Hello, this is Kenji in Hong Kong. By the time this newsletter reaches your inbox, Chinese president Xi Jinping will have arrived in the city for his very first trip outside of mainland China since the outbreak of the pandemic more than two years ago.
Xi is here for two days — without staying overnight, but commuting from neighbouring Shenzhen — to commemorate the 25th anniversary of the handover of Hong Kong from the UK to China. The atmosphere is much more tense than on a similar occasion five years ago, a sign of how much has changed since then. Perhaps the most notable difference is the imposition of the controversial National Security Law exactly two years ago. Meanwhile, Washington has imposed sanctions on Beijing over what it sees as the breaking of the “One country, two systems” principle, which was supposed to guarantee a measure of autonomy for Hong Kong at least until 2047.
For Southeast Asian countries, the heightened Sino-US tensions have provided a tailwind. Companies are looking to Vietnam, for example as both an alternative production base and a promising new market. But they are finding that Hanoi may not be so different from Beijing when it comes to state control over data, information and tech.
Elsewhere, South Korea is struggling to break its dependence on Japanese chipmaking materials, a sign that political rhetoric alone is not enough to reshape supply chains.
These two stories show just how complex and ever-changing the interface between tech and politics is in Asia.
Having it both ways
Vietnam has been the darling of global tech companies in recent years in their quest to supplement — or even replace — China as a production base and growth market amid growing geopolitical tensions. Beijing’s strict “zero Covid” policy, which saw even its largest city locked down for months with almost no notice, seemed to accelerate the trend.
However, Nikkei Asia’s Lien Hoang reminds us that Vietnam is also a one-party, authoritarian state with a strong inclination to keep a tight grip on the internet and information flows.
Just over a month ago, Prime Minister Pham Minh Chinh visited California and held cordial meetings with Silicon Valley heavyweights, including Apple, Intel, Google and Facebook parent Meta. But today, Hanoi is contemplating changing its tech laws to force social media platforms to censor posts within 24 hours of receiving orders from the authorities. The draft decree also requires tech companies to hand over contact details of influencers who livestream and have at least 10,000 followers.
“Vietnam is positioning itself in tech and [supply chains] quite successfully,” said Huong Le Thu, principal fellow at the think-tank Perth USAsia Center. But, again like China, Vietnam faces a fundamental contradiction: “Global integration, or the need to have control?”
Easier said than done
The aftermath of Japan’s export controls on three chipmaking materials to South Korea imposed nearly three years ago is a prime example of how tech decoupling is easier said than done. Despite loud calls by South Korea’s then administration to create domestic supply chains independent of Japanese producers, the country’s own import data shows reality does not match up with the political rhetoric.
“Besides hydrogen fluoride, there hasn’t been any exceptional impact,” a source from a Japanese material manufacturer told Nikkei’s Seoul correspondent Kotaro Hosokawa. Photoresist imports logged double-digit year-on-year growth in 2020, while imports of fluorinated polyimides declined only slightly. Even the imports of semiconductor manufacturing equipment jumped 44% on the year to $6.3 billion in 2021, which led to a widening of Seoul’s overall trade deficit with Japan.
The economic agenda released two weeks ago by the new South Korean President Yoon Suk-yeol’s administration did not include any wording referring to “Japan-free” supply chains or localisation.
For most of China’s 1.4 billion people, entering a Starbucks, taking the bus or strolling in a park now depends on the approval of health code applications that are central to the battle against Covid-19. But these apps are also ripe for abuse, the Financial Times’ Ryan McMorrow and Cheng Leng write.
The health code apps pull together a huge amount of data on citizens, including mobile phone locations, government-issued ID numbers, Covid test results, vaccination status and other personal information, feeding that data into a system that helps officials decide who to quarantine.
Some of those decisions are automated by the software. For instance, just passing by an area with Covid-19 cases in Beijing can cause one’s health app to go from showing a green code to a pop-up message banning the person from public places until the results from several new tests are fed into the system. A Beijing resident who spoke to the FT said that simply buying cold medicine, which now requires registration with an ID card, triggered a pop-up.
The dangers of such digital controls were on full display in Zhengzhou earlier this month. City officials changed the codes of more than a thousand people to red — requiring quarantine — to prevent them from protesting against the potential loss of their savings in local rural banks that are on the brink of collapse.
Chinese health officials condemned the misuse of the health codes, but the health code applications are developing alongside a broad panoply of technologies pushed by President Xi Jinping to ensure order and social control.
This Japan-South Korean tech story is more heart-warming than the spat over chipmaking materials.
Tech start-ups in both countries are developing apps that use the nose prints of dogs — said to be as unique and unchanging as human fingerprints — to identify pets, writes Nikkei’s Hiroko Fujii.
The idea behind these apps is that the owner uploads a few photos of his or her dog’s nose. Then, if the animal is ever lost, artificial intelligence technology, powered by deep learning, can compare those photos to images submitted by someone who has found a lost pet.
“If our app becomes widely used, the concept of a dog getting lost will disappear,” Satsuki Sawashima, chief operating officer of Tokyo-based start-up S’more told Nikkei. And that would truly be a dog owner’s dream come true.
TSMC set to revitalise small farming town in Japan (Nikkei Asia)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.