Minxin Pei is a professor of government at Claremont McKenna College.
Given the circumstances, Uber Technologies appears to have done the right thing, at least for its investors. After losing $1 billion a year before the deal in a self-destructive price war with its Chinese rival, Didi Chuxing, the U.S. ride-hailing company finally decided to sell itself to the competition. What makes this transaction worth noting is not the business acumen of Uber's senior management, but the perfect record Beijing has kept so far in preventing leading American technology firms from dominating China's information sector.
The saddest thing about this abysmal record is not that American firms did not try hard enough. On the contrary, they have done just about everything they were told to do by their advisers to befriend the Chinese government. For example, CEO Mark Zuckerberg personally led a high-profile campaign to charm senior Chinese officials in an attempt to persuade them to unblock access to Facebook . In December 2014, Zuckerberg even hosted Lu Wei, China's then Internet censor-in-chief, in his office, where a copy of a collection of speeches by Xi Jinping, the Chinese Communist Party chief, was prominently displayed. Unfortunately, no matter how hard Zuckerberg tried (he even jogged across Tiananmen Square last year amid heavy pollution), the Chinese government would not relent.
What talented senior executives in leading American tech firms such as Zuckerberg have failed to grasp is that the Chinese government has made it a national policy not to allow any foreign tech firm dominate China's information industry in an effort to build up Chinese companies. For the ruling Communist Party, its foremost concern is regime security. Ceding the control over the flow of information to American tech firms would seriously endanger its survival. Economically, the Chinese government's mercantilist mindset would not allow American tech firms to dominate - and reap lucrative profits from - China's fast-growing information sector. Finally, relying on American information technology also undermines Chinese national security because, as shown by the documents leaked by Edward Snowden, the former U.S. National Security Agency contractor, Washington has a backdoor into the systems operated by American tech firms.
Obviously, governments in many other countries share the same concerns as Beijing (especially those over economic benefits and national security). But unlike China, no other country has the advantages of market size, the political will of the government, and the dynamism of private sector tech entrepreneurs to thwart the titans of Silicon Valley. Consequently, only China has succeeded where all other countries have failed: it is the only country where local Internet giants, such as Alibaba, Tencent, Huawei, and Baidu, can rival their American counterparts in scale, market capitalization and, in some instances, even profitability.