The invasion of Ukraine sheds an unflattering light on the role of private Chinese technology groups, including Tencent, Sina Weibo and ByteDance, in spreading false official information, posing difficult compliance issues for foreign corporate investors.
Tech giants’ internet platforms in China promote content supporting Russian President Vladimir Putin’s attack on Ukraine while removing pro-kyiv posts, potentially conflicting with corporate and social responsibility commitments international funds and public statements against the war.
In the early days of the conflict, Beijing followed Moscow in blaming the United States for causing the crisis. False reports of Ukrainian President Volodymyr Zelensky’s escape and the surrender of Ukrainian troops have been widely shared in China. This week, Russian disinformation reports about US-run biological labs in Ukraine with “large amounts of dangerous virus” were repeated by Chinese Foreign Ministry spokesperson and state media.
“The Chinese market is uninvestable from an ESG perspective,” said Félix Boudreault, managing director of Sustainable Market Strategies, an environmental, social and corporate governance (ESG) investment research group.
Many of the companies most popular with investors were subject to tight state controls, Boudreault said, adding that tech and media companies were “extremely vulnerable to a pen slap from a Chinese bureaucrat. “.
China’s information control apparatus – a mixture of state directives, platform self-regulation and individual self-censorship – has been on full display since Putin’s decision to invade Ukraine. The attack, which China has refused to condemn, came just weeks after Putin and President Xi Jinping announced a “limitless” partnership after meeting at the Beijing Winter Olympics.
Beijing’s official war line blames the West and the NATO defense alliance for pushing Putin into conflict. This position was widely publicized not only in state media, but also on the platforms of Tencent, Sina Weibo and Douyin.
Moscow’s talking points are frequently adopted by Russian state media and aired on Chinese platforms, as well as picked up by Chinese officials, state media and a chorus of nationalist influencers.
Tencent owns WeChat, a messaging and networking service with 1.2 billion users, while ByteDance owns Douyin, the domestic Chinese sister to short-form video app TikTok, which has more than 600 million users. Both declined to comment. Twitter-like microblogging site Sino Weibo, another of China’s biggest social media platforms with 500 million users, did not respond to questions.
Censors have targeted articles, opinions, comments and visual images that criticize the invasion and support Ukraine. In one example, a joint letter denouncing Putin’s invasion signed by five academics was quickly scrubbed from the internet after circulating on WeChat. In another, Ke Lan, a Chinese actress, was blocked on Weibo after posting content critical of Moscow.
Investments in Chinese platforms are becoming “problematic” from a social responsibility perspective, said a Hong Kong-based executive at an international fund whose portfolio includes shares of Chinese internet companies.
“It’s a tough market, which is getting tougher and tougher,” said the investor, who asked not to be named, citing Hong Kong’s national security laws, which target criticism of China. . “Investors should be able to engage with companies on these issues. But there’s no way we really can.
The focus on Chinese tech giants and their investors comes as Western governments push international social media companies to remove Russian state-backed media from their platforms.
Funds with tech stakes in China are under “tremendous pressure” due to ESG concerns from their investors as well as Chinese hawks in the United States, said another Asia-based private equity adviser, who also requested the ‘anonymity.
“It will only get worse,” the person said, noting that the invasion adds to rising US-China tensions.
Outside China, TikTok has blocked access to Russian state media Russia Today and Sputnik. But news services still have tens of millions of subscribers in China, and platform companies have said blocking content from Russian services will require orders from Beijing.
“Personally, I am really, really saddened by what is happening.[in Ukraine]. . . But there’s a line between what you can do and what’s out of your control,” said an employee at a large platform group, who asked not to be named.
Chinese tech stocks were popular among international institutional investors keen to tap into the world’s largest consumer market until Beijing launched a crackdown on the sector in late 2020. The risk of increased regulation and the threat of a Falling profits caused by Xi’s so-called common prosperity campaign rattled markets.
Johnny Patterson, policy director of Hong Kong Watch, a UK-based research group, said Ukraine was a “wake-up call” for investors exposed to “expansionary authoritarian regimes”.
“This is not the first area where questions have been raised for investors considering the ‘S’ in ESG when it comes to Chinese tech companies,” he said. He added that investors had also largely ignored the sector’s alleged links to surveillance in China’s western Xinjiang region, where 1 million Muslims have been imprisoned.
“One of the most concerning issues is the level of passive investing in these companies, particularly Tencent and Alibaba. exposed – whether in California or London,” Patterson said, referring to international index providers.
Additional reporting by Maiqi Ding and Eleanor Olcott in London