Xi Jinping Tightens His Grip, and China’s Tech Giants Feel the Squeeze


The police have used technology from WeChat’s parent company, Tencent, to monitor crowds at public events. JD.com, Alibaba’s main rival in online shopping, is helping China’s military to upgrade its procurement and logistics systems, state media reported recently. (A JD.com spokesman said, however, that its military cooperation was limited to the procurement of goods available to all customers on its site.)

In scientific research — a focus for Mr. Xi as economic growth becomes harder to sustain — tech giants have joined with government institutes to run labs in fields like quantum computing, deep learning and human-computer interaction. Soon, Chinese citizens may even be able to use their accounts on Tencent’s and Alibaba’s apps as digital versions of their national ID cards.

American tech firms also do business with governments, of course. And they, too, are sometimes asked to hand over user data to law enforcement agencies.

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President Xi Jinping’s government is harnessing Chinese tech companies’ capital and knowledge to realize its goals for the country. Alibaba, the e-commerce giant, is helping cities like Hangzhou manage traffic.

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China Stringer Network, via Reuters

But in the United States, disagreements can be hammered out in court. China’s judiciary is controlled by the Communist Party. Making themselves useful to the government is often the price that Chinese firms must pay for regulatory and financial blessings — even for the very right to exist as a business.

“If you see the situation clearly and are able to move in sync with the state, you will get great support,” Wang Xiaochuan, chief executive of the internet search company Sogou, said in a recent interview with Phoenix Satellite Television. “But if it’s in your nature to say, ‘I want freedom, I want to sing a tune different from the state’s,’ then you might suffer, more so than in the past.”

Phoenix subsequently removed that portion of the interview from its website. A Sogou spokesman declined to comment.

Chinese tech companies have found a variety of ways of moving in sync with Beijing. Last year, they injected money into a struggling state telecom carrier, precisely the kind of company they had long sought to disrupt.

Regulators picked Tencent and Ant Financial, an Alibaba corporate sibling, to build credit-scoring databases, though their role in those efforts has since been curtailed. Still, their systems and data would be key, analysts say, for China’s ambitions to build a broader “social credit” system that would track people’s financial activities, police records and other public behavior.

Until recently, Tencent’s website said its cloud services helped the Communist Party “standardize and streamline party-building work.” But that page was removed after The New York Times asked Tencent about it. The original web address now points to a page that describes how Tencent can help local governments manage data.

“He’s scared the absolute bejesus out of everyone, which doesn’t normally work in tech,” said Ryan Manuel, a fellow at the University of Hong Kong, referring to Mr. Xi, who has been more willing than past leaders to purge officials and arrest high-profile businessmen. “That fear is the antithesis of creativity.”

For many years, as Chinese companies became major players in online services, telecom gear, drones and more, the government neither boosted them nor meddled much in their operations. Now, though, as Beijing aims to make China a world technology leader, it is trying to steer private companies more directly, particularly in research and development.

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Pony Ma, left, Tencent’s chief executive, and Jeff Bezos of Amazon with Mr. Xi in Redmond, Wash., in 2015. Mr. Ma is one of a growing number of Chinese tech leaders who have joined the country’s rubber-stamp Parliament.

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Ted S. Warren, via Associated Press

The government’s “Made in China 2025” plan, which seeks to upgrade national capabilities in electric cars, robotics, semiconductors and other advanced industries, is a big factor behind the spiraling trade tensions with the United States.

In areas such as supercomputers, satellite navigation and drones, Mr. Xi has pushed Chinese companies to work alongside the military to chase breakthroughs. At a speech last month in Beijing, Mr. Xi said that the internet and information technology represented the “most dynamic and promising area for civil-military integration,” according to the state news agency Xinhua.

China’s internet titans have already been roped into the government’s plans to lead in artificial intelligence. Alibaba was designated, in November, as the national champion for developing “smart city” infrastructure. Tencent was picked to fill that role in medical imaging; the search giant Baidu is to lead for self-driving cars. A fourth company, iFlyTek, was named to spearhead voice recognition.

Divvying up an industry before it has matured risks stifling competition, though. And shoehorning companies into specific activities could discourage them from exploring others.

