TikTok deal may have potential national security impact: Longview Global's McNeal

Key Concepts:

• TikTok deal: Potential agreement between the US and China regarding the ownership and control of TikTok.
• Algorithm control: The debate over who should control the algorithm that powers TikTok, particularly concerning Chinese principles.
• Dueling laws and regulatory regimes: The conflict between US and Chinese laws and regulations regarding technology and data control.
• Protecting Americans Against Foreign Adversarial Control Applications Act: US law requiring complete divestiture of foreign-controlled applications, including algorithms.
• Optics and principle: China's focus on demonstrating leverage and protecting its interests and companies on the world stage.
• Taiwan's role: The concern that Taiwan is not being adequately considered in US-China relations.
• Nvidia chip ban: China's directive to its companies to avoid purchasing certain Nvidia chips due to national security concerns.
• Critical minerals: The importance of addressing the critical minerals deal set to expire in December.

TikTok Deal and Algorithm Control

• The discussion centers on the potential TikTok deal and whether it aligns with both US and Chinese principles.
• The Vice Commerce minister of China stated that any deal must adhere to Chinese principles, likely including control of the algorithm.
• Derek McNeil expresses reservations, stating that the deal, as it appears, may not comply with the Protecting Americans Against Foreign Adversarial Control Applications Act, which mandates complete divestiture, including the algorithm.
• McNeil emphasizes the existence of "dueling laws and regulatory regimes" between the US and China.

China's Perspective and Motivations

• China's primary motivation is seen as "optics and principle," demonstrating its leverage and ability to protect its interests and companies.
• The deal is not considered a core issue for China, but it allows them to show the world that they have agency and can negotiate favorable terms for Chinese companies.
• China aims to reinforce that "these are their laws, their rules, their way."

Taiwan's Role in US-China Relations

• There is concern that Taiwan is not being adequately considered in US-China relations.
• McNeil notes the lack of discussion about Taiwan in Washington and points to a $400 million package of defensive weapons for Taiwan that did not go through.
• This lack of attention to Taiwan is seen as "music to China's ears."

Technology Restrictions and Trade Relations

• China has instructed its companies to avoid purchasing certain Nvidia chips (e.g., RTX 6000) due to national security concerns.
• The discussion touches on whether the recent conversation between Xi and Trump has improved the prospects for a trade deal or progress at APEC.
• McNeil believes that while leader-to-leader calls are important, significant progress on core issues is still distant.

Critical Minerals

• McNeil hopes that the meeting at APEC will include a discussion about critical minerals.
• The critical minerals deal is set to expire in the first week of December, and a resolution is needed.
• Critical minerals are highlighted as a very important issue for the US to keep at the forefront.

Conclusion

The discussion highlights the complexities of US-China relations, particularly concerning technology, trade, and security. The potential TikTok deal raises questions about compliance with US law and the extent to which China will maintain control over the platform's algorithm. China's focus on demonstrating its leverage and protecting its interests is evident. The lack of attention to Taiwan and the restrictions on technology purchases further complicate the relationship. Addressing the critical minerals deal is seen as a crucial step forward. While leader-to-leader calls are important, significant progress on core issues remains a challenge.