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From AI to facial recognition: how China is setting the rules in new tech

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This article is part of a series on the New Cold War

Zhao Houlin is head of the UN’s telecoms agency, an independent international arbiter that sets some of the rules shaping the modern technology industry. But that does not stop him from letting his patriotism burst into the open.

A former government official in China, Mr Zhao has repeatedly lionised the Belt and Road Initiative, the pet project of Chinese president Xi Jinping to invest in overseas infrastructure. He has also defended Huawei, the controversial Chinese telecoms champion, against US accusations that its equipment can be used for espionage.

“Those preoccupations with Huawei equipment, up to now there is no proof so far,” Mr Zhao, who is secretary-general of the International Telecommunication Union, told reporters in Geneva last year. “I would encourage Huawei to be given equal opportunities to bid for business.”

But it is in his unabashed support for Chinese technology standards that Mr Zhao’s loyalty to Beijing is most striking. Although he was sworn into his ITU role with a pledge to act “with the interest of the union only in view” while avoiding influence from any one country, he regularly celebrates China’s growing presence in the telecoms and internet industries.

“Nowadays in the discussion of relevant ITU standards, China’s technical strength is already in the first echelon and the international community expects China to play a greater role in the UN system,” Mr Zhao was quoted by the People’s Daily, an official Chinese newspaper, as saying last week. In other statements carried by the Chinese media he has praised the role of the country’s telecoms companies in setting new industry standards.

Mark Warner of the US Senate intelligence committee says Beijing is intending to control digital infrastructure and, as it does so, to impose principles that are antithetical to US values
Mark Warner of the US Senate intelligence committee says Beijing is intending to control digital infrastructure and, as it does so, to impose principles that are antithetical to US values © Saul Loeb/AFP/Getty

Zhao Houlin, head of the independent UN telecoms agency, regularly celebrates China’s growing presence in the telecoms and internet industries
Zhao Houlin, head of the independent UN telecoms agency, regularly celebrates China’s growing presence in the telecoms and internet industries © Denis Balibouse/Reuters

Mr Zhao declined to comment on his statements. His advocacy of China’s interests, however, throws light on the intensifying geopolitical battleground of technological standards, a much overlooked yet crucial aspect of a new struggle for global influence between China and the US.

Such standards might seem obscure, but they are a crucial element of modern technology. If the cold war was dominated by a race to build the most nuclear weapons, the contest between the US and China — as well as the EU — will partly be played out through a struggle to control the bureaucratic rule-setting that lies behind the most important industries of the age.

Gearing up

The commercial and geopolitical power of industrial protocols has long been recognised. Werner von Siemens, the 19th-century German industrialist and innovator who gave his name to the Siemens conglomerate he founded, said: “He who owns the standards, owns the market.”

Standard-setting has for decades largely been the preserve of a small group of industrialised democracies. Everything from the width of train tracks, to software, satellites, the frequencies that mobile phones use and a whole gamut of rules about how electronic gadgets work and process data have been decided by western-dominated standards organisations.

New Cold War

In a series of articles this week, the FT explores how the US-China rivalry is beginning to resemble a new cold war, with the technology world splitting into two blocs and countries being asked to choose sides.

Monday: Trump, Xi and the escalating US-China confrontation

Tuesday: Can supply chains in China be shifted elsewhere?

Thursday: How America turned hawkish on China

But China now has other ideas. “Industrial standards are an important area of contestation in the new cold war, with both Beijing and Washington gearing up to shape the development and implementation of global standards,” says Adam Segal, director of the digital and cyber space policy programme at the Council on Foreign Relations, a New York-based think-tank.

He and other experts say an intensifying US-China battle to dominate standards, especially in emerging technologies, could start to divide the world into different industrial blocs. In the same way that rail passengers who travel from western Europe to some former Soviet bloc countries must to this day change trains to accommodate different track widths, strategic competition between the US and China raises the spectre of a fragmentation of standards that creates a new technological divide.

