TikTok Saga: How China Outplayed Trump and Won the Long Game

In the high-stakes game of global politics, nothing is free. You give to get, and the same ironclad rule applies to US-China trade negotiations.

On September 25th, Trump was all smiles as he signed an executive order to push through the acquisition of TikTok's US operations. He made sure to emphasize that the deal would meet the national security demands of a 2024 law. Meanwhile, his Vice President, Vance, threw out a figure, valuing TikTok at $14 billion. As he signed the order, Trump couldn't resist boasting to reporters about how he single-handedly brought in shareholders for the new US version of TikTok. The media quickly named the players: Oracle and private equity firm Silver Lake, among others, would be the main investors, scooping up a 50% stake.

Trump's Hollow Victory

To hear Trump tell it, he'd scored a massive win, successfully forcing the Chinese company ByteDance to sell off a controlling stake in TikTok's American business. But Trump was only telling half the story—the half that lets him brag to his base that he's "winning bigly." While China has remained characteristically low-key about the deal, details disclosed by media in both mainland China and the US paint a completely different picture.

In fact, the real framework of the deal, as outlined by mainland China's Guancha.cn, is far more clever. TikTok’s US business isn't being sold off as a single entity. It's being split into two separate companies. The foreign-controlled joint venture that Vance mentioned is just one part of the equation, a company called the "TikTok US Data Security Joint Venture," and it certainly doesn't represent the whole of TikTok's US operations. According to earlier estimates from Bloomberg, the entire US business is worth closer to $40 billion, not a mere $14 billion.

The Two-Company Structure

Here’s the breakdown of the operational plan that China and the US actually hammered out. It involves two main companies. The primary one is the "ByteDance TikTok US Company." This entity will remain the core operating company, handling all the crucial commercial activities like e-commerce, brand advertising, global connectivity, and product support. Crucially, this main US company will remain 100% owned by ByteDance.

The company Trump and Vance keep talking about is the other entity in this dual-body structure: the "TikTok US Data Security Joint Venture." This is where things get clever. This company will be responsible for handling US user data, content moderation, and software security. ByteDance will hold a 19.9% stake, conveniently keeping it just under the 20% threshold to avoid being classified as an associate company under US law. However, ByteDance's existing global shareholders will hold another 30.1%, while new investors like Oracle will have a combined 50%. But make no mistake: as a single shareholder, ByteDance's 19.9% stake makes it the largest individual shareholder.

And what about control? The board will have seven seats. ByteDance gets one, its existing global shareholders get two, the new investors get three, and an independent director gets the last one. But here’s the real kicker: the algorithm. ByteDance retains full ownership of its intellectual property. It will simply license the relevant IP to the "TikTok US Data Security Joint Venture" and collect licensing fees in return.

Who Really Profits?

When you analyze this two-company solution, the genius of China's strategy becomes crystal clear. The wholly-owned "ByteDance TikTok US Company" keeps 100% control of the real money-makers—e-commerce and brand advertising, which are TikTok's main revenue streams. Meanwhile, the US joint venture is saddled with all the high-cost, non-profit-making operations like data and content security. Content moderation alone requires hiring a massive number of staff. It's expected that this US joint venture will end up charging the main TikTok US subsidiary for its services, making it function more like a landlord with a stable rental income than a dynamic commercial enterprise.

This setup isn't even new; it mirrors how American tech giants operate in China. Take Apple, for instance. All its operational data in China is stored with "Cloud Big Data (Guizhou)," which is a 100% Chinese state-owned enterprise in which Apple holds no stake at all. In contrast, TikTok still retains the single largest shareholding in its new "US Data Security Joint Venture."

A Strategic Play, Not a Sell-Out

Many outsiders mistakenly thought TikTok was franchising its entire operation to the US joint venture, like a Disney theme park. The reality negotiated between Trump and China is far more limited. Only the cost centers—the data and security businesses—were handed over. This also explains why a company like Oracle was so keen to get involved. Managing data and security is Oracle's bread and butter. By investing in the joint venture and then taking on that business, Oracle can easily calculate its return on investment.

So, let's call a spade a spade. After tough negotiations, China only ceded its data security business to a US-led joint venture while keeping total control over TikTok’s profitable US commercial operations. Trump gets to put on a show for the cameras, but in reality, China has walked away with a major victory.

Xi's Grand Chessboard

This isn't just my analysis. The Wall Street Journal's chief China correspondent, Lingling Wei, hit the nail on the head in a September 24th article. She pointed out that while Trump was busy grabbing the TikTok deal, Chinese President Xi Jinping was playing a much larger game of chess. The Journal believes Trump, desperate for a quick win to show off before the election, couldn't afford endless negotiations with no trophy. He needed a result, any result, to avoid looking weak.

