One afternoon in April 2018, Zhang Yiming, the founder of Bytedance, a Beijing-based online media company, received a notice from Chinese regulators asking him to shut down an app where people shared jokes and funny videos.
He did so and in aPublic ApologyHe expressed remorse and guilt in his speech. “I blame myself because I failed to live up to the guidance and expectations of the competent authorities,” he wrote.
Zhang Yiming promised to take nine remedial measures. The most important measure is to strengthen party building within ByteDance and educate employees to consider issues from the perspective of the party and the government.
Now, ByteDance, which owns TikTok, faces a similar order from the U.S. government: sell the short-video app or face a ban. The company is fighting back in U.S. courts.
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In the past, Chinese companies doing business overseas could survive at home by submitting to the Chinese government while enjoying the protection of private ownership and the rule of law in the United States.
But as distrust deepens between the world’s two superpowers, the foundations on which Chinese companies like ByteDance have been built are crumbling. These companies have been caught between their own authoritarian governments and an increasingly suspicious, even hostile, U.S. administration.

TikTok and other Chinese companies that have flourished in the United States, such as Temu and Shein, are multinational companies controlled by the Chinese. The label of being owned by the Chinese has become a heavy burden. This is deeply felt by all those in the Chinese business community who want to find opportunities overseas when the domestic economy is weak.
TikTok’s challenges in Washington are an example of what many Chinese entrepreneurs and investors will encounter outside of China as the business environment in China deteriorates under Xi Jinping, who favors state-owned enterprises.
According to data from China’s Ministry of Commerce, Chinese investors invested $130 billion in nearly 8,000 companies around the world in 2023. Compared with 2018, the investment amount increased by about 8%, and the number of invested companies increased by 38%.
“The business community is very concerned about where and what they can invest in outside of China,” said Ding Xueliang, a retired professor at the Hong Kong University of Science and Technology who studies globalization and China’s sociopolitical processes. He has been giving lectures, sometimes attended by hundreds of people at a time, to Chinese entrepreneurs who want to know whether their companies might face national security scrutiny in developed countries.
“The road is getting narrower and the grade is getting steeper,” he said.
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The hard part, he and others said, is that the U.S. has legitimate doubts about whether TikTok can be truly independent of the Chinese government. No Chinese company or Chinese-owned entity can refuse a request from the Chinese government. Doing so would jeopardize the personal and corporate assets of executives and the safety of their families. ByteDance founder Zhang Yiming’s response to a government order in 2018 was typical.
The murky realities of doing business in China make it difficult for outsiders to distinguish between companies and the Chinese government.
Some companies, especially online platforms like ByteDance, help strengthen the Chinese Communist Party’s rule by implementing government-mandated censorship and spreading government propaganda. Companies benefit from close ties to the government, which are difficult to avoid in a country where the government owns nearly everything.

Mr. Su, a former project manager at Bytedance and TikTok who left the company last year, said Bytedance’s problem is that it wants to have the best of both worlds. He said Bytedance acts as an arm of the government’s propaganda machine at home while enjoying the benefits of the free and democratic world abroad.
TikTok has more than 1 billion users worldwide, including 170 million in the United States. Users in China do not use TikTok but Douyin, a similar short-video app offered by ByteDance in China. The U.S. government is concerned that the Chinese government is pressuring ByteDance to obtain sensitive user data or spread propaganda. TikTok has denied those concerns and said it has taken steps to store U.S. user data in the United States.
But most private Chinese companies, like their American counterparts, want a level playing field where they can go where the money is made. That goal is facing increasing scrutiny and uncertainty.
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A Chinese businessman in self-exile in another Asian country told me that the government there blocked his plans to invest in a semiconductor company because of national security concerns. He ended up investing in the hotel industry. He couldn’t go back to China for fear that the authorities would punish him for speaking out, but his money wasn’t welcome in the host country because he was Chinese.
Most of the people I interviewed asked not to be named for fear of retaliation from Chinese authorities. Some asked me not to name the country or Chinese city where they currently live.
Silicon Valley startups focused on artificial intelligence, semiconductors and other cutting-edge technologies are either shunning Chinese investors or telling existing Chinese backers to divest, wanting to avoid the government review process Washington requires companies to submit deals involving foreign investment to.
Some American politiciansSay itIt is necessary to distinguish between the Chinese Communist Party and the Chinese people, but in practice this is done very poorly.
At a Senate hearing in January, Republican Senator Tom Cotton of Arkansas repeatedlyaskCitizenship question for TikTok CEO Chew Shou Tzu. “What country are you a citizen of?” he asked. And: “Have you applied for Chinese citizenship?” The answer is Singaporean, no. I can’t imagine what the follow-up questions would be if Chew Shou Tzu, like me, held a Chinese passport.

Florida passed a law that bars many Chinese citizens from buying homes, citing national security concerns, as my colleague Amy Qin reported this month. More than 30 states are considering similar laws.lawprohibiting Chinese citizens and entities from purchasing or owning property.
All of this has had a chilling effect on Chinese investment in the United States. New investment has slowed to a trickle, according to research firm Rhodium Group.wroteChina’s new investment in the United States in 2022 has dropped from $46 billion in 2016 to less than $5 billion. China is no longer in the top five nationalities of American investors, and countries such as Qatar, Spain and Norway have surpassed China in the rankings.
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Chinese venture capitalists no longer go to Silicon Valley to find the hottest startups. They now often meet in Abu Dhabi or Riyadh.
This is not to say that the United States is wrong to be cautious about Chinese investment, according to several scholars and lawyers. A scholar who has studied China’s Internet industry for decades said that in the context of the Chinese Communist Party putting national security first and the world deglobalizing, democratic countries need to think seriously about their principles and practices. She said that this process will expose many contradictions and weaknesses that these countries’ opponents can exploit. Countries need to decide how to balance openness and national security.
The scholar said that given the huge influence of online platforms like TikTok, it is not surprising that its ownership has become a sensitive issue in the United States. In China, such issues can be resolved with a phone call from the government. In the United States, due process is required and may take years.