The Chinese government has responded to Donald Trump's proposal for TikTok ownership with a firm stance. They have made it clear that they will not sell the app to the US government.
The proposal, which was made in August 2020, aimed to ban TikTok in the US unless its Chinese parent company, ByteDance, sold a majority stake to an American company. However, the Chinese government has stated that they will not intervene in the ownership structure of the company.
The Chinese government has also expressed concerns about the potential national security risks associated with the sale of TikTok to a US company. They argue that the app's data and algorithms would be vulnerable to US government access and manipulation.
The Chinese government has said that they will take all necessary measures to protect the interests of the company and its users.
China's Response to Trump's Proposal
China's foreign ministry emphasizes the importance of companies making independent decisions regarding their operations and deals, especially concerning international ownership proposals.
The Chinese government advocates for businesses to manage their affairs without external pressures, which is a break from its previous rhetoric, where it indicated its staunch opposition to any U.S.-led TikTok divestiture.
TikTok's CEO, Shou Zi Chew, has become a public hero in China, where he is seen as an iconoclastic figure who is resisting strongarm tactics, which might influence the national government's decision to stand up to American bullying.
The Chinese government has yet to determine whether it wants to sign off on Trump's proposal, and authorities in Beijing are willing to let TikTok's operations cease in the U.S. unless a "grand deal" is proposed.
China's Ministry of Commerce has previously stated that it will "resolutely oppose" any forced sale, but now the Foreign Ministry spokesperson has offered a different take on the matter, suggesting that Beijing may be open to a sale.
The reference to a transaction being subject to Chinese law is a holdover from previous positions, and Beijing has plenty of legal levers to pull if it decides to halt a transaction.
The Chinese government is hoping to avoid another damaging trade conflict, which suggests that it might be open to negotiating a deal that addresses security concerns.
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TikTok US Deal Status
The TikTok US deal status is a complex and ever-changing situation. The Chinese government initially strongly opposed the US government's law forcing TikTok's owner ByteDance to divest its US operations or shut down the service stateside.
In March 2023, China's Ministry of Commerce stated that China will "resolutely oppose" any forced sale. However, this stance appears to have softened, with the Chinese Ministry of Foreign Affairs now open to the idea of a sale.
The US government had proposed a joint venture between a private entity and the US government to acquire half of TikTok's US operation. The Chinese Foreign Ministry spokesperson, Mao Ning, responded that actions such as the operation and acquisition of businesses should be independently decided by companies in accordance with market principles.
However, the spokesperson also stated that if it involves Chinese companies, China's laws and regulations should be observed. This is a holdover from previous positions, and Beijing has plenty of legal levers to pull if it decides to halt a transaction.
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The proposed deal to spin off TikTok's US operations into a new company based in the United States had largely been finalized. Under the proposed structure, a majority of the new entity would have been owned by US investors, with ByteDance retaining a minority stake of less than 20%.
However, the Chinese government indicated that it would not give the necessary approval for the deal to move forward, following the recent tariffs announcement by former President Donald Trump. As a result, the spin-off arrangement is now on hold.
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