For China, the calculus was completely different. By offering Trump a small, face-saving compromise, China secured something far more valuable: a stable future. In the next year, Trump might visit China, and President Xi might travel to the US for the G20 summit. This effectively locks in a one-year cooling-off period for US-China relations. For China, time is the ultimate prize. The Wall Street Journal concluded that President Xi got what any grand strategist values most: an entire year, all while keeping firm control of the situation.

I call this the "peach theory." China tossed Trump a small peach to execute President Xi's grand strategy. With China's incredible pace of development, one year for it is like five years for the US. By buying time to strengthen itself on all fronts, China ensures it will leave its opponent further and further behind.

Lo Wing-hung

Bastille Commentary

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

Picture this: Back before 2018, I'd have laughed off any talk of Hong Kong rivaling the big dogs like London, New York, or Switzerland as a global hub. But dig into the facts—US-launched trade wars in 2018, followed by Western sanctions crushing Russia after the  2022 Ukraine conflict. And suddenly, Hong Kong's spotlight sharpens.

Hong Kong just wrapped up its FinTech Week, drawing crowds with real momentum. Then came the Asian Infrastructure Investment Bank (AIIB)—founded in January 2016, well before US-China tensions boiled over—announcing plans for an office here to handle surging business, as stated in their official press release. 

Nine years on, the landscape has flipped: Western dominance cracks under self-inflicted wounds, opening doors for Hong Kong to anchor international flows.

Western Giants Exposed

For decades, a handful of spots ruled the roost as international powerhouses. Let's break them down with the receipts.

New York stands as the nerve center for global finance and politics. The New York Stock Exchange dominates as the world's largest market by volume, per SEC filings, pulling in companies chasing listings. It's also home to UN Headquarters, buzzing with organizations and elite talent. And don't forget: The US pumps out top-tier education, drawing students worldwide—though that's shifting, as we'll see. 

London. It's the silver medal in finance, hosting the London Stock Exchange—second biggest globally, according to LSE data. The city doubles as an education magnet, a go-to for international students seeking prestige.

Switzerland plays the wealth guardian, its neutrality—enshrined in treaties since 1815—luring billionaires to stash fortunes, as UBS and Credit Suisse reports confirm. Commerce sparks arbitration needs, making it a go-to for disputes under the Swiss Chambers' Arbitration Institution.

Let’s not forget Silicon Valley: fueling innovation and tech while clustering talent and venture capital—think $100 billion-plus in annual US VC deals, per PitchBook stats, centered there.

Globalization's Breaking Point

Back then, it was pure bliss under globalization's spell. G7 powerhouses and Global South players alike swam in free trade and supply chains, hooked on the efficiency.  

But Trump stormed in during 2017, firing the first shot at China with 2018 tariffs. This wasn't just bluster; it targeted China's rise, using export bans on chips and tech to throttle growth.

Fast-forward to February 2022: Russia's Ukraine conflict triggers the West's harshest sanctions yet. The US-led bloc froze Russia's $300 billion central bank reserves, a stark alert to the Global South that no one's assets are safe.

The UK piled on, locking down "Russian oligarch" holdings under the 2019 Russia (Sanctions) (Post-Brexit) Regulations. Take Roman Abramovich: Owner of Chelsea FC, he was forced to sell the club for £2.5 billion in 2022, but the cash sits frozen, per UK Treasury disclosures. London claims Putin ties, yet offers zero public evidence linking him directly. Why move assets to the UK if a single decree can snatch them? It spooks anyone parking money there.

Even Switzerland's famed neutrality crumbled, aligning with EU sanctions despite no formal membership—freezing over CHF 7.4 billion ($9.2 billion) in Russian assets by March 2023, as the Swiss State Secretariat for Economic Affairs reported. Baffling? Absolutely. Neutrality was their brand; now it's a joke.

Assets on the Run

These cracks make Western hubs look like traps for Global South players. One US sanction call, and allies echo it, icing government and private funds. The fix? Spread risks to steadier spots like Hong Kong—neutral, connected, and tied to China's stability. 

Trump's second act piles on the damage, gutting US science and tech. Since his January 2025 inauguration, he's slashed new energy subsidies by billions, and hammered universities, axing federal research funds. 

The National Institutes of Health alone halted 2,100 projects worth $9.5 billion, hitting gender studies, climate health effects, Alzheimer's, and cancer work, as NIH memos confirm. Silicon Valley's biotech VCs reel: Government-backed ventures now starve, sparking an exodus of US scientists to safer shores.

This mess forces the Global South—including China—to redraw the map. The old guard of US-steered centers? Exposed as fragile illusions. Hong Kong emerges as the smart pivot: A hub for finance, education, tech, and organizations, luring branches with headquarters potential, talent, and capital. China's International Mediation Institute already bases in Wan Chai, per its founding charter—a blueprint for more.  

Kick off with the International Mediation Institute, add AIIB's regional office, and watch the dominoes: More groups follow, cementing Hong Kong as a multifaceted powerhouse. China's backing ensures resilience against Western whims, turning opportunity into reality.

 

 

Lo Wing-hung