Chinese Comrades

The insecurity underpinning Xi Jinping’s repression

Chinese President Xi Jinping speaks during a meeting with five U.S. governors in Seattle on Tuesday. (Matt Mills Mcknight/Reuters)

There are increasing, if dimly perceived, signs that internal political struggles are again occurring within the Communist Party elite, despite Xi’s assumption of virtually all the formal levers of authority in a fashion reminiscent of Stalin as well as Mao. Given recent purges of important leaders and their supporters, it would be surprising if the situation were otherwise.

Xi Jinping’s Inner Circle Offers Cold Shoulder to Western Officials

Wang Huning and Li Zhanshu, third and fourth from right, both advisers to President Xi Jinping of China, at an event with Boeing employees in Everett, Wash., on Wednesday. CreditRuth Fremson/The New York Times

“One of the problems we have in U.S.-China relations now is that we basically don’t know these people,” said David M. Lampton, director of China Studies at the Johns Hopkins School of Advanced International Studies. “I don’t think we have a very good understanding of who below Xi Jinping speaks for him.”

The refusal of Mr. Xi’s inner circle to develop ties with Western officials is consistent with a fundamental belief that has become widespread in the system here — namely that Western ideas and influences will undermine the Communist Party and lead to a “color revolution.”

“If the party thinks it’s besieged by external and internal forces, the natural human reaction is to bring your organization more tightly together to reduce the flow of information to the outside,” Mr. Lampton said.

There is also broad agreement that Mr. Xi keeps colleagues and advisers — especially technocrats in state ministries — at more of a distance than other Chinese leaders did and that he relies mainly on his own knowledge and instincts in making decisions.

China Tries to Extract Pledge of Compliance From U.S. Tech Firms


HONG KONG — The Chinese government, which has long used its country’s vast market as leverage over American technology companies, is now asking some of those firms to directly pledge their commitment to contentious policies that could require them to turn user data and intellectual property over to the government.

The government distributed a document to some American tech companies earlier this summer, in which it asked the companies to promise they would not harm China’s national security and would store Chinese user data within the country, according to three people with knowledge of the letter who spoke on the condition of anonymity.

The letter also asks the American companies to ensure their products are “secure and controllable,” a catchphrase that industry groups said could be used to force companies to build so-called back doors — which allow third-party access to systems — provide encryption keys or even hand over source code.

The document underlines the way China is wielding its power over the American tech industry. Next week, Beijing has also planned a tech forum in Seattle between China’s Internet czar, Lu Wei, and tech companies including Apple, Facebook, IBM, Google and Uber, in a show of how it can get some of the world’s leading tech players to meet even as President Obama has suggested American companies are being hurt by anticompetitive Chinese practices. The forum is timed to coincide with President Xi Jinping‘s first state visit to the United States.

The situation is tricky for American tech companies. Many are eager to take advantage of business opportunities in China before local rivals sew up the market. But they have to tread carefully given the Chinese government’s sensitivities on issues like censorship and security.

Facebook and Google are among those blocked by China’s web filters from offering their core services in the country, which is the world’s biggest Internet market.

It is not clear whether any of the companies invited to the Seattle tech forum received the pledge. The document was sent by the China Information Technology Security Evaluation Center, most likely under pressure from China’s main Internet regulator, according to one of the people with knowledge of the letter.

It is also unclear when Chinese officials want a response from the companies on the pledge, but they may be hoping for some sign during next week’s tech forum, or at an Internet conference hosted by China’s Internet regulators later in the year, these people said.

The Cyberspace Administration of China did not respond to a faxed request for comment on the pledge.

Uber, Apple, Google, IBM, Microsoft and Facebook did not immediately respond to requests for comment.

The pledge contains language similar to that in a recently distributed Chinese national security law. The document begins with the statement: “Our company agrees to strictly adhere to the two key principles” and names them as “not harming national security and not harming consumer rights.” It also asks the company to make six additional promises — some seemingly innocuous, like guaranteeing product safety, and others less so, like volunteering to check that products are “secure and controllable.” That could imply an agreement to cater products to Chinese surveillance.

Over the last year, Chinese officials have sought to persuade American companies to support declarations of differing types. In a conference hosted by China’s Internet regulator last year, attendees were given little time to provide feedback on a declaration that said countries should have the right to make their own Internet laws, even if those laws mandate censorship and surveillance. The declaration was ultimately abandoned because of objections.

The Pledge China Wants Tech Companies to Sign

Signing the new pledge could set a precedent of American tech firms openly cooperating with Beijing and enabling snooping on users. Conversely, a refusal could bring fresh restrictions or penalties for companies in China’s enormous market.

For the most part, American firms have sought to follow Beijing’s wishes in China, while lobbying at home for more pushback against Chinese laws that they say restrict market access and force technology transfers.

To protect their businesses in China, some have transferred intellectual property and cooperated with would-be Chinese competitors. Some have promised huge new investments and used jargon favored by the leaders of the Chinese Communist Party.

In a recent speech, Travis Kalanick, chief executive of the ride-hailing company Uber, said that progress brought by his company had to be “in harmony with stability,” words often used by Chinese officials to signal the dangers of social and political unrest. IBM’s China marketing materials use phrases like “building a harmonious society” and “the Chinese dream,” the latter a phrase coined by Mr. Xi to signify the rejuvenation of the Chinese nation.

Earlier this month, Dell pledged to spend $125 billion in China over the next fiveyears, which is about five times the company’s value when it was taken private in 2013. In June, Cisco pledged $10 billion in investment in China over the next several years. Qualcomm earlier this year said it would help a Chinese chip maker develop advanced semiconductor materials, and IBM transferred intellectual property for one of its lines of servers to a Chinese firm.

