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China Has Begun To Feel The Pinch From India's Apps Ban Policy

Source : Mint

China Has Begun To Feel The Pinch From India's Apps Ban Policy
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China is no longer in Mao’s thrall and follows Xi Jinping thought these days. Still, the notion that it is good to be attacked by the enemy retains its essential sense: it shows you make an impact that calls for countermeasures

“It is good if we are attacked by the enemy, since it proves that we have drawn a clear line of demarcation between the enemy and ourselves. It is still better if the enemy attacks us wildly and paints us as utterly black and without a single virtue; it demonstrates that we have not only drawn a clear line of demarcation between the enemy and ourselves but achieved a great deal in our work." Thus spake Chairman Mao. China is no longer in Mao’s thrall and follows Xi Jinping thought these days. Still, the notion that it is good to be attacked by the enemy retains its essential sense: it shows you make an impact that calls for countermeasures.

True, the initial ban that India imposed on a clutch of smartphone apps by Chinese companies, including TikTok, the short video app that is both a threat to US tech companies dominant in the business and a shield for them against the charge of unassailable monopoly, did not cause any serious damage to Chinese business. But, expanding the scope of the bans and persisting with them do, it would appear, make an impact.

At a press conference on Thursday, the spokesman for China’s commerce ministry, Gao Feng, expressed concern about India’s ban on Chinese apps. India, this week, banned 54 apps built by Chinese companies, over and above the 200 odd apps already proscribed.

One of the principles of materialist dialectics that Mao favoured, as a student of Karl Marx, is that changes in quantity eventually lead to changes in quality. Water remains water so long as the heat that is added raises the temperature only up to 100°C; at that point, further quantities of heat transferred to the water would convert it into steam. Evidently, India’s determination to ban Chinese apps by the hundreds is working up a steam in Beijing.

How precisely would banning an app affect Chinese businesses? The biggest example of an Indian app ban making a company suffer is Sea, the maker of the popular video game Free Fire. After India banned the game, Sea, which is listed in New York, plunged 18% in value, and some analysts forecast further fall, as much as by 40% in JP Morgan’s estimate. Now, Chinese tech major Tencent is the largest investor in Sea, although the company is now domiciled in Singapore and most of its staff work in the city state. Sea is feeling aggrieved that India picked on its app, but the fact remains that Chinese investors are the largest owners of the company.

India has overtaken or is about to overtake China as the world’s most populous nation, with a population of 1,400 million, with a fast-growing economy. Even if Indians are not, right now, big spenders on apps, preferring to make use of the free goodies available in the ecosystem, there is no gainsaying the potential market power of India’s 1.4 billion people, 65% of them below 35 and, presumably, potential users of phone apps. Being forced to be absent from such a market, ceding the space for others to stake out their market shares, while you look on from the outside, can be hard for a Chinese company with global ambitions.

Will their angst, fed back through the layers of Communist Party control, thought and administrative, and persuade the Chinese government to lay off blowing up a dormant border dispute with India? The chances are small. The Chinese leadership is probably more concerned about India’s prominent role in the Quad, an alliance of four nations — the US, Japan and Australia, besides India — that has been forged to counter Chinese dominance of the Asia-Pacific. Beijing must have noted that India is able to buy the sophisticated S-400 missile system, despite the US government’s theoretical opposition to its partners buying the sophisticated military kit from Russia, and still be acknowledged as the bulwark of the Quad.

If that does not change Beijing’s mind on how to maintain relations with India, it is unlikely that the fate of a few tech companies — uppity pretenders to societal leadership, in the Chinese Communist Party’s opinion, whose bosses have shown the temerity to criticize the Party and its sclerotic policy — would have much of an impact. In an old Chinese saying, a ‘foolish old man’ was mocked by fellow villagers when he decided to remove a mountain, but he succeeded in demolishing the mountain, removing it chunk by small chunk, day after day. In other words, things add up, quantity leads to quality.

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