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A better alternative to Trump's WeChat ban

Wei Shang-Jin
Wei Shang-Jin8/21/2020 7:0 AM GMT+08  • 6 min read
A better alternative to Trump's WeChat ban
US users often share info with friends and family in China. By banning WeChat, Trump is closing a vital crack in the firewall.
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THE EDGE SINGAPORE - Shortly after US President Donald Trump issued an executive order effectively banning the Chinese-owned social-media app TikTok, he issued a second order prohibiting “any transaction that is related to WeChat by any person … as identified by the Secretary of Commerce”. According to the White House, the WeChat ban — which will take effect on Sept 20 — is intended to protect Americans and visiting Chinese in the US from violations of privacy by the Chinese government and to limit fake news from the Chinese government reaching Americans. But the ban is likely to be counterproductive, and there are better solutions to these problems.

WeChat, owned by Tencent, a Chinese company listed on the Hong Kong Stock Exchange, is a widely used multipurpose app that combines messaging, social media, digital payments, and other functions. If Tencent’s founders, Pony (Huateng) Ma and four other partners, had built their company in the US, they would be celebrated in much the same way that Bill Gates, Jeff Bezos, and Elon Musk are.

Chinese entrepreneurs likely have had to overcome much greater difficulties to succeed than their American counterparts. After all, funding for those without family wealth or political connections is less in China due to a less developed capital market. Property rights protection is weaker, and Chinese Internet users’ purchasing power is much lower than that of Americans. In 1998, when Tencent was founded, China’s per capita income was a mere $850 — less than 5% of the US level and less than 20% of the Mexican level that year.

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