HONG KONG -- India is administering to China a dose of its own medicine. New Delhi's decision to ban and disable all access within India to 59 China-based apps -- including the wildly popular TikTok -- comes straight out of China's own playbook.
Beijing has long banned popular foreign apps, social media platforms and search engines as part of its domestic censorship regime. Facebook, Youtube, Wikipedia, Google, Yahoo Japan and many others are disabled in China.
For a number of reasons, India's move is highly significant. It ranks as the first broad-based ban by a large democracy of Chinese tech services because of national security and data privacy concerns. U.S. actions against Huawei, the Chinese telecoms equipment giant, and other Chinese companies have been more narrowly focused.
New Delhi's decision also jeopardizes several billion dollars in tech investments by Chinese companies into India and gives U.S., Japanese and European counterparts a potential advantage in one of the world's fastest-growing technology marketplaces.
Although the trigger for India's ban was the killing in June of 20 Indian soldiers by China's People's Liberation Army in a Himalayan border area, suspicions over privacy breaches by Chinese apps in India have been mounting for years.
In 2017, India's Ministry of Defence directed the armed forces to uninstall 42 Chinese apps which it suspected of being compromised by spyware. In 2019, ByteDance -- the Chinese company that owns the TikTok app -- came under fire from politicians for various alleged abuses.
This points to a deeper issue hampering the overseas expansion of Chinese tech companies. They find themselves caught between the global ambitions of China Inc. and their role at home as supporters of China's surveillance state.
Two pieces of Chinese legislation oblige Chinese companies to support Beijing's espionage efforts. The 2017 National Intelligence Law states that any organization "shall support, assist and cooperate with the state intelligence work." The 2014 Counter-Espionage Law states that when the "state security organ" is collecting evidence, "the relevant organizations and individuals shall provide it truthfully and may not refuse."
Thus, Indian suspicions over the data privacy processes of Chinese tech companies appear to be backed by evidence, creating headwinds for potentially all Chinese tech investments on the subcontinent.
But any unravelling of Chinese investment would hit India hard, too. Research by Gateway House, a Mumbai-based think tank, shows that out of India's 26 existing unicorns, 13 are funded either by China's big technology companies -- such as Alibaba or Tencent -- or by Chinese venture capital funds.
"Chinese are the largest investors in tech start-ups in India," says Amit Bhandari, a fellow at Gateway House. "They see India as the next big potential market and they are trying to recreate in India what they have already done in China."
Indeed, Chinese tech companies and venture capitalists invested a record $3.3 billion into Indian start-ups last year, according to Refinitiv, a research company. This number, though large, lagged behind the track record of U.S. investors, which put in a record $7 billion.
The upshot of India's action against Chinese tech and data companies, therefore, may be to hand opportunities for market access to U.S. competitors along with their Japanese and European counterparts.
James Kynge is editor of Tech Scroll Asia, a newsletter on technology in Asia that combines the best reporting from Nikkei and the Financial Times. He is also the FT's Global China editor, writing about China's growing footprint in the world, and won the Wincott Foundation award for the U.K.'s Financial Journalist of the Year in 2016. His prizewinning book, "China Shakes the World," has been translated into 19 languages.