Why is China really going after Facebook?

More than economics is behind the nation's efforts to buy up shares of Zuckerberg's company

Topics: GlobalPost, China, Facebook,

Why is China really going after Facebook?

NEW YORK — Sometime in early 2013, if current trends hold steady, the number of Facebook users worldwide should exceed the population of China.

Call it a coincidence, but now it seems China wants a piece of the action.

Last month, analysts who monitor China’s gargantuan sovereign wealth fund detected signs that a deal was in the works to buy a huge stake in Facebook. Neve rmind that access to Facebook has been blocked in China since 2009.

The fund, known as the China Investment Corporation (CIC), is a $332 billion portfolio that seeks to earn money from the government’s massive export earnings. It operates in almost complete secrecy, as do many sovereign wealth funds in the Persian Gulf, Russia and elsewhere. These have grown into major economic players over the past 20 years.

But a number of high-profile investment websites have quoted “inside sources” describing efforts by Citibank to secure for China a stake in Facebook large enough “to matter,” according to Business Insider. Citibank, incidentally, is undertaking a major expansion in China.

The logic behind such a deal from China’s perspective is clear.

Politics aside, Facebook is one of the most sought after share offerings in history. The economics just make sense.

But many believe China has more than profits in mind.

As a factor hastening the revolutions raging across the Middle East, Facebook and other social networks represent a real threat to the Chinese Communist Party’s monopoly on political power.

Minxin Pei, a China expert at the Carnegie Institute, says the Arab Spring, combined with the coming Communist Party leadership transition in 2012, has pumped up the paranoia in Beijing and led to the current crackdown on domestic dissent.

So, would a major Chinese stake in Facebook inoculate China from a “Facebook revolution?” Not likely.

When Facebook finally goes public, the company is expected to be valued at over $100 billion. That’s a daunting sum, even to the portfolio managers of China’s war chest.

But the non-voting stock Facebook’s IPO is offering is all that China could obtain. This would hardly allow it to steer corporate policy or even to get a look behind the curtain of Facebook’s software developers.



China’s leadership would dearly love such a portal into the social networking software, but even in the unlikely event that voting stock were ever offered, Congress would never allow a Chinese takeover of Facebook.

Starting in 2005, when China’s state oil firm, CNOOC, tried to buy financially strapped California oil producer Unocal, American politicians began question what constituted an appropriate Chinese investment in the U.S. economy. 

Not all China’s proposed investments have risen to the level of political fights — China State Construction Engineering Group, for example, is a major contractor on the reconstruction of San Francisco’s Bay Bridge and has won contracts for work on New York City’s subway. But China’s foreign direct investment in U.S. corporations remains tiny — a paltry $791 million in 2009, compared with over $43 billion invested in China by American firms that same year.

There is, however, a second benefit to getting a foot in the door at Facebook, from China’s standpoint: the chance to fund the one force on Earth, other than the Communist Party’s censors, which have taken software giant Google down a peg.

Google’s brave decision in 2010 to close up shop in China — leaving untold billions in potential profits on the table — deeply embarrassed Beijing, which had sparred with the software giant over censorship of its search engine results.

Sergey Brin, Google’s founder, told reporters his upbringing in the Soviet Union had definitely influenced the decision. A “hack” of Google China’s database apparently was the last straw. “Our objection is to those forces of totalitarianism,” Brin said at the time.

Facebook, growing at a pace of about 100 million new users every five months, will plateau sooner or later. There are only so many internet users on the planet.

And the competition is heating up with the launch of Google+, an innovative effort by Facebook’s primary digital rival to stake a claim in the world of social networking. It is far too early to know if the new Google initiative will take off, or if it does, whether it will rival Facebook or just complement it.

China, of course, has plenty of other investment options. But Facebook has good reasons to tolerate a Chinese stake. China represents something of a last frontier for Facebook, whose website has been blocked by Chinese censors since its value as an organizing tool became clear during Iran’s 2009 Green Revolution.

Mark Zuckerberg already had China in his sights long before rumors of the possible stock deal arose. Last December, Zuckerberg toured the headquarters of Baidu, the native-grown Chinese search engine that benefitted most from Google’s decision to leave the country.

Zuckerberg has been studying Mandarin, and during a speech last year he asked, “How can you connect the whole world if you leave out 1.6 billion [sic] people?” (China’s population is actually 1.33 billion.)

