WeChat: The next battle in the U.S.-China trade war
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The Trump administration last week intensified its "campaign to claw apart the Chinese and American tech worlds," said Scott Rosenberg and Kyle Daly at Axios. After a series of attacks on the Chinese-owned video network TikTok, President Trump signed executive orders that would ban U.S. companies from doing business with not just TikTok but also WeChat, an app central to daily life in China. With American tech platforms largely blocked from China, a ban on WeChat would be a "major disruption" hampering commerce in China and cutting links to the "Chinese diaspora" around the world. The U.S. "has piled one anti-China initiative on top of another," said Bob Davis at The Wall Street Journal. China has been cautious in retaliation, aside from some rhetoric about "red lines," but we may be poised for a major escalation in the trade war. While so far China has said it will stick with the trade accord signed in December, Trump appears to be having second thoughts, saying "I don't feel the same about the deal."
"It's hard to overemphasize the prominence of WeChat in China," said Chaim Gartenberg at The Verge. Initially a messaging app, WeChat is now used in China for every kind of transaction. It has a payments system that is accepted almost everywhere, as well as features that cover everything from hailing a taxi to reading the news. A ban on WeChat is a serious blow to China — and one that could also cripple American companies trying to do business there. "An iPhone without WeChat is effectively not a phone at all for the hundreds of millions of Chinese users who rely on the service." U.S. companies have also come to rely on WeChat to entice Chinese customers, said Adam Minter at Bloomberg. "Since 2017, Caesars Palace in Las Vegas has let Chinese visitors pay for almost anything using the service." A ban would discourage these tourists, as well as people who "come to visit relatives who have settled in the U.S., or to tour college campuses with their kids." Trump is sending a clear message: They're no longer welcome here.
We've seen this approach to technology before, said Josephine Wolff at The New York Times — from China. "China has maintained strict control over the internet and aggressively blocked foreign tech platforms within its borders." Now the U.S. is threatening to do the same, putting at risk the vision of an "open and global internet" our tech industry was built on. That's fine for Trump, who has sold the Republican Party on "a nationalist vision of an America that must stand up to China or be swallowed by it," said Eric Boehm at Reason. The administration is pursuing a fantasy of American self-sufficiency that's repeatedly failed. "The most instantly noticeable effect of Trump's tariffs was to increase the price of goods imported from China, including medical equipment." Even worse, the Trump administration was warned that tariffs would disrupt the supply chain for medical equipment. When the pandemic arrived, that's exactly what happened. Our 18-month trade war with China accomplished nothing, yet now Trump and his advisers are doubling down on an economic nationalism that "will leave the world sicker and poorer."
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.