Mr Segal says it is possible, for example, that 5G mobile telecoms — a bedrock technology that enables the “internet of things” — may be divided into two competing stacks to reflect US and Chinese influence. Some measure of division is also possible in semiconductors, artificial intelligence and other areas where US-China rivalry is intense, he adds.

A software engineer works on a facial recognition program in Beijing. The technology used in 'smart cities', which automate multiple municipal functions, represent a big prize for China’s standards drive
A software engineer works on a facial recognition program in Beijing. The technology used in ‘smart cities’, which automate multiple municipal functions, represent a big prize for China’s standards drive © Thomas Peter/Reuters

“In some sectors, there will be two stacks that are relatively incompatible,” says Mr Segal. “But in others, there is likely to be some demand that they co-operate. It is possible that large markets that make it clear they do not want to choose between China and the US may be able to pressure Chinese and US tech firms to ensure some degree of compatibility.”

In Washington, the battle for influence over technology standards is seen in some quarters as crucial to defending democracy from the influence of China, which Madeleine Albright, a former secretary of state, describes as “the world’s leading pioneer of what we call techno-authoritarianism”.

Mark Warner, Democratic vice-chair of the US Senate intelligence committee, sees the threat from China in equally unambiguous terms. Beijing is intending to control the next generation of digital infrastructure, he says, and, as it does so, to impose principles that are antithetical to US values of transparency, diversity of opinion, interoperability and respect for human rights.

“Over the last 10 to 15 years, [the US] leadership role has eroded and our leverage to establish standards and protocols reflecting our values has diminished,” Mr Warner told a webinar in September. “As a result others, but mostly China, have stepped into the void to advance standards and values that advantage the Chinese Communist party.”

“Communist party leaders are developing a model of technological governance that . . . would make Orwell blush,” Mr Warner added, referring to George Orwell, the British writer of the dystopian novel 1984.

Such issues are exercising others in Washington too. Two congressmen, David Schweikert and Ami Bera, introduced bipartisan legislation called the Ensuring American Leadership Over International Standards Act in June to commission a study on China’s influence in the setting of global technology standards.

Graphic showing the number of ‘smart city’ and ‘safe city’ project deals involving Chinese companies since 2013 (by region)

Military and civil applications

From a US perspective, China’s challenge derives from three main areas. First, it is developing world-beating technology in several emerging areas, such as 5G telecoms and AI. Second, as it exports this technology — often to more than 100 countries that participate in the Belt and Road Initiative — it is nurturing adherence to a distinctly Chinese set of standards and protocols. Third, Beijing is boosting its influence in the UN and other standards-setting bodies to enhance the interests of its own companies.

Yang Guang, a Beijing-based senior analyst at Strategy Analytics, a consultancy, says China has long been interested in raising the profile of its technology standards. “It is just that foreigners didn’t pay attention before,” he says, naming as examples TD-SCMA and WAPI, two telecoms standards that largely failed to catch on more than a decade ago.

The Chinese government is working towards a standards masterplan — China Standards 2035 — which Beijing was expected to publish before the end of this year. The strategy is expected to set out standardisation goals for crucial next-generation technologies. It is also due to emphasise the imperative to strengthen China’s role in standards organisations, analysts say.

“The strategy will also focus on standards to facilitate civil-military fusion — a concept that has gained considerable traction in China and has caused a stir in strategic communities overseas, particularly in Washington,” wrote research fellow John Seaman in a report this year for the French Institute of International Relations and the Policy Center for the New South.

Military-civil fusion is a plan to use the best of civilian research and development to bolster the technological capacities of the People’s Liberation Army. The drive is led by Mr Xi himself, who heads the Commission for Military-Civil Fusion Development. It is believed to target civilian advances in “dual use” areas such as quantum computing, big data, semiconductors, 5G and AI, but concrete initiatives are shrouded in secrecy.

“China’s greatest potential lies in areas where standards have yet to be collectively developed and defined,” Mr Seaman says. “It can roll out technologies using Chinese standards in foreign markets, creating ‘facts on the ground’.”

