As China seeks to rebuild its economy in the wake of COVID-19, it will likely turn to its local tech scene under President Xi Jinping’s “Made in China 2025” agenda, which aims to make China the world’s largest supplier of high quality products. manufacturer of goods by 2050. This will likely create a number of lucrative opportunities for foreign investors – but buyers beware.
“The US blacklisting of several Chinese technology companies – including HikVision, SenseTime and Megvii – due to their links to human rights abuses in Xinjiang illustrates the reputational risks for institutional investors,” said Sofia Nazalya, rights analyst humans at Maplecroft. “Importantly, current and emerging legislation that delists or imposes sanctions or bans on companies with ties to human rights abuses highlights how risky it is to partner with technology companies that have found themselves involved in state surveillance.
Foreign companies in China are also forced to operate in an environment “with little respect for privacy and transparency”, with the state actively collecting citizens’ data through the implementation of its controversial social credit system. (SCS).
“With the threat of a resurgence of the virus, businesses risk being penalized under the SCS if they do not implement social distancing measures in the workplace,” Ms Nazalya said. “Similarly, if employees are found to be endangering public safety, for example by flouting current travel restrictions or hiding their medical history, they risk having their social credit score reduced.
“This has direct implications for businesses, as employees’ poor behavior and poor social credit record would in turn reduce the credit rating of their employers.”
China has dramatically increased its surveillance efforts in the theoretical aim of combating COVID-19, with CCTV cameras installed outside the homes of people in quarantine and drones that warn citizens to wear masks, now become the new norm.
“While China is keen to assert that a comprehensive approach to surveillance will be necessary to protect public health, the impact on individuals and businesses will be significant,” Nazalya said. “Not only will China’s ‘new normal’ be characterized by increased erosion of individual anonymity and privacy, but intensified surveillance will place businesses under the microscope of the state, unlike anything they have ever known previously.
