry issued a travel warning in February, saying Chinese tourists have been treated unfairly in the U.S. due to excessive virus prevention measures. China was also said in 2019 to have asked employees at state-run enterprises to avoid business trips to the U.S. and take extra care to protect their electronic devices.

South China Sea

IMPACT: Potentially significant
DISPUTE: China’s expansive territorial claims in the resource-rich South China Sea have put it at odds with Southeast Asia neighbors including Vietnam, the Philippines and Malaysia. The U.S. has sent warships and aircraft near disputed areas for decades to assert the freedom to navigate through what it considers international airspace and waters. More than $3 trillion worth of trade is estimated to transit through the region annually.
CONSEQUENCES: The Trump administration, reversing a U.S. policy of not taking sides in the underlying territorial disputes, said some of China’s broad claims to the South China Sea “are completely unlawful,” prompting China to accuse the U.S. of “doing all it can to stir up trouble” in the region. In a display of force in August, China launched four medium-range ballistic missiles into the sea during military exercises, a day after protesting a flyover by a U.S. spy plane. At the same time, the U.S. announced trade and visa restrictions on 24 companies for their alleged efforts to help China “reclaim and militarize disputed outposts” in the area, and moved in 2021 to restrict access to U.S. technology by oil giant Cnooc, China’s main deepwater explorer. Biden might seek to play down the military component of U.S. engagement in Asia, which under Trump has prioritized arms sales. His party platform called for avoiding “the trap of a new Cold War.”

Taiwan

IMPACT: Symbolic, for now
DISPUTE: A 1979 law commits the U.S. to support the military self-defense of Taiwan, the democratically run island that China claims as its territory, even though the U.S. has agreed not to officially recognize the government in Taipei.
CONSEQUENCES: The State Department in October approved a potential $1.8 billion arms deal for Taiwan -- including land attack missiles and mobile artillery. Months earlier, the U.S. and Taiwan completed the sale of 66 new model F-16 aircraft. China has condemned such sales as interfering in its domestic affairs and in late October said it would impose unspecified sanctions on three U.S. defense contractors: Lockheed Martin Corp., the defense unit of Boeing Co. and Raytheon Technologies Corp. It also reacted angrily when the U.S. sent a high-level cabinet official to visit Taiwan, followed by the opening of economic talks and the State Department’s removal in early 2021 of restrictions on interactions with Taiwanese officials. Chinese warplanes repeatedly breached a buffer zone between the mainland and Taiwan in mid-September, adding to jitters. Biden has long advocated “strategic ambiguity” in seeking to minimize the risk of a direct conflict.

Coronavirus

IMPACT: Symbolic
DISPUTE: Trump has attacked China’s handling of the outbreak, which he and others on his team have labeled the “Chinese virus” or “Kung flu.” The two sides have also traded accusations about its origins.
CONSEQUENCES: Each put restrictions on the other’s airlines to stem the spread of the virus. In July, Trump began the process of quitting the World Health Organization, in part due to what he called its undue deference to China. Biden has called the WHO “not perfect” but “essential” for fighting a global pandemic and said he would reverse Trump’s withdrawal “immediately.”

Tibet

IMPACT: Symbolic
DISPUTE: In 1959, the People’s Liberation Army quashed a revolt in this mountainous region on China’s border with India and Nepal, and the Dalai Lama, the Tibetan spiritual leader, fled into exile. Tibet’s status as an autonomous region of China has long been an irritant in U.S.-China relations.
CONSEQUENCES: The Trump administration imposed travel restrictions on unspecified Chinese government and party officials determined to be “substantially involved” in restricting access to the region by U.S diplomats and others. In response, China said it would restrict visas for U.S. personnel over their “egregious behavior” on Tibet. Biden has promised to meet the Dalai Lama.

The Reference Shelf

  • More QuickTakes on whether the U.S. and China are really decoupling, the China model of governance, and tensions between China and Australia.
  • A Harvard Business Review article says to be prepared for more.
  • The 2020 annual report from the U.S.-China Economic and Security Review Commission.
  • Bloomberg Opinion’s Niall Ferguson on how Biden and Xi can cool tensions.
  • Bloomberg Economics assessed the trade war and other U.S.-China flashpoints.

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