Digital silk road

Crucial to the goal of popularising Chinese standards overseas is the Belt and Road Initiative, which Mr Zhao described in a blog on the ITU’s website as holding “so much promise”.

The BRI is generally seen as a huge Chinese programme to build roads, railways, ports, airports and other forms of infrastructure in mostly developing countries. But this portrayal overlooks a key point. The BRI is also a means of diffusing Chinese technologies — and the standards they operate on — across the developing world by constructing what Beijing calls a “digital silk road”.

Zhao Houlin of the UN’s telecoms agency has defended Huawei against US accusations that its equipment can be used for espionage, saying 'up to now there is no proof'
A Huawei logo in Belgrade, Serbia. Zhao Houlin of the UN’s telecoms agency has defended the company against US accusations that its equipment can be used for espionage © Marko Djurica/Reuters

“The Chinese government has been actively promoting its internet and cyber governance playbook in many developing countries, most recently by leveraging 5G connectivity and smart city projects along the digital silk road,” says Rebecca Arcesati, an analyst at Merics, a Berlin-based think-tank.

“Smart cities” are a focus of this standards diffusion effort because they incorporate so many emerging technologies. The facial recognition systems, big data analysis, 5G telecoms and AI cameras that go into creating smart cities are all technologies for which standards remain up for grabs. Thus smart cities, which automate multiple municipal functions, represent a big prize for China’s standards drive.

“China is setting standards from the bottom-up through widespread export and foreign adoption of its technology,” says Jonathan Hillman, an analyst at CSIS, a Washington-based think-tank. “A country such as Serbia might not sit down and decide they want to adopt Chinese standards, but after enough purchases and deals, they might end up with Chinese standards. There is the risk of lock-in, a point after which switching becomes too costly.”

Serbia is just one of many countries that has signed up to a Chinese-installed smart city package complete with surveillance cameras supplied by Hikvision, a company blacklisted by the US because of suspected human rights abuses in Xinjiang. Indeed, the smart city package is proving immensely popular for governments that wish to automate services such as traffic management, sewage systems and public safety while keeping a close eye on what its people are up to.

According to research by RWR Advisory, a Washington-based consultancy, Chinese companies have done 116 deals to install smart city and “safe city” packages around the world since 2013, with 70 of these taking place in countries that also participate in the Belt and Road Initiative. The main difference between “smart” and “safe” city equipment is that the latter is intended primarily to surveil and monitor the population, while the former is primarily aimed at automating municipal functions while also incorporating surveillance functions.

Cities in western and southern Europe together signed up to a total of 25 such “smart” and “safe” projects, according to RWR Advisory. Cities in south-east Asia and the Middle East were also key recipients, taking 16 and 15 respectively.

Andrew Davenport, chief operating officer at RWR Advisory, says smart cities open the door to a series of risks. “Smart cities essentially increase the downside risk considerably of cyber intrusions or abuses, both in terms of data security and cyber security,” he says. “The cyber risk that is associated with entities that are subject to Chinese laws and governance structures is amplified in this environment.”

People pass facial recognition cameras at Peking University. China's growing influence in global IT standards-setting bodies is facing a US backlash, while the EU is likely to be squeezed by competing superpower ambitions
People pass facial recognition cameras at Peking University. China’s growing influence in global IT standards-setting bodies is facing a US backlash, while the EU is likely to be squeezed by competing superpower ambitions © Thomas Peter/Reuters

Chinese school children learn about artificial intelligence technology in Haian City. Some measure of global division is possible in semiconductors, AI and other areas where US-China rivalry is intense
Chinese school children learn about artificial intelligence technology in Haian City. Some measure of global division is possible in semiconductors, AI and other areas where US-China rivalry is intense © Costfoto/Barcroft Media/Getty

Alongside with these export moves designed to inculcate its technology standards, China is also active in signing political agreements to the same end.

The 2019 China Standardisation Development annual report, an official document, makes clear that promoting Chinese technology standards is a BRI priority. As of 2019, some 85 standardisation co-operation agreements with 49 countries and regions had been signed, though scant literature exists on the depth and specific contents of such agreements.