“Having the state define and pick winners and losers is not how long-term sustainable innovation really happens,” said Tai Ming Cheung, a professor at the University of California, San Diego, who studies technological development in China.

Countries that have tried it, from the Soviet Union to Japan, “haven’t really fared well over the long run,” Mr. Cheung said.

China’s record is mixed. In the 1960s and ’70s, Mao’s “two bombs, one satellite” program helped the government develop a nuclear bomb, a ballistic missile and its first satellite. More recently, state guidance has helped Chinese companies gain ground in high-speed rail and renewable power. In other fields, including flat-panel displays and cars, the country’s industrial policy has flopped repeatedly.

For China’s tech giants, working with Beijing has become more important for another reason: Mr. Xi has tightened China’s controls on the internet, and moved with remarkable force against companies that step out of line.

Sina Weibo, a service that resembles Twitter, lost some of its appeal as a raucous forum amid a coordinated crackdown early in Mr. Xi’s tenure on what regulators called rumor-mongering. Last month, regulators clamped down on Bytedance, one of China’s most successful start-ups, shutting down its humor app and ordering it to clean up “vulgar” content on several of its other apps.

As a result, tech potentates are trying harder than ever to keep the leadership happy.

On the third floor of a gleaming Tencent high-rise in Shenzhen, the Communist Party makes its presence within the company literal.

A chart on the wall shows how many employees are party members (more than 8,000 this year). Another display lists the monthly schedule for employees’ party education. (This month’s offering: training sessions on “New Era, New Thought, New Journey.”)

Tencent’s mascot, a jaunty winking penguin, appears throughout with a hammer and sickle on its chest.

Growing numbers of tech industry leaders have also joined the National People’s Congress, China’s rubber-stamp Parliament, and the People’s Political Consultative Conference, an advisory group.

In December, Jack Ma, Alibaba’s executive chairman, announced that the company had started a $1.5 billion poverty relief fund. At a news conference before this year’s legislative session, Pony Ma, Tencent’s chief executive and a returning member of the congress, offered suggestions for improving schools and health care.

“The general secretary’s remarks were very sophisticated and contained a lot of information,” Pony Ma said after discussing innovation with Mr. Xi, according to state media, using one of Mr. Xi’s official titles. “I filled a full six pages with notes.”

Mr. Ma continued: “This is a new opportunity for the rapid development of our innovative companies.”

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Retailers Race Against Amazon to Automate Stores


JD and Alibaba both plan to sell their systems to other retailers and are working on additional checkout technologies.

Back in the United States, Walmart, the world’s largest retailer, is testing out the Bossa Nova robots in dozens of its locations to reduce some tedious tasks that can eat up a worker’s time. The robots, which look like giant wheeled luggage bags, roll up and down the aisles looking for shelves where cereal boxes are out of stock and items like toys are mislabeled. The machines then report back to workers, who restock the shelves and apply new labels.

At 120 of Walmart’s 4,700 American stores, shoppers can also scan items, including fruits and vegetables, using the camera on their smartphones and pay for them using the devices. When customers walk out, an employee checks their receipts and does a “spot check” of the items they bought.

Kroger, one of the country’s largest grocery chains, has also been testing a mobile scanning service in its supermarkets, recently announcing that it would expand it to 400 of its more 2,700 stores.

New start-ups are seeking to give retailers the technology to compete with Amazon’s system. One of them, AiFi, is working on cashierless checkout technology that it says will be flexible and affordable enough that mom-and-pop retailers and bigger outlets can use it. In the United States, venture capitalists put $100 million into retail automation start-ups in each of the past two years, up from about $64 million in 2015, according Pitchbook, a financial data firm.

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Advances in automation like Hema’s checkout technology are being tested in the United States by retailers including Walmart and Kroger.

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Giulia Marchi for The New York Times

“There’s a gold rush feeling about this,” said Alan O’Herlihy, chief executive of Everseen, an Irish company working with retailers on automated checkout technology that uses artificial intelligence.

While such technologies could improve the shopping experience, there may also be consequences that people find less desirable. Retailers like Amazon could compile reams of data about where customers spend time inside their doors, comparable to what internet companies already know about their online habits.

