China’s tech clampdown signals push for ideological security

4 August 2021

Days after China’s homegrown ride-hailing giant, Didi Global, listed in New York in early July, China’s Cyberspace Administration (CAC) launched a national security investigation into the company, instantly cratering its share price. Within weeks, Beijing had raided the company and stationed tax and cyber officials, as well as officers from the Ministries of Public Security, and State Security inside Didi’s offices as part of a national security review of its collection and handling of data. This is the first time a permanent intelligence presence has been stationed inside a Chinese tech company — or at least announced publicly so.

Since the crackdown, Chinese regulators have further clamped down on the country’s education sector and signalled plans to amend the Measures for Cybersecurity Review, which have been in effect since 1 June 2020. Among the proposed amendments is a requirement for any Chinese company with data on at least one million users to undergo a cybersecurity review by the CAC before listing in a “foreign country”. Regulators are also said to be considering a rule that would require firms that have already gone public via a variable interest entity (VIE) structure to obtain CAC approval for additional share offerings overseas.

Almost every US-listed Chinese company is listed through a VIE structure, including those in China’s USD100 billion tutoring industry. The overhaul will eliminate foreign investors from much of the sector, quashing billions of dollars of investment. Together, the consequences of Beijing’s regulatory manoeuvres will be vast, and more actions are likely forthcoming. Beijing has framed the measures as a matter of national security. Yet what it considers national security extends beyond just risks to the nation-state to involve expansive ideational considerations.

National data, national identities

The market response has been swift. A number of Chinese companies including home service platform, Daojia, and e-commerce platform Xiaohongshu, known as Little Red Book, have set aside their ambitions to go public, while others are considering a pivot to Hong Kong. While the proposed amendments do not include an explicit exemption for Hong Kong listings, Beijing has made clear that it considers Hong Kong a part of China and not a ‘foreign country’.

In the case of Didi and China’s wider technological crackdown, it is then ideology, above all else, that is at the centre. Recognising and internalising this fact will help foster a better global understanding of China, and a better ability to anticipate what else is to come.

The routing of public listings to Hong Kong may then have factored in Beijing’s decision as a likely and welcomed consequence of the regulatory shifts. As a global financial and business hub and home to world-class universities and research institutes, Hong Kong is key for Beijing in its push to become a financial and technological power — key to Xi Jinping’s goal of ‘national rejuvenation’.

If, as the saying goes, your data knows more about you than you know about yourself, then the most surprising aspect of the crackdown is that it did not happen sooner. Didi has 377 million annual active users, 13 million annual active drivers, and volumes upon volumes of data on street mapping and consumer mobility. As late as the 1990s, Beijing restricted old–fashioned city maps on national security grounds. Since 2015, it has further tightened supervision of maps that run counter to its stance on territorial disputes and “endanger the country’s sovereignty, safety, and interests".

According to China’s State Council, such maps reflect China’s “national sovereignty and political views”. The information they possess is key to the Communist Party’s policy aims. While US-China competition has assumed centre stage in the crackdown — and for good reason, as Beijing does not want US regulators to have influence over Chinese firms or access to their data — the recent moves can only be fully understood in the context of the CCP’s broader policy agenda and its evolved understanding of national security. For both, ideology is key.

Information about what people eat, the goods they purchase, the places they frequent and when; the content they consume and how; the state of their finances; their social interactions — all reveal a story about a country and its people. Based on what we know of China’s gaming industry, for instance, we might surmise that the Chinese are competitive or creative.

Data collected by mobility platforms like Didi may paint a picture of how often citizens attend religious services, for example, or visit family, or more controversially, they may offer insights into the comings–and–goings of state officials, as happened in China in 2015. When well aggregated and analysed, data forms the basis of storytelling. And stories are essential for a country’s national identity. They help foster a nation’s collective memory: it's understanding of itself, it’s worldview, and culture.

When understood in this way, Beijing’s data clampdown was expected. Since the emergence of the Chinese state over one thousand years ago — and the political ascent of the CCP over seventy years ago — Chinese security policy has been key to the defence of a Chinese geographic, sociopolitical, and cultural heartland. The CCP has continued to warn of the threat of “cultural contamination and subversion” posed by Western philosophical beliefs and popular culture, and by Western concepts of social, political, and economic pluralism.

For the Party, foreign access to data that could lend actors greater insight into the preferences and behaviours of Chinese citizens, and which could then be used for their political gain, aggravates this threat. This is what the CCP means when it notes that data is a reflection of national sovereignty and ideals.

Perhaps more importantly, the CCP wants to ensure details on Chinese citizens are available only for the pursuit of its own policy objectives. These include propagating China’s voice on the international stage, “telling China’s stories well, spreading China’s voice well”, and in so doing establishing a global ideological environment conducive to the country’s rise. Beijing’s vision of ‘national rejuvenation’ is as much normative as it is economic.

Its success requires a community of states that are sympathetic to Beijing’s aims and share (or at the very least do not oppose) its worldview. For this, the Party’s ability to leverage data and craft narratives that engender a kind of strategic empathy among its peers is essential. China’s creative industries — television, film, gaming — have emerged as tools to achieve this end. This end in turn demands unbridled access to not only domestic information but also information on other states. Overseas data theft is a challenge.

In pursuit of ideological security

So far, China’s regulatory measures have been framed as a matter of national security. This is not entirely incorrect. Yet, for Beijing, national security is ideological security, and all elements of policymaking and political considerations are subordinate to it. This was true before Xi — before even China’s communist turn — and it has become all the more true since.

One does not even have to conjecture: the CCP has made this point abundantly clear in documents such as the 2013 ‘Communiqué on the Current State of the Ideological Sphere’ (commonly known as ‘Document No. 9’), Xi’s April 2014 speech on the ‘Overall National Security Outlook’, and more recent Party pronouncements.

In the case of Didi and China’s wider technological crackdown, it is then ideology, above all else, that is at the centre. Recognising and internalising this fact will help foster a better global understanding of China, and a better ability to anticipate what else is to come.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Aleksandra Gadzala Tirziu is a thought-leader on a range of geopolitical issues with a unique focus on authoritarian systems and commercial growth. She is Head of Research for The Singularity Group, Senior Nonresident Fellow for the Atlantic Council, Lecturer in International Relations at the University of Zurich, and author of Africa and China: How Africans and Their Governments are Shaping Relations with China. She holds a PhD and MPhil in Politics from the University of Oxford, and BA in Political Science from Northwestern University. Image credit: Flickr/Konrad Lembcke.