Institutional push

Not content with forging bilateral agreements along the Belt and Road, China is also trying to persuade multilateral standards agencies to recognise its growing clout.

As recently as 2007, China was a minnow in the International Organization for Standardization, one of the world’s leading standards-setting bodies, with 164 member countries. Back then, it had sparse representation on the all-important technical committees and subcommittees that do much to decide which standards to adopt.

But in 2008, Beijing managed to win a place as the sixth permanent member of the ISO’s council and in 2013 it became a permanent member of its technical management board, alongside the US, Japan, the UK, Germany and France. In 2015, the organisation got its first Chinese president when Zhang Xiaogang, a former steel industry executive, was chosen for a three-year term.

© Andrew Harnik/Pool/Reuters

It has been a similar story at the 88-member International Electrotechnical Commission, an organisation that publishes standards on all electronic items. China’s influence at the IEC has grown steadily, culminating in the appointment in January of Shu Yinbiao — who is also chairman of the State Grid Corporation of China — as president of the IEC. Mr Zhao completes the picture as head of the ITU, which he is due to lead until 2023.

The increased representation has had a marked effect on China’s standards-setting clout. As of March 2019, for instance, China had proposed 11 standards for the internet of things within the ISO/IEC framework, of which five had been adopted and published and six were still pending review, Mr Seaman said.

State Grid Corporation of China has also pulled off a coup. The IEC has agreed to take on co-ordinating standards for a concept called Global Energy Interconnection, which essentially aims to create huge grids of power cables that run between countries and continents. If the idea gets off the ground it could directly benefit State Grid, which is the global leader in making ultra-high voltage transmission lines.

The build-up of such institutional firepower in these standards-setting bodies is a sure sign that China is set to wield much more influence over global technological standards. But equally as sure is that the backlash from Washington is building. Europe, for its part, is likely to be squeezed by competing superpower ambitions.

“The non-transparent and authoritarian way in which China is going about data security management at home undermines trust in its standards and platforms abroad,” says Merics analyst Ms Arcesati. “On the other hand, the current US strategy is essentially equating data security with a total and unilateral decoupling from Chinese technology in the digital domain.

“This puts Europe is an extremely difficult position,” she adds.

The worst-case scenario, as described by Mr Seaman, is of a growing technological divide. If international collaboration on standards grinds to a halt, it could create opposing technology blocs that do not talk to each other. “Think of it almost like trying to connect with someone on [Tencent’s] WeChat by using Facebook, but on an industrial scale.”

Mr Davenport sees a similar risk. “If the US does engage more proactively in trying to confront Chinese influence over standard-setting bodies . . . it could lead China to explore creating parallel alternatives. This could ultimately result in a more bifurcated arena on industrial standards.”



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Hong Kong’s Olympic successes expose deep political fissures

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Hong Kong politics updates

The Hong Kong Olympics team’s future as a separate entity from that of mainland China is secure, the territory’s Games chief Timothy Fok said, despite political tensions exposed by his squad’s historic achievements over the past week.

Siobhan Haughey, a Hong Kong swimmer, won a second silver medal in Tokyo on Friday, cementing the Games as the city’s most successful ever. Fencer Cheung Ka-long won the city’s first gold medal since its 1997 handover from the UK in the foil event.

But the euphoria over their victories quickly became politicised when crowds in the territory celebrating Cheung’s gold booed and shouted “We are Hong Kong” over the Chinese national anthem, which played as he accepted his medal on the podium in Tokyo this week.

Police have launched an investigation and said on Friday they had arrested a 40-year-old person, who also waved Hong Kong’s colonial-era flag at the scene, for insulting the national anthem.

The display of resistance was a stark reminder of a strong lingering undercurrent of discontent in the Asian financial centre, despite a crackdown on dissent by Beijing after anti-government protests in 2019.

China last year imposed a tough new security law last year on Hong Kong, with the first person to be convicted under the legislation, a former waiter who rode a motorbike into a police line last year, given a nine-year jail term on Friday.