So far, speculation that a strategic partnership is in the works has proven unfounded. But China’s investment in Facebook implies an open door to the Chinese market, which Google has now officially eschewed.

Thanks to China’s “Great Firewall” that allows most people to connect only to state-approved sites, Facebook has a relatively small footprint in China. But growth has taken off since the New Year, going from 100,000 in January to approximately 700,000 today.

Analysts believe Zuckerberg’s visit, combined with the software’s notoriety in recent Arab uprisings, has driven a particularly motivated digital elite in China to “vault” the Great Firewall using virtual public networks, which Western nonprofits have made available in their cat-and-mouse battle with the censors.

This is small potatoes in China, of course, which has 450 million internet users. But Facebook marches on. At 700 million users and rising, particularly in Asia and the Middle East, Facebook’s “community” towers over anything previously unleashed by the creative mind of global capitalism.

With its chief commercial rival now moving to counter its dominance of social networks and a spotty history of protecting its users privacy, just how much would Facebook be willing to compromise to get access to China’s 1.3 billion people?

At this point no one knows, but you can be sure that China’s twitchy leadership isn’t about to unblock the social network that rocked the Middle East unless its security officials know exactly how to track down troublesome users bent on speaking their minds.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    Ten spectacular graphic novels from 2014

    Beautiful Darkness by Fabien Vehlmann & Kerascoët
    Kerascoët's lovely, delicate pen-and-watercolor art -- all intricate botanicals, big eyes and flowing hair -- gives this fairy story a deceptively pretty finish. You find out quickly, however, that these are the heartless and heedless fairies of folk legend, not the sentimental sprites beloved by the Victorians and Disney fans. A host of tiny hominid creatures must learn to survive in the forest after fleeing their former home -- a little girl who lies dead in the woods. The main character, Aurora, tries to organize the group into a community, but most of her cohort is too capricious, lazy and selfish to participate for long. There's no real moral to this story, which is refreshing in itself, beyond the perpetual lessons that life is hard and you have to be careful whom you trust. Never has ugly truth been given a prettier face.

    Ten spectacular graphic novels from 2014

    Climate Changed: A Personal Journey Through the Science by Philippe Squarzoni
    Squarzoni is a French cartoonist who makes nonfiction graphic novels about contemporary issues and politics. While finishing up a book about France under Jacques Chirac, he realized that when it came to environmental policy, he didn't know what he was talking about. "Climate Changed" is the result of his efforts to understand what has been happening to the planet, a striking combination of memoir and data that ruminates on a notoriously elusive, difficult and even imponderable subject. Panels of talking heads dispensing information (or Squarzoni discussing the issues with his partner) are juxtaposed with detailed and meticulous yet lyrical scenes from the author's childhood, the countryside where he takes a holiday and a visit to New York. He uses his own unreachable past as a way to grasp the imminent transformation of the Earth. The result is both enlightening and unexpectedly moving.

    Ten spectacular graphic novels from 2014

    Here by Richard McGuire
    A six-page version of this innovative work by a regular contributor to the New Yorker first appeared in RAW magazine 25 years ago. Each two-page spread depicts a single place, sometimes occupied by a corner of a room, over the course of 4 billion years. The oldest image is a blur of pink and purple gases; others depict hazmat-suited explorers from 300 years in the future. Inset images show the changing decor and inhabitants of the house throughout its existence: family photos, quarrels, kids in Halloween costumes, a woman reading a book, a cat walking across the floor. The cumulative effect is serene and ravishing, an intimation of the immensity of time and the wonder embodied in the humblest things.

    Ten spectacular graphic novels from 2014

    Kill My Mother by Jules Feiffer
    The legendary Pulitzer Prize-winning cartoonist delivers his debut graphic novel at 85, a deliriously over-the-top blend of classic movie noir and melodrama that roams from chiaroscuro Bay City to Hollywood to a USO gig in the Pacific theater of World War II. There's a burnt-out drunk of a private eye, but the story is soon commandeered by a multigenerational collection of ferocious women, including a mysterious chanteuse who never speaks, a radio comedy writer who makes a childhood friend the butt of a hit series and a ruthless dame intent on making her whiny coward of a husband into a star. There are disguises, musical numbers and plenty of gunfights, but the drawing is the main attraction. Nobody convey's bodies in motion more thrillingly than Feiffer, whether they're dancing, running or duking it out. The kid has promise.