Qualcomm declined to comment. Cisco and Dell did not immediately respond to requests for comment.

“Everyone has assumed that it is easier in the market if you are seen as a friend of China,” said Adam Segal, a senior fellow at the Council on Foreign Relations. “People have doubled down on that strategy now that the pressure has increased so dramatically.”

A report released Thursday by the Information Technology and Innovation Foundation, an industry research group, took aim at what it described as China’s mercantilist approach to innovative industries. The report said the United States should establish an industrial intelligence council, create the position of chief trade enforcement officer and restructure the way reviews of foreign investments on national security grounds are conducted.

“Disregard for international rules of market-based competition is increasingly apparent as China continues to develop a robust set of mercantilist policies, virtually all of which violate the spirit, if not the letter, of the World Trade Organization’s laws,” the report said.

Correction: September 16, 2015
An earlier version of this article misstated a detail of Dell’s investment pledge to China. The company said it would spend $125 billion there over the next five years, not the next 10 years.

Correction: September 17, 2015
An earlier version of this article misidentified the Chinese government agency that sent the document to the American tech companies. It is the China Information Technology Security Evaluation Center, not the China Internet Security Certification Center.

Chinese official to frustrated U.S. businesses: We hear you

By Emily Rauhala September 20

BEIJING — A senior Chinese trade official has a message for U.S. businesses operating in China: We hear your concerns, and we are trying our best. Oh, and we have some concerns of our own.

In a rare interview granted in the run-up to President Xi Jinping’s visit to the United States, Zhang Xiangchen, China’s deputy representative for international trade, shared his thoughts on the nature of U.S.-China trade relations, likening the ties to a boat and trade to the ballast that keeps things “sailing forward smoothly.”

Although there has been much talk about issues such as the South China Sea, cybertheft and the devaluation of the yuan in the lead-up to the visit — “drama, drama, drama,” quipped CNN — Zhang prefers to take a long view, noting that U.S.-China ties are much better now than they used to be, say, 10 or 20 years ago.

With Xi in Seattle, the District, and New York over the next two weeks, Zhang said we can expect positive steps, including progress on state-province economic ties, cooperation on overseas development assistance and talk on a bilateral investment treaty — a potentially landmark agreement that would provide clearer rules for foreign investment.

Zhang declined to comment on when such a deal might be made, noting only that China’s entrance to the World Trade Organization took 15 years and that this treaty is “no less important or complex.”

Although Zhang was careful to emphasize “positive progress,” — “positive” seems to be a key talking point for the carefully choreographed trip — he agreed that when it comes to commercial ties between the world’s two largest economies, there are legitimate concerns on both sides.

“As I often tell U.S. colleagues, good is not perfect,” he said.

To U.S. businesses in China, “not perfect” might feel like something of an understatement. U.S. companies that operate in the country have long complained that their success in the gargantuan Chinese market is undercut by policies that give local companies an advantage, whether by restricting foreign investment, subsidizing local firms or selective targeting in periodic compliance crackdowns.

China’s top leaders have vowed to let the market play a “decisive” role in the years ahead as part of their plan to “comprehensively deepen” economic reform. But the U.S.-China Business Council (USCBC) and others have raised doubts as to whether they are willing to loosen their grip, especially in light of this summer’s stock crisis and the aggressive state intervention that followed.

Zhang said he spends a great deal of time listening to the concerns of the U.S. business community, whether by reading reports by the U.S. Chamber of Commerce or the USCBC or by meeting with business people.

Topping their list of worries, he said, are questions of transparency, reasonableness of regulation and intellectual-property protection. “All these are issues that China meets in the process of its liberalization and opening up, and I also see that the concerns of [those] businesses are reasonable,” he said.

“It’s our job to promote the improvement of China’s investment environment,” he continued. “And we believe that the Chinese government is a pro-business government, and the Chinese government welcomes foreign investment.”

And is China moving fast enough to reform and open its economy?

“I think, historically speaking, we’ve been moving forward steadily,” Zhang said. “If we look back after a few steps, maybe we will feel that we’ve been very quick and very bold.”

Other major areas of concern for U.S. businesses are China’s new laws on national security and nongovernmental organizations, which many worry will give the country’s sweeping security apparatus undue power over foreign firms.

This summer, more than 40 U.S. trade associations and lobby groups, including the U.S. Chamber of Commerce wrote a letter to China’s National People’s Congress complaining that the NGO law could hamper their work.

Zhang said those concerns are “reasonable” but are overblown and reflect a “lack of understanding.” China’s new national security law is “like a hanging sword which will only fall upon those that are engaged in activities that will undermine China’s national security or social stability,” he said.

Besides, he added, China is not the first to implement a national security law and, indeed, in developing the law, “borrowed and learned heavily from international experience, including the U.S. experience.”

Asked about the concerns of Chinese investors and people in business in the United States, Zhang flipped the script, zooming in on how national security reviews in the United States have affected Chinese firms such as Huawei, one of the world’s biggest makers of telecommunication equipment.

The Chinese firm hoped to expand into the United States, but it faced strong opposition, with many U.S. voices noting that the company’s founder, Ren Zhengfei, was once in the People’s Liberation Army. In 2012, a year-long House Intelligence Committee investigation into the company found that it was a threat to national security.

Zhang dismissed the move as hypocrisy. U.S. firms in China are sometimes led by former ex-military types, he said. So Ren’s PLA links are “irrelevant.”

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
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