But Fok, president of the national Olympic committee of Hong Kong, said he had urged athletes to ignore the controversies. There was an understanding in China that Hong Kong had “a separate identity” to the mainland and there were no plans to integrate the city’s team with that of its bigger neighbour, he said.

“They have [1bn] people, we only have 7m. I am very proud with this new encouragement and success. Sport will be a very important part of the development of Hong Kong.”

Hong Kong authorities are keen to demonstrate the crackdown has not had an impact on the city’s vibrancy. Carrie Lam, Hong Kong’s chief executive, said last week that arts and culture in the city were “booming” and there had been no weakening of people’s freedoms.

The city was promised a high degree of autonomy and freedom of expression after 1997. This autonomy was symbolised by Hong Kong’s right to have its own Olympics team, although it was also agreed that China’s national anthem would be played at medal ceremonies for the territory’s athletes.

Shushu Chen, a lecturer in sport policy at the University of Birmingham, said the mainland had shown significant support for elite sport development in Hong Kong

“I don’t think the Chinese government will advocate in future Olympics that Hong Kong athletes should be integrated under the main PRC flag,” she said. “That will lose the sense of identity of Hong Kong . . . I don’t think that is what the Chinese government is trying to do.”

Tam Yiu-chung, Hong Kong’s sole delegate to the National People’s Congress Standing Committee, the permanent body of China’s parliament, said that any change was unlikely under “one country, two systems”, the Chinese government policy governing Hong Kong’s autonomy from the mainland since the handover.

Hong Kong’s only other gold medallist, windsurfer Lee Lai-shan, accepted her medal at the 1996 Atlanta Games under the British Hong Kong colonial flag as “God Save The Queen” played.

Cheung, whose parents were both Chinese national league basketball players, is a cat lover who often posts pictures of his family’s American shorthair Zimba. “It means a lot to show to the world we can do it,” he said. “We are not only a city. We can fight for victory.”

While Cheung made no political comments after his win, pro-democracy groups were quick to seize on the victory. During the 2019 protests, anti-government demonstrators sang their own anthem “Glory to Hong Kong” in shopping malls. After Cheung’s ceremony, netizens substituted the Chinese anthem for the song in viral videos showing Cheung on the Tokyo podium.

Hong Kong’s pro-Beijing camp also generated controversy when a lawmaker Nicholas Muk criticised one of the territory’s top badminton players for wearing a black T-shirt — a colour favoured by the 2019 protesters — without displaying the Hong Kong flag.

After Muk accused him of supporting the pro-democracy movement, the player, Angus Ng Ka-Long, wore a different shirt to try to calm things down as he also came under attack from Chinese netizens.

Even though he was the eighth seed in the men’s singles competition, Ng was beaten by Guatemalan shuttler Kevin Cordon, who was ranked 59th, leaving many supporters blaming Muk for distracting Ng.

“It is probably not true that there was no impact. I have been trying hard to calm down and I want to focus on the competition,” Ng said after losing. “But how can I forget it completely.”



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Ben Okri: rediscovering a 4,000-year-old poem

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When the world began to close down 17 months ago, I was filled with a sense of foreboding about what would befall the life of the spirit, and wrote a heartfelt appeal in this paper urging the world not to forget the arts. I maintained that art at its best reveals to us the fullness of what it means to be human.

At the time I feared the lights would go out all over the world and all forms of culture would sink under the assault of the pandemic. But it soon turned out that we could not live without art and culture after all. It was just that art had to find new ways to reach us, new ways to exist, and artists had to find new ways of making art. For many artists, their homes became their studios. Zoom replaced travel, and virtuality replaced intimacy.

But there is something matchless about live theatre. Nothing quite comes close to the mysterious vitality of living actors and an audience throbbing with anticipation and immersed in the entanglements of a story. And so this weekend something remarkable will happen. After a year and a half of not practising their art in person, a group of actors will be staging at the Young Vic my new play, Changing Destiny. It is set in ancient Egypt and is based on a nearly 4,000-year-old poem called “The Tale of Sinuhe”.