    Ten spectacular graphic novels from 2014

    The Motherless Oven by Rob Davis
    This is a weird one, but in the nervy surreal way that word-playful novels like "A Clockwork Orange" or "Ulysses" are weird. The main character, a teenage schoolboy named Scarper Lee, lives in a world where it rains knives and people make their own parents, contraptions that can be anything from a tiny figurine stashable in a pocket to biomorphic boiler-like entities that seem to have escaped from Dr. Seuss' nightmares. Their homes are crammed with gadgets they call gods and instead of TV they watch a hulu-hoop-size wheel of repeating images that changes with the day of the week. They also know their own "death day," and Scarper's is coming up fast. Maybe that's why he runs off with the new girl at school, a real troublemaker, and the obscurely dysfunctional Castro, whose mother is a cageful of talking parakeets. A solid towline of teenage angst holds this manically inventive vision together, and proves that some graphic novels can rival the text-only kind at their own game.

    Ten spectacular graphic novels from 2014

    NOBROW 9: It's Oh So Quiet
    For each issue, the anthology magazine put out by this adventurous U.K.-based publisher of independent graphic design, illustration and comics gives 45 artists a four-color palette and a theme. In the ninth issue, the theme is silence, and the results are magnificent and full of surprises. The comics, each told in images only, range from atmospheric to trippy to jokey to melancholy to epic to creepy. But the two-page illustrations are even more powerful, even if it's not always easy to see how they pertain to the overall concept of silence. Well, except perhaps for the fact that so many of them left me utterly dumbstruck with visual delight.

    Ten spectacular graphic novels from 2014

    Over Easy by Mimi Pond
    When Pond was a broke art student in the 1970s, she took a job at a neighborhood breakfast spot in Oakland, a place with good food, splendid coffee and an endlessly entertaining crew of short-order cooks, waitresses, dishwashers and regular customers. This graphic memoir, influenced by the work of Pond's friend, Alison Bechdel, captures the funky ethos of the time, when hippies, punks and disco aficionados mingled in a Bay Area at the height of its eccentricity. The staff of the Imperial Cafe were forever swapping wisecracks and hopping in and out of each other's beds, which makes them more or less like every restaurant team in history. There's an intoxicating esprit de corps to a well-run everyday joint like the Imperial Cafe, and never has the delight in being part of it been more winningly portrayed.

    Ten spectacular graphic novels from 2014

    The Shadow Hero by Gene Luen Yang and Sonny Liew
    You don't have to be a superhero fan to be utterly charmed by Yang and Liew's revival of a little-known character created in the 1940s by the cartoonist Chu Hing. This version of the Green Turtle, however, is rich in characterization, comedy and luscious period detail from the Chinatown of "San Incendio" (a ringer for San Francisco). Hank, son of a mild-mannered grocer, would like to follow in his father's footsteps, but his restless mother (the book's best character and drawn with masterful nuance by Liew) has other ideas after her thrilling encounter with a superhero. Yang's story effortlessly folds pathos into humor without stooping to either slapstick or cheap "darkness." This is that rare tribute that far surpasses the thing it celebrates.

    Ten spectacular graphic novels from 2014

    Shoplifter by Michael Cho
    Corinna Park, former English major, works, unhappily, in a Toronto advertising agency. When the dissatisfaction of the past five years begins to oppress her, she lets off steam by pilfering magazines from a local convenience store. Cho's moody character study is as much about city life as it is about Corinna. He depicts her falling asleep in front of the TV in her condo, brooding on the subway, roaming the crowded streets after a budding romance goes awry. Like a great short story, this is a simple tale of a young woman figuring out how to get her life back, but if feels as if it contains so much of contemporary existence -- its comforts, its loneliness, its self-deceptions -- suspended in wintery amber.

    Ten spectacular graphic novels from 2014

    Through the Woods by Emily Carroll
    This collection of archetypal horror, fairy and ghost stories, all about young girls, comes lushly decked in Carroll's inky black, snowy white and blood-scarlet art. A young bride hears her predecessor's bones singing from under the floorboards, two friends make the mistake of pretending to summon the spirits of the dead, a family of orphaned siblings disappears one by one into the winter nights. Carroll's color-saturated images can be jagged, ornate and gruesome, but she also knows how to chill with absence, shadows and a single staring eye. Literary readers who cherish the work of Kelly Link or the late Angela Carter's collection, "The Bloody Chamber," will adore the violent beauty on these pages.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>