Welcome to Foreign PolicyOverview of China.
Highlights this week: Beijing is overturning Meta’s acquisition of a Chinese startup AI companyThe Iran war is troubling US ability to defend Taiwanand the accounting guru is caught with bad results from The case of Evergrande Group in Hong Kong.
Welcome to Foreign PolicyOverview of China.
Highlights this week: Beijing is overturning Meta’s acquisition of a Chinese startup AI companyThe Iran war is troubling US ability to defend Taiwanand the accounting guru is caught with bad results from The case of Evergrande Group in Hong Kong.
China Blocks Access to Meta AI
On Monday, China blocked Meta’s acquisition of Manus, an artificial intelligence firm founded by Chinese businessmen and based in Singapore. The move marked a turning point, as Beijing approved A $2.5 billion deal last december
The decision to undo the acquisition does little to preserve Manus’ knowledge within China, as Meta has had months to take over the company’s data and systems. Furthermore, there is no obvious way to undo the transactions: Manus’ investors had already been paid, meaning that Meta would have to eat the losses.
So, what explains this shift from approval to cancellation?
The administrators who signed the agreement initially considered its legal and economic standards, before the security government suddenly intervened. One senior official – possibly Chinese President Xi Jinping – becoming aware of the plan and seeing it as being against China’s interests amid global AI competition could trigger the change.
There’s not much Meta can do about Manus’ decision, especially because Chinese advertising on its primary platforms — including Facebook — gets more 18 billion dollars every year. Any pullback could end the trade. Additionally, Meta’s complicated history with China helps explain the authorities’ mistrust of the company.
Facebook has been banned in China since 2009, but the appeal of a market of more than one billion users led CEO Mark Zuckerberg to start an offensive there in the 2010s. This includes to tell them His staff to read a collection of Xi’s essay Chinese ruleas well as a much-publicized jog through smoggy Beijing that made him viral to laugh.
Xi rejected Zuckerberg’s excessive. According to one Former Facebook executivethe Chinese leader instructed his aides to prevent Zuckerberg from participating in the event. Zuckerberg even provided give them authority ability review posts on Meta platforms, but Beijing’s doubts remained.
Part of the miscalculation was cultural. Zuckerberg approached Xi with the kind of obvious condescension that typifies the underdogs in the Chinese Communist Party (CCP), rather than the subtle civility and friendliness that would be appropriate for buttering up a leader like Xi.
After try in court Lu Wei, China’s inspector general who ultimately failed corruption charges in 2017, Zuckerberg went to Washington. There, he announced himself as a champion of free speech—and later, after the re-election of US President Donald Trump, repositioned himself as a leader. an anti-woke and hypermasculine figure.
But Meta’s difficulties in China have little to do with the behavior of its CEO; it’s because Meta is an American company.
China’s security state doesn’t understand Silicon Valley’s complicated relationship with Washington, where private companies can sue the government and win-an impossible idea in China-and yet to cooperate in security matters. The Manus case highlights the notion of Chinese intelligence that Meta is incapable of resisting demands from the government.
Although Manus is headquartered in Singapore—a regular exercise for Companies founded by China to avoid foreign probes—such arrangements provide minimal insulation under pressure. Manus has no choice but to obey new orders from China, not because its founders, Chinese citizens, are there is blocked from abroad.
Meta may accept Manus’ decision to keep its China business afloat, but this episode should be a cautionary tale for Western companies that believe they can avoid international tensions. As the AI competition is increasingly framed as a global arms race, Beijing will continue to treat it as a matter of national security.
What we’re after
Can the US defend Taiwan? The Iran war has reportedly depleted the US weapons stockpile internal assessment of the US military they show that it will be difficult to defend Taiwan against Chinese invasion. Contrary to the most alarmist views, China is in no immediate position to exploit this weakness.
The invasion is a major political and military project that will require months of mobilization; it can’t be thrown together in a weekend. What China will be watching closely, however, is how quickly the U.S. can replenish those reserves—as a measure of its near-term threat and its commitment to fighting a long war.
Although China may have procurement problems in its military, mainly due to corruption, Beijing has shown a greater ability to identify and address security weaknesses over the past decade than Washington.
Anti-corruption regulations. Chinese courts—which often change the law of CCP orders through so-called judicial interpretations—have reduced the level of corruption prosecutions, the latest step in Xi’s ongoing anti-corruption campaign. The new ruleswhich will take effect on May 1, also reduces the difference in penalties for private companies versus government agencies.
However, harsher penalties will do little to prevent future corruption in China. What is needed is more transparency and elimination of favoritism and favoritism within the government, but such measures are incompatible with the way power works in the CCP.
Most Read FP This Week
Technology and Business
Evergrande Tournament in Hong Kong. Accountancy giant PricewaterhouseCoopers (PwC) is in trouble in Hong Kong following the death of Chinese property developer Evergrande Group. PwC’s Hong Kong office has already been contacted big fineand workers in Hong Kong and mainland China have been detained and may face criminal charges.
Evergrande, which was the world’s largest real estate company by valuation, went bankrupt in 2024, and its founder recently pleaded guilty. financial irregularities and payment of bribes continent. Evergrande was undercut by the collapse of China’s real estate bubble during the COVID-19 pandemic, but management delayed its closure to avoid a “Lehman moment.”
Fraud, corruption, and bribery in China’s real estate industry were already well known. What is known in this case is how a respected international company went along with questionable practices to retain customers.
The Iran war continues. China is somewhat insulated from the current global energy crisis thanks to its oil reserves and its world-leading renewable energy networks. But the continued closure of the Strait of Hormuz has disrupted important supplies and started to worry the Chinese. industrial sector.
Thailand—no help from its ally the United States—has he approached China with the help of facilitating the passage of its ships, to which the Chinese Foreign Minister Wang Yi replied that China has 70 of its ships trapped behind the sea.
On Tuesday, the Financial Times information that China was preparing to relax its ban on certain oil exports, which could buy it goodwill with its poorer and smaller neighbors.