“It’s combined with everything else Amazon might know about you,” said Gennie Gebhart, a researcher at the Electronic Frontier Foundation, an online civil liberties organization. “Amazon knows what I buy online, what I watch and now how I move around a space.”

In China, there is less public concern about data privacy issues. Many Chinese citizens have become accustomed to high levels of surveillance, including widespread security cameras and government monitoring of online communications.

Depending on how heavily retailers automate in the years to come, job losses could be severe in a sector that has already experienced wave after wave of store closings by the likes of Macy’s, Toys “R” Us and Sears.

Retailers are playing down the threat to jobs. Walmart, the largest private employer in the United States, says that it does not anticipate automation will lead to job losses, but rather that the new technologies are meant to redirect employees to spend more time helping customers find what they need.

“We see this as helping our associates,” said John Crecelius, vice president of central operations at Walmart. “We are a people-led business that is technology enabled.”

Some traditional retailers are also skeptical about whether the sort of automation in Amazon Go can move to large stores. They say the technology may not work or be cost effective outside a store with a small footprint and inventory.

“That’s probably not scalable to a 120,000-square-foot store,” said Chris Hjelm, executive vice president and chief information officer at Kroger.

But he said it was just a matter of time before more cameras and sensors were commonplace in stores. “It’s a few years out,” he said, “before that technology becomes mainstream.”

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A Hong Kong Newspaper on a Mission to Promote China’s Soft Power


But journalists worry that Alibaba, which has become one of the most highly valued companies in the world in part by maintaining good ties with the Chinese government, is abandoning The Post’s history of scrappy reporting to please Beijing.

“By explicitly stating that its aim is to tell a positive story of China and running questionable stories, management undermines the very attributes that make the S.C.M.P. useful in the first place,” said Yuen Chan, a journalist and senior lecturer at the Chinese University of Hong Kong.

As businesses and governments around the world look for ways to skirt the traditional news media, The Post has become a test case for how a new owner can co-opt an established brand to promote certain viewpoints. Alibaba executives say they want to present a “fair and balanced” alternative to foreign media, a mission statement that echoes Fox News.

Gary Liu, a Harvard-educated technology entrepreneur who is the Post’s chief executive, said the newspaper could offer a more nuanced portrait of China than Western news outlets, with a staff of 350 journalists in Asia, including about 40 in the mainland.

“We are not here, certainly, to promote the views and wishes of Beijing,” said Mr. Liu, who was previously chief executive of Digg, a news aggregation site in New York.

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“We are not here, certainly, to promote the views and wishes of Beijing,” said Gary Liu, the Post’s chief executive.

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Lam Yik Fei for The New York Times

But a culture of self-censorship at the newspaper predates its purchase by Alibaba, said Wang Feng, who served as The Post’s online editor from 2012 to 2015. He said top editors routinely rewrote, played down or withheld critical stories for fear of offending influential Chinese officials or business executives.

“It was often done in a very hush-hush manner,” said Mr. Wang, now the editor of the Chinese-language website of The Financial Times. “You could see that people were not exactly free to speak their minds.”

That timidity has persisted under Alibaba, according to more than a dozen Post journalists who, speaking on condition of anonymity, described how the paper shies away from investigative reporting on Communist Party leaders and contentious subjects such as human rights.

Last year, The Post retracted a business column that suggested an investor in Hong Kong had ties to a trusted adviser to President Xi Jinping and had used his connections to amass wealth. The editors said the column made “insinuations beyond the facts.”

Its author, Shirley Yam, a well-respected financial commentator, resigned. In a statement, Ms. Yam defended her column, saying that editors had vetted the piece extensively before its publication.

Some critics said the more notable change under Alibaba may be The Post’s ramped-up production of articles that present China in a friendly light.

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Jack Ma, the founder of Alibaba and one of China’s richest men, at the World Economic Forum in Switzerland in January.

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Laurent Gillieron/European Pressphoto Agency

In February, Post journalists said, the Ministry of Public Security pushed the paper’s top editors to send a reporter to interview Gui Minhai, a political critic and Swedish citizen whom the Chinese police had snatched from a train.

