October 16, 2019
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I've got 1,107 words for you this afternoon — a 4-minute read. To start...
1 big thing: It's bigger than Huawei
The consensus in Washington is increasingly clear: The security threat to the U.S. from Chinese firms is bigger than just Huawei.
Why it matters: If the administration views every Chinese company with suspicion, it could prolong the trade war and put the U.S. and China on a crash course toward a swift technological decoupling.
"The State Department and the White House and Congress are all saying it's not just Huawei, but all Chinese companies are part of China's military-civil fusion complex and are a national security threat."— Samm Sacks, a China expert at New America
Context: In a September speech, Christopher Ford, an assistant secretary at the State Department, warned not just of Huawei — the telecom giant sanctioned by the administration in May — but also "its siblings."
- "This narrative is creating a lot more pressure on Chinese companies," Sacks says.
- While Huawei has grabbed most of the recent headlines, attention is now turning to other Chinese firms, like ByteDance, which runs the wildly popular TikTok video app.
Driving the news: The NBA's fallout with China over a general manager's tweet regarding the Hong Kong protests has raised concerns about the Chinese Communist Party's ability to enforce censorship on U.S. soil.
Activision Blizzard, an American gaming company that counts the Chinese tech giant Tencent as an investor, was criticized for suspending a Hong Kong-based gamer who supported the protest movement.
Moderators at TikTok — the short-form video-sharing app that is habit-forming among U.S. kids — are instructed to censor videos that mention topics that bother the Chinese Communist Party, including Tiananmen Square and Tibetan independence, according to leaked documents viewed by the Guardian.
- The Guardian report prompted Sen. Marco Rubio to call for an investigation of the app.
- TikTok announced Tuesday it had hired two former congressmen and was convening a panel of outside experts to review its content moderation policies.
Chinese firms are also prompting concerns about data privacy.
- Experts say TikTok could become China's next big weapon in the race for personal data. "Think about all the data that TikTok has on American teenagers," says Sacks.
- In May, the U.S. government pushed China's Kunlun to sell off the American dating app Grindr over similar worries about data privacy.
All the while, Washington's rhetoric and policies have grown more hawkish.
- Congress has strengthened CFIUS, the Treasury Department's committee for reviewing foreign investments in the U.S.
- "We understand that the program is staffing up in ways that suggest increased scrutiny is the new norm for the foreseeable future," says Doug Barry of the U.S.-China Business Council.
But, but, but: A heavy-handed approach to Chinese firms has a host of consequences.
- "No one should take national security lightly, but the real risk here is government overreach," Barry says.
- The government risks making U.S. companies less competitive in the international market by prohibiting them from selling products to Chinese companies — and pushing those companies to buy the same goods from Japan or South Korea, Barry says.
- A true decoupling that gives the U.S. no visibility into technological advancement in China could be "really dangerous," says Sacks.
- "Gene-editing? AI? These are technologies that are going to fundamentally change society, and if China and the U.S. go down completely different paths here, there could be dire consequences for humanity," says Sacks.
2. The crisis in retail work
A collision of forces — automation, e-commerce and stagnating wages — is squeezing retail jobs in the U.S.
Why it matters: With more than 15 million jobs, the retail industry is America's biggest employer. A hit to this sector would reverberate across the economy.
Driving the news: Led by Amazon, several big American retailers are raising their wages to around $15 an hour. But stores are slashing workers' hours, and robots are supplanting people.
- "Close to 30% of America's ... retail workers worked fewer than 35 hours a week last year, according to the Bureau of Labor Statistics. Nationally, 17% of workers work below 35 hours a week," reports CNN's Nathaniel Meyersohn.
- Meyersohn spoke with current and former Target employees who said they struggled to pay rent or buy food due to shrinking workweeks.
Some jobs that have existed for decades — like taking inventory or cleaning aisles — are being automated away.
- In April, Walmart added nearly 4,000 robots that can mop floors, unload trucks and scan shelves.
And retailers are adding part-time and temporary workers to staff the holiday rush as they cut hours for full-time employees.
- Close to 40% of Walmart's workforce are part-timers, per CNN.
- Target has announced plans to hire 130,000 temps for the holiday season.
The bottom line: "It's a much slower process to eliminate people than you might think," says J.P. Gownder, an expert on automation at Forrester. But in retail, "in the longer term and at scale, the economics favor automation."
3. The United States of Walmart
The cities and towns where Walmart gobbles up more than half of all grocery sales are concentrated in the South and the middle of the country, illustrating a broader division in U.S. retail.
- While some cities build glitzy, revamped main streets and get same-day shipping, others are left with few options beyond Walmart Supercenters and dollar stores.
Why it matters: Retail has become one of the forces driving American inequality — and dividing us.
By the numbers:
- As we reported last week, Walmart owns 50% or more of the grocery market in 203 U.S. markets, per an analysis by the Institute for Local Self-Reliance, a nonprofit research and advocacy group that opposes concentrated economic power. In 38 of those markets, Walmart has 70% or more of the grocery sales.
- But in some places, the retail giant has virtually wiped out all other competition. Walmart owns 95% of the market in Portales, New Mexico; 95% in Atchison, Kansas; and 90% in Guymon, Oklahoma.
The bottom line: No other grocer in American history has been so dominant.
4. Worthy of your time
5. 1 musical thing: The sounds of the UAW strike
Some of the most famous worker strikes across history have drawn celebrity guests and performers.
- An Oklahoma oil strike in the 1940s saw a Woody Guthrie performance, and British coal miners on the picket line in the 1980s got Sting, WSJ's Ben Foldy and Mike Colias write.
So far, the United Auto Workers' GM strike — in which a preliminary deal was reached on Wednesday — has seen visits from activists and 2020 hopefuls alike, but no big-name musicians.
- GM forklift operator Richard Spriggs, whose rap alter ego is RSpriggie, is filling the void with spirited renditions of his parody song "Or We Strike," set to the 2003 hip-hop hit “Like a Pimp."
- His latest track, per WSJ, is more modern: “Burn Barrel—Strike Anthem," set to A$AP Ferg’s “New Level.”
Thanks for reading!