The Internet and China have been the two poles of growth in the global political economy for several decades.1
The information and communication technology (ICT) industry, which U.S. digital giants dominate, has risen to be one of the most lucrative and powerful industries. The worth of the world’s ten largest Internet companies in 2018 was $4.38 trillion, surpassing Germany’s 2017 gross domestic product (GDP) and making these companies together the fourth-largest global economy.2 Apple alone, with a market capitalization of $995.5 billion, stands as number 17 in the World Bank’s 2017 GDP ranking—just above Turkey and the Netherlands.3
China, on the other hand, has been another dynamic site for capitalist expansion since 1978 when leader Deng Xiaoping opened up China to global capitalism.4 Two shaping forces were high inbound foreign direct investments (FDI) and trade exports.5 China’s GDP grew by 82 percent from $149.5 billion in 1978 to $12.24 trillion in 2017.6 China’s rise as a global political-economic power should be understood within the more encompassing worldwide process—namely, the neoliberal trend across Global North and South that resulted in structural shifts between the two.7
As the global ICT industry and China more and more interact with one another, China’s Internet industry comes as a unique site to study the dynamics in contemporary global political economy. This book investigates Tencent, a Chinese Internet company, as a nexus of the two poles of growth: China and the Internet.
Critical political economy, according to Vincent Mosco, is the study of “control and survival in social life.” The analytical strength of this approach is to foreground the “social relations, particularly the power relations” at the center of scholarly concerns and to examine the production, distribution, consumption, and regulation of resources—including communication resources—within the circuit of capitalist processes. The political economy of communication, specifically, recognizes the media and communication sector as an integral aspect of the “fundamental economic, political, social and cultural processes” in modern capitalist societies.8
Grounded in a historical and critical tradition, political economy of communication (PEC) has contemporary relevance for its critique on the capital- accumulation logic and the commodity fetishism in cultural industry.9 To answer the question, “Who (controls) and for whom (production, distribution, and audiences)?” borrowing Dallas Smythe’s words, PEC cares, first and foremost, about the power relations—both in and outside the media and communication institutions—that have shaped, informed, and challenged their production and distributions.10 By looking at media and communication institutions as a part of the capitalist system, political economists have inquired into individual media firms as sites where ownership and control, organizational and business strategies, capital structures, product development, research and development (R&D), and public relations (PR) strategies, units of capital, and state entities have interacted.11
Carrying forward the basic line of research in power dynamics and social relations, PEC scholars in recent decades have been keenly interested in studying ICTs as spheres of transnational capitalist expansion. As Christian Fuchs states, “The Internet is today primarily a space that is dominated by corporations that derive money profit from human communication.”12
Herbert Schiller lays out an early foundation of such arguments in his examination of the use of communication technologies and information systems by the United States in maintaining dominant power. He argues that “surveillance, intervention, and marketing are the near-certain outcomes of the utilization of new communication technologies, domestically and globally.”13 Dan Schiller and Robert McChesney consistently work on identifying the extensive commercial power in global information and communication industries under the neoliberal policy framework.14 Dan Schiller details the historical process and global reconfiguration of the telecommunication sector along neoliberal lines. McChesney examines the mechanisms of advertising, surveillance, and networked corporations that have given rise to “a handful of gigantic monopolistic firms” in the U.S. context.15 Vincent Mosco looks into one recent development of global information capitalism—cloud computing—which, in his argument, is an “engine that powers informational capitalism” that carries economic, political, social, environmental, and cultural implications.16 ShinJoung Yeo studies the management and practice of scientific labor in search-engine industry as a critical tool for Google’s profitability.17
As these scholars’ critiques on mainstream Internet studies stand, the Internet is an integral and critical vehicle of the basic power relations and capitalist structure in social processes. Pointed out by McChesney, the foundational mechanisms in contemporary capitalism, such as “profit motive, commercialism, public relations, marketing, and advertising,” must be references for comprehending and evaluating how the Internet developed and what forces shaped it.18
While these works have set the ground for understanding the political economy of the Internet, they are primarily situated in the United States and the developed world, despite China’s increasing importance to the dynamism of the global communication system. Only recently have studies begun about China’s Internet companies. The extended case study of Tencent in this book adopts the long-standing political economy approach to the contemporary Chinese context.
Many scholars have offered interpretations on China’s contemporary transformation. Three major discourses—neoliberalism, developmentalism, and nationalism—are reviewed here.