Ashley Zhangazha in rehearsal for Ben Okri’s ‘Changing Destiny’ © Marc Brenner

The play began its life before lockdown, but the writing of it and the intricacies of production took place during it. Most of the process happened on Zoom. Staff had to work from home and the theatre struggled for funding. A curious early obstacle was the shortage of black male actors, who were unprecedentedly in such high demand. Fortunately, we found the excellent Ashley Zhangazha, who had played Ike Turner in Tina: The Tina Turner Musical. He plays alongside the wonderful Joan Iyiola, a veteran of the Young Vic.

The play began as a classic three-act play in the Greek tradition, then was compressed into a two-hander. We wanted this play, based on one of the most popular poems in the ancient world, to be as close as possible to the oldest form of storytelling on the stage, where the play is made up as much from the imagination of the audience as from the suggestive performance of the actors. We wanted an ancient form of theatre, the campfire theatre, alongside the most modern of technological innovations.

But producing a play during lockdown proved quite a challenge. And it took nerves of steel from the intrepid artistic director of the Young Vic, Kwame Kwei-Armah, to manage all the contingencies and devise the most Covid-free environment for the actors to rehearse and the theatre to function. Going into rehearsal required a rigorous daily health check. The rehearsal area was completely sealed off.

The pressure on the actors was enormous. There are only two of them, one male, the other female, playing 100 roles. They rotate the playing of the central role of Sinuhe. This makes it a gender-transcendent performance. To experience the play fully, you have to see it twice, to see what happens when Sinuhe is a man and then a woman.


Joan Iyiola in rehearsals for ‘Changing Destiny’ © Marc Brenner

I first became interested in “The Tale of Sinuhe” as part of my abiding curiosity about the ancient Egyptian civilisation and its relationship to Africa. It seems people have managed to mentally separate Egypt from the rest of the continent. Now, perhaps, is the time for Egypt to be dealt with as part of the broken history of the continent.

But my interest in ancient Egypt is also mythical and spiritual. The poem of Sinuhe is a literary text but also belongs to the mural tradition of Egyptian art. The scribe who copied it had it painted in his tomb. It is a visual poem, a performance to death and immortality.

A casual encounter with Kwei-Armah, who is himself a fastidious playwright, at an event celebrating Nelson Mandela through his prison letters, gave the second impetus for the writing of the play. We were surprised at our mutual fascination for this now little-known Egyptian poem.

After the final draft was accepted, Kwame decided early that he wanted Changing Destiny to be the first play the Young Vic performs as it comes out of lockdown, a play that matches the strangeness of emerging from the long period of isolation with the magic and strangeness of an ancient world. But it has proved as difficult coming out of lockdown as going into it. The production suffered cancellations and postponements and has been a lesson in bringing back theatre in historic times.

From the beginning, though, we were not interested in theatricalising the poem, but in finding an authentic political and ritual drama from it. No play about ancient times can be written that is not a play about today. We can only understand the past through the present. It is the only portal we have. Conversely, we can only understand the present through the past.

The Sinuhe poem reveals profound political tensions in ancient Egypt. It is an indirect account of the assassination of Pharaoh Amenemhat I; and of Sinuhe, implicated in the plot, who had to flee to foreign lands. Contained in the poem are archetypes that have haunted the human imagination.

Prefigured within it are preoccupations with home and exile, with identity, the unknowability of human motives, and those eternal issues of freedom. Right at the heart of the poem is the problem of power, of what to do when an autocratic regime is destroying the fabric of society. Hard as this is to believe, those pyramid-makers had their fingers on the pulse of things that would consume us 4,000 years later.

Kwame Kwei-Armah, artistic director of the Young Vic and director of ‘Changing Destiny’ © Marc Brenner

Ancient Egypt has been marginalised in the story of literature. That ought to change. The tendency in the west has been to begin with the Greeks as if nothing much had been written before. But the writing of Herodotus and Plutarch bears witness to the Egyptian roots of Greek culture, to the notion that the Greeks got some of their gods from Egypt. There is even a fruitful tradition that contends that the ancient Egyptian mystery plays were the real progenitors of Greek theatre.

