China is quietly reshaping the digital landscape. From entertainment and e-commerce platforms including TikTok and Lazada, to breakthroughs in artificial intelligence and technological manufacturing, Chinese firms are extending influence across Asia, Europe, and beyond. Although, Western nations have imposed export controls, restrictions, and regulatory barriers, China adapts and innovates within its constraints. Power in the digital world is shifting, and the world must adapt to China’s growing influence and carefully orchestrated expansion.

On September 25, 2025, President Donald Trump signed an executive order allowing TikTok to continue operating in the United States by approving a plan to transfer control of its US assets away from its Chinese parent company, ByteDance. While much remains to be finalized, the move temporarily eased years of political and legal pressure to address data privacy and national security concerns tied to its ownership of the major entertainment platform with over 1.6 billion users.

Harnessing Soft Power in the Age of Diplomatic Digital Expansion

Many Americans were quick to call this a victory. Under the deal, US-based companies such as Oracle and Silver Lake will hold around an 80 percent ownership stake, while Chinese investors are limited to a maximum of 20 percent under the deal. These American companies will oversee TikTok’s recommendation algorithm and data storage to ensure that Chinese entities will not have access to American user data. Millions of Americans will also be able to continue using the app they love, which provides every day entertainment and generates revenue for tens of thousands of creators and small businesses alike. 

However, China still has the capability to impose conditions on the transfer of ByteDance’s algorithm, the addictive ‘secret sauce’ that has arguably fueled TikTok’s success. Essentially, this means that ByteDance continues to hold significant influence over the platform, even in its separated American iteration. 

Beneath the surface, China now has the opportunity to leverage TikTok as a strategic bargaining chip. However, this is not the first instance of this tactic – it has been a commonly observed principle within other Chinese businesses, most prominently the tech giant Huawei. Although heavily regulated in multiple countries, as TikTok will be in the US, Huawei, a company that competes with Apple and Samsung, has extensively spread across Europe, Africa, and Asia, extending China’s reach over the digital market despite strict oversight by a slew of international bodies. In essence, this deal highlights only one of many aspects of China’s broader strategy: securing influence over strategically vital technologies regardless of foreign ownership or regulatory hurdles.

Expanding Across Continents and Emerging Markets

China has also been quick to strategically identify and enter high-potential digital markets such as e-commerce, often establishing an early dominant presence. Most notably, Lazada, a leading online shopping platform acquired by Alibaba in 2016 (one of China’s champion corporations) has expanded rapidly across countries in Southeast Asia including Indonesia, Malaysia, the Philippines, Singapore, and more. While e-commerce is a familiar concept across much of Asia, the sector in the region continues to grow rapidly and remains one of the largest sectors attracting ample investment. The total internet economy in Southeast Asia is forecasted to increase from $195 billion USD in 2024 to over $330 billion USD as of this year. Standout markets such as Vietnam, Thailand, and the Philippines are anticipated to double their e-commerce market sizes by 2030. 

Fueled by tactical ambition, Lazada continues to expand throughout the region, even into other parts of Asia. Currently, the platform has partnered with South Korea’s Gmarket, Korea’s Amazon equivalent, to introduce over 20 million Korean products to Southeast Asian shoppers. In the Philippines, Lazada has partnered with the government’s Department of Science and Technology (DOST) to assist micro, small, and medium enterprises (known commonly as MSMEs), to grow into the e-commerce market.

Building on its momentum in Asia, Lazada has explored opportunities with expansion into Europe, aiming to connect Chinese manufactures and Asian sellers with new consumer bases in mature European markets. The platform has already courted top European luxury brands including Armiani, Dolce & Gabbana, and Ferragamo. Lazada’s swift entry into high-potential, but regulated markets, through strategic partnerships with brands and governments such as the Philippines, quietly expands China’s influence over the digital market under the guise of commercial growth.

Pursuing Self-Reliance Through AI Innovation

With the rise of AI and other emerging technologies, it is clear the digital sector is becoming a central arena of technological and economic competition – one that China recognizes as crucial for securing long-term market power. As a result, the nation has aggressively innovated to position itself at the forefront of the global AI market. China’s AI sector is growing rapidly, expected to expand from about $28 billion USD as of 2025 to over $200 billion USD by 2032, with an annual growth rate of 32.5 percent. 

