Illustration: Aïda Amer/Axios

The TikTok debate has exposed a deepening fissure among venture capitalists, over their attitudes toward China.

Why it matters: Silicon Valley and China could morph from frenemies into full-blown adversaries.

China skeptics in Silicon Valley are fundamentally opposed not only to the China Communist Party's ideology, but also to its data collection policies (which they say is far more pervasive and pernicious than that of U.S. internet companies).

  • They also are fed up with the asymmetric relationship with it comes to tech, whereby U.S. companies must censor and open the code kimono to operate in China.
  • There's also a belief among many China skeptics that America is falling way behind on consequential technologies like AI.
  • As Founders Fund partner Trae Stephens puts it: "[America's] best engineers are optimizing how to get cat videos .... We have sat back and assumed that our hegemony is infinite."

Globalist VCs argue that those averse to China misunderstand local dynamics, and mistakenly view tech competition as a zero-sum game.

  • A Silicon Valley investor active in China argues that while China's barriers to entry for American companies are unfortunate, its government has actively sought to foster at least some version of capitalism. Banning Chinese products like TikTok, he believes, could prove counterproductive.
  • "The Chinese government cares a lot more about the data about its citizens than U.S. users," he adds.
  • Other U.S. investors suggest to Axios that many of their peers are overreacting to China based on the politics of the moment, which isn't in keeping with a long-term asset class like venture capital. They add that the free flow of ideas more important than the flow of capital, and benefits both countries.

What to watch: A big variable could be how big tech companies like Apple and Amazon refer to China at the (now-delayed) Congressional antitrust hearings. For example, they may argue that breaking up big U.S. tech companies would cede ground to China, thus emboldening the skeptic class.

The bottom line: Expect VC firms to begin using their "side" of this disagreement as a calling card, when it comes to pitching both entrepreneurs and limited partners.

Go deeper ... Exclusive: Under fire from Washington, TikTok pledges U.S. job growth

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Illustration: Aïda Amer/Axios

In an Oval Office interview on Friday afternoon, President Trump told me that he held off on imposing Treasury sanctions against Chinese officials involved with the Xinjiang mass detention camps because doing so would have interfered with his trade deal with Beijing.

Driving the news: Asked why he hadn't yet enacted Treasury sanctions against Chinese Communist Party officials or entities tied to the camps where the Chinese government detains Uighurs and other Muslim minorities, Trump replied, "Well, we were in the middle of a major trade deal."

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Illustration: Aïda Amer/Axios

An order from President Trump that would ban TikTok in the U.S. is putting in jeopardy TikTok's plan to hire 10,000 U.S. employees, according to a source familiar with the company's thinking.

Why it matters: When TikTok first rolled out the job pledge, it served as a carrot in the political conflict over the social video service, but it's now being held out as a stick.

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Vice Presidential hopeful Sen. Kamala Harris (D-Calif.) Photo: Justin Sullivan/Getty Images

Sen. Kamala Harris, tapped Tuesday as Joe Biden's running mate, is not a "break up Big Tech" crusader. But should Democrats win in November and seek to go after Silicon Valley, she could bring prosecutorial rigor to the case.

Why it matters: The vice president doesn't normally run a president's tech agenda, but can still help set the tone on a wide range of issues for a presidential campaign and administration. Harris' familiarity with the firms in her backyard may give her an outsize role on tech policy.