There are hints in the Greek myths of importations from other cultures. Dionysus has an Asiatic tinge. Many cultures inform the pantheon of Greek gods. In order to overcome enduring Eurocentric tendencies, we need to go back to the ancients to see how myths and mysteries spread from one centre to another. It should cure us of the notion that the roots of western civilisation come from only one place.

The migration of gods and cults and peoples is hard-wired into the story of civilisation itself. “The Tale of Sinuhe”, for this reason, ought to induce in us cultural humility and a sense of wonder. It ought to be widely taught in schools and be as well known as Homer’s Odyssey or The Arabian Nights.

Writing Changing Destiny, I wanted to bathe the audience in this eternal stream. I wanted to divert some of its waters into these divisive times. Whether it be the cruel treatment of migrants at American borders, or the European seas alive with the ghosts of migrants who tried to make it across, or the new immigration bill recently published by the British government, this ancient Egyptian poem, now made into a play, hints that the issue of immigration demands a new way to look at the human story and the human spirit. Not one that demonises out of fear, but one whose understanding comes from the long perspective about the mystery of the human estate.

To August 21, youngvic.org

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China reaffirms plans to beef up oversight of foreign listings

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Chinese politics & policy updates

Beijing reiterated its intention to strengthen oversight of overseas listings on Friday, capping a volatile week during which contradictory policy signals rocked the share prices of Chinese companies.

At its mid-year meeting, the Chinese Communist party’s politburo stated its determination to “improve” the regulatory framework for companies listing shares overseas. It was the first time the politburo, comprised of the party’s top 25 officials, had specifically addressed the issue.

Chinese regulators have been angered by Didi Chuxing’s decision to press ahead with a $4.4bn initial public offering in New York last month, despite their concerns about the ride-hailing group’s data security practices.

Senior party and government officials have subsequently vowed stricter oversight of overseas listings, which will now require clearance from the country’s internet regulator. Didi’s shares have plunged as other Chinese companies cancelled or delayed plans to list outside of the country.

Investor confidence in Chinese tech companies was further dented on Monday when Beijing revealed draconian new rules for the country’s booming private education sector. The share prices of New York-listed tutoring companies collapsed, after which a senior securities regulator sought to reassure financial executives that Beijing was not seeking to ‘“decouple” Chinese companies from US and other overseas markets.

The comments by Fang Xinghai, vice-chair of the China Securities Regulatory Commission, on Wednesday helped stop a broader sell-off of Chinese shares. But they were not enough to prevent a more than 20 per cent monthly decline in US-listed Chinese tech companies.

Chinese officials have shown no sign of reining in their crackdown of the country’s largest tech groups for alleged violations of monopoly and data security laws.

Separately, China’s transportation ministry on Friday signalled an intensification of the measures against Didi and other ride-hailing groups. It said in a statement that companies in the sector must improve compliance over network and data security management to better protect customers’ personal data. Stronger supervision of antitrust practices, as well as improved rights of workers in the sector, was also needed, it said.

The statement did not name specific companies but noted that the government’s transport sector oversight is being directed by President Xi Jinping.

The Chinese government is conscious that the campaigns against tech and education companies could dent already fragile private sector confidence as the government tries to boost slowing economic growth.

Liu He, a Chinese vice-premier and the country’s top economic and financial official, sought to reassure representatives of small and medium-sized enterprises on July 27, acknowledging that they were the “main source” of employment. “The Chinese economy will do well only if SMEs do well,” he added.

While China has rebounded strongly from the Covid-19 pandemic, officials have been concerned by slowing infrastructure investment — an essential driver of the world’s second-largest economy. The politburo suggested it would encourage more fiscal spending and local government debt issuance to accelerate economic growth.

The Chinese government has also struggled to contain a new outbreak of Covid-19’s Delta variant, which has spread across the country from an airport in eastern China.

Additional reporting by Edward White in Seoul



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