Chinese companies such as Baidu, Alibaba, and Tencent are leading with breakthroughs in large language models and generative AI that is tailored both domestically as well as to the global market. Chinese domestic AI adoption has also soared, doubling to 515 million users in six months this year, in reference to a report released by the China Internet Information Centre (CNNIC). This massive push is also strongly emphasized by China’s Five Year Plans, which are essentially government blueprints that dictate national priorities. 

This focus on domestic innovation has already borne fruit, driving considerable advances in China’s AI ecosystem. Amid US restrictions limiting the export of high-quality AI chips, such as US-based Nvidia’s H100 and H200 models to China, domestic firms have invested in developing alternatives to maintain international competitiveness. Baidu, a leading Chinese AI firm, and a previous Nvidia customer, recently ordered 1,600 Huawei Ascend 910 chips valued at around $61 Million USD, to power 200 new servers. 

Huawei’s Ascend 910B Chip, tested to achieve up to 80 percent of Nvidia’s A100 Graphics processing unit (GPU), even surpassing it by 20 percent in some benchmarks. While many Chinese firms will continue to purchase chips from foreign markets, including the US, China has discernibly pursued self-reliance with the advanced development of semiconductors and artificial intelligence in anticipation of future market demands.

Should China solidify its AI leadership, it stands to gain a multifaceted competitive advantage that could directly challenge and potentially dismantle Western dominance in the global technology and business landscape. Given AI’s transformative potential across virtually all industries, from finance to healthcare and more, China’s advancements and current strategy to normalize AI could drastically grant it greater digital influence. Whereas China aims to integrate AI into 90 percent of its economy by 2030, Western AI development has arguably largely prioritized short-term profit through startups and private ventures, giving China a head start. 

Tactical Investment in Human Capital

Building on this foundation, China has also turned its attention to strengthening the human capital behind its subtle digital expansion. In October, China announced the introduction of its K Visa, what many have dubbed China’s version of the US’s H-1B Visa. The Chinese government had stated that the purpose of its visa is for “exchanges related to education, science and technology, culture, as well as entrepreneurship and business activities”. Furthermore, its requests that applicants should be those who have attended or taught at prestigious institutions specifically in the STEM field. 

Thereby, just as the US, under President Donald Trump, tightened restrictions on study and work visas, China has strategically introduced its own talent policy – one that could potentially appeal more to international talent. This timing is highly advantageous as well, coinciding precisely with a stale period where the US has struggled to fill gaps in its STEM workforce. Given the ongoing rivalry between the two powers across key sectors such as semiconductors, biotechnology, and AI, this initiative represents much more beyond a simple new visa introduction. Industry experts suggest that China’s new K Visa could attract top global STEM talent, not only diverting prospective workers from the US, but also contributing to advancing China’s digital expansion.

By no means is this a new strategy: nations have long leveraged skilled immigration to advance innovation and competitiveness. What sets China apart is the tactical precision of its approach. For instance, the Thousand Talents Plan, a similar recruitment initiative, launched in 2008 successfully attracted high-caliber researchers despite outright resistance from nations such as the US over counterintelligence concerns, according to a Stanford study in 2023. In this current political climate, the targeted recruitment of STEM professionals from top global institutions via China’s K Visa has the potential to be highly effective, and its results should be closely monitored as the program reaches full implementation.

We may soon find ourselves in a world where China sets the pace in shaping the digital economy. Its early e-commerce expansions, coupled with aggressive advances in AI and a targeted strategy to recruit STEM talent, form a coordinated blueprint for influence. Western companies may soon have no choice but to pivot, doubling down on innovation and self-reliance to withstand China’s quiet expansion. The balance of influence in the global digital economy is shifting, and those who set its standards may soon look very different. 

Image credits: CC / Jacobs School of Engineering, UC San Diego

Jacob Tam
Jacob Tam is an undergraduate student at the University of Toronto from Victoria, BC. He holds extensive experience in writing and public speaking and was ranked among the top 15 debaters in British Columbia last year. He currently serves as a Committee Director for the University of Toronto Model United Nations Conference (UTMUN) and Tournament Staff with the UofT Students’ Pre-Law Association. Tam is a Bachelor of Commerce candidate at Rotman Commerce and part of the Munk One program at the Munk School of Global Affairs and Public Policy.