Mr. Gui was then quoted saying he had broken Chinese law and did not want help from the outside world. In its coverage, The Post said that the interview with Mr. Gui was “government-arranged.”

“The Post risks being a vehicle in Beijing’s overall propaganda machinery,” said Willy Wo-Lap Lam, a scholar at the Chinese University of Hong Kong and a former Post journalist.

Mr. Xi, China’s most powerful leader in decades, has all but eliminated critical reporting in the mainland, placed new pressure on Hong Kong media and ordered a vast expansion of China’s publicity machine, with state broadcasters merged into a single entity called the “Voice of China” to strengthen China’s international messaging.

Chow Chung-yan, who oversees coverage of China and Hong Kong, denied The Post yields to pressure from Beijing.

“We are independent and free,” he said. “We don’t have people calling into our newsroom asking what we will publish.”

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A monitor showing website traffic at the Post’s headquarters in Hong Kong. Traffic to its website has roughly tripled over the past year.

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Lam Yik Fei for The New York Times

The Post’s editor in chief, Tammy Tam, a former Hong Kong television broadcaster, declined to be interviewed. “We believe in reporting freely, fearlessly and in accordance with the highest editorial standards,” she said in a statement.

The Post’s leaders say that Alibaba executives, who have offices a few floors above the newsroom, are not involved in editorial decisions. But Mr. Tsai, the co-founder who spoke at the celebration last month, maintains a close connection, offering occasional feedback on coverage and new products.

There has been at least one noticeable change since the sale: an outpouring of coverage of Alibaba and its leader, Jack Ma, one of China’s richest men. Articles mentioning Alibaba reached an average of about 3.5 per day last year online and in print, roughly double the number in 2016, according to an archival search.

Alibaba appears to be willing to lose money on The Post, which is not profitable, according to newsroom leaders. Mr. Tsai has said The Post, with a circulation of about 101,000 and more than 10 million monthly active users on its website, may not become a self-sustaining business for at least five more years.

Traffic to The Post’s website has roughly tripled over the past year, the company said. Alibaba made access free when it took over.

But Alibaba has abandoned ambitions of expanding the audience for the Post’s journalism in the mainland, where its website is blocked. Even with its pro-China mission, articles in The Post still touch on topics that are off limits to mainland readers, like the 1989 Tiananmen massacre.

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The Post’s new headquarters features an in-house pub that serves Post Hop, a custom-made beer.

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Lam Yik Fei for The New York Times

While many of its approximately 850 articles a week appear tailored for a Hong Kong or Asian audience, The Post has gone on a hiring spree of journalists from outlets like BBC and The New York Times to help bring an international tone to its coverage.

To cater to young people and readers in the United States, now its largest market, the Post this month launched Inkstone, an app and newsletter that offers a conversational take on China, and Abacus, a multimedia site focused on technology. The new products also help blunt criticism that The Post is a propaganda tool.

“Diss the national anthem? That’s up to three years in the slammer,” read one recent headline on an Inkstone article about penalties for mocking the Chinese national anthem in Hong Kong.

The Post is catering to readers in the United States with new products, such as multimedia apps about China. Video by Inkstone News

The Post’s success may hinge on persuading overseas readers that it delivers reliable journalism about China. But on the front lines, reporters are grappling with perceptions that the paper is another Chinese state news media outlet.

Tom Grundy, editor of the Hong Kong Free Press, a rival news site, said The Post was home to talented reporters. But he said Alibaba’s ownership of the paper and recent editorial missteps risked tarnishing high-quality work.

“No matter how good their output,” he said, “there will always be distrust.”

Robert Delaney, a New York-based correspondent for The Post, said he had difficulty lining up interviews with American politicians and other sources because they assumed he worked for a news outlet controlled by the Communist Party.

Now Mr. Delaney, a former China correspondent for Bloomberg News, makes a point of clarifying.

“Within the first minute, I just want to let them know, ‘Just so you know, we’re not a mainland Chinese newspaper, even though we have China in our name,’” he said. “That gets kind of awkward.”

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