The first theme pertains to the role of what David Harvey calls neoliberalism in China’s reform. Harvey refers to China’s transformation “from a closed backwater to an open center of capitalist dynamism,” as a “neoliberal project” that readapted to capital accumulation and reenabled the power of economic elites in alliance with political elites.19 He sees China’s experience as part of a global neoliberal wave that has prioritized the practices of liberating corporate freedoms and commercial interests and a withdrawal of the state from many social and public sectors. Critics, however, maintain that such a pure capitalist analysis seems to be inadequate for understanding the practices of China’s state. Giovanni Arrighi, for example, finds dual efforts by the Chinese state that, on the one hand, were in favor of capitalist development and, on the other, were concerned with labor welfare.20
Instead of the “wholesale neoliberalism” framework, China’s path was seen by others as a reflection of internal conflicts and a crisis of Chinese socialism that crystallized on a developmental state model.21 Alvin Y. So’s work finds evidence from China’s rebalancing policies that were oriented to social development rather than economic growth.22 Lin Chun situates the political economy of the Chinese model in the historical and global context of a revolutionary, socialist, and post-socialist path and argues, “Capitalism is neither an inevitable evolutionary stage nor a sustained option for China.”23 Rather, according to Lin, Chinese reform attempts to seek a Chinese alternative to modernity and responses to the crisis of Chinese socialism, although it has to some extent departed from socialism and turned into a capitalist path.
A third perspective, stemming mostly from the Cold War rhetoric, holds a nationalist view that China is a rising national power in global geopolitics that generated not only “fearful reactions” among the Western public but also genuine concerns from Western political leaders.24 Minqi Li argues that the U.S. hegemony was declining, and China was potentially capable of destabilizing the existing world system.25 The claim that China was rising as a global power is not unchallenged, though, in that China is only a “partial power” and “has not yet bought the world” according to David Shambaugh and Peter Nolan, respectively.26
Among these discussions, the role of China’s communication sector in its contemporary development has been a contested one. Traditionally, media and communication in China have been understood, since the revolutionary time, mainly as a means of control. Much analytical emphasis in prior scholarship is put on the state power and the propaganda mechanism.27 Banal discussions have very often featured a discourse of censorship versus democratization and/or the state-versus-market dichotomies in China’s communication practices, assuming that the communist nature of the state would naturally take over the propaganda machine. Such a dichotomous argument holds some element of truth historically but also neglects a changing dialectic of the state and market relations coupling the reform.28
In recent years, an increasing number of researchers have started recognizing communication and, especially, the ICT industries in China as critical aspects in the country’s political-economic (re)structuring. Yuezhi Zhao, as the groundbreaking scholar, argues that the political economy of China’s communication is one essential perspective of understanding the “class character of the Chinese state and its role in the shifting regimes of capitalist accumulation.”29 In her earlier work, Zhao demonstrates the nuanced nature of the relation between Chinese news media and the communist party–state apparatus and unveils the multidimensional dynamics of the state and capital interaction, foregrounding their entangled relations in communications, and pointing to the inadequacy of the equations between commercialization and democratization and the dichotomous discourse of “state or market.” According to Zhao, the state and capital, in collaboration and contestation, have shaped “the institutions, processes and contents of contemporary Chinese communication.”30
With respect to the newly developed ICT and Internet sector, in particular, PEC scholars further situate it in China’s contemporary reinsertion into global capitalism.31 Yu Hong extends the inquiry into the political economy of ICTs by exploring state-business relations in designing and constructing China’s information infrastructure systems.32 Hong argues that the information communication sector is interwoven into the state’s information policies that prioritized continuing capitalist (re)production. Emerging scholars add knowledge to latest developments in Internet industry from different perspectives, such as policy shifts and financial connections.33
China’s communication sector, particularly the ICT industries, is the critical lenses through which we are able to understand how contemporary China’s development continues to pivot.34
This book is built on a political economy case study of a leading Chinese Internet company, Tencent. Taking Tencent as a historically unfolding business entity, the book focuses on the shaping, enabling, and conditioning forces with which the company has developed, rather than considering individual user behaviors, employee performances, or isolated management strategies. Referring to the strengths of PEC scholarship, the book proposes four lines of inquiry:
The study draws upon document research, using primary and secondary sources that include the following four types:
These four types of sources go far to contextualize and clarify the research questions. But they embody various weaknesses, since they are expressions of special interests and power relations, and therefore require caution in use and analysis.
The rest of the book is organized as follows: Chapter 1 goes into the historical context of the birth and growth of China’s Internet and Tencent. Chapter 2 describes Tencent’s economic features: capital structure, basic businesses and expansion strategy, horizontal and vertical integration, and diversification. Chapter 3 delves into the company’s ownership, control, and its primary institutional stakeholder, the South Africa-based media conglomerate Naspers. Chapter 4 directs attention to the cultural sphere by examining mobile chat and digital gaming, two of Tencent’s most popular and successful products and services. The conclusion summarizes Tencent’s rise as a global digital giant grown out of the joint efforts by the Chinese state and transnational financial capital. This book contributes to the political-economy theory of the Internet, to the knowledge of China’s contemporary transformation and ICT industry, and to the understanding of two emerging and entangling trends in global political economy: transnationalization and financialization.