As America Looks Inward, China Looks to Outer Space


A successful mission would be a significant scientific achievement as well as useful propaganda tool for President Xi Jinping, who sees China’s largely military-run space program as a vehicle for enhancing national prestige.

A ‘rabbit’ discovers moon rocks

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A screen grab from CCTV footage shows the Jade Rabbit moon rover photographed by the Chang’e-3 probe lander in December 2013.

Credit
CCTV/Agence France-Presse — Getty Images

While China’s mission to the far side of the moon would be a first for the world, Chinese spacecraft have previously visited the moon.

In 2013, the year Mr. Xi first assumed power, China became the third country — after the United States and the Soviet Union — to steer a spacecraft onto the moon. The rover known as Jade Rabbit operated for more than two years, and allowed researchers to investigate the moon’s surface remotely using spectrometers, and discover a new type of basaltic rock.

A year later, an unmanned Chinese spacecraft orbited the moon to test equipment and techniques for a future lunar mission. It carried a microchip with Chinese music, including a song by Peng Liyuan, a famous singer who is married to Mr. Xi.

Mr. Xi has said the target date for sending an astronaut to the moon is 2025.

China joins the astronaut club

Video

Thumbs Up as China Sends 2 Into Space

Astronauts Jing Haipeng and Chen Dong signaled a successful launch on Monday, as their spacecraft left Earth to dock with an orbiting space laboratory launched last month.


By REUTERS on Publish Date October 17, 2016.


Photo by European Pressphoto Agency.

Watch in Times Video »

China is also only the third country to send its own astronauts to space aboard its own rocket.

The country conducted its first manned mission to space in 2003, and has since sent several other astronauts and put a pair of space stations into orbit.

In 2016, China sent two astronauts to space for 30 days, its longest manned mission to date. The mission was China’s sixth human space launch, and the two astronauts more than doubled the national record for staying in space.

The astronauts docked with a space station, where they conducted experiments in a lab, as well as testing computer, propulsion and life support systems, according to state news media.

A mission to Mars … and beyond

Continue reading the main story

Why Trump’s Intense Focus on the Trade Deficit Could Cost the Economy in the Long Run


The latest China trade talks defused a potential trade war, and promise a boost for American agriculture and energy, but at the cost of industries of the future.

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A soybean field in Indiana. Selling more commodities like soybeans to the Chinese would make U.S. farmers happy, and reduce the trade deficit, but would not accomplish much more than that.CreditDaniel Acker for The New York Times

The Great Sino-American Trade War of 2018 has fizzled, at least for now. Global markets rose Monday after the Trump administration, at least for the time being, backed away from its threat to impose tariffs on Chinese imports.

But as negotiations proceed, a big question for the administration remains. Is the goal to make some supporters in farm states and energy extraction industries happy, and shrink the trade deficit temporarily?

Or is it to reset a dysfunctional economic relationship between the world’s two biggest economies, in hope of ensuring that the United States maintains competitive footing in the industries of the future — even if dividends aren’t immediate?

Over the weekend, Mr. Trump’s team de-escalated the trade war while seemingly choosing Option A.

The problem with this strategy is not just that the trade peace might prove less than durable. It creates a risk that after all the bluster and threats of the last few months, there will be no payoff in terms of solutions to bigger, longer-term problems.

If those purchases materialize, there could be political dividends for the president. American farmers have much to lose from a potential Chinese trade war, and stepped-up Chinese purchases of American soybeans and other commodities could be a boon. If those purchases are large enough to move the dial on the overall trade deficit with China, it would create an easy-to-measure win for the president on his pet issue.

“This is the stuff you can count and measure,” said Gary Clyde Hufbauer, a trade scholar with the Peterson Institute for International Economics. “It’s short-term, and instantaneous.”

The administration’s approach might quickly reduce the headline level of the trade deficit, but it largely ignores the frustrations of American sectors that are the most promising sources for creating future good export-related jobs.

American companies that make automobiles, semiconductors and other complex products bemoan Chinese government requirements that force American firms to form joint ventures with Chinese companies, sharing their technology. They accuse those partners of widespread theft of intellectual property as they try to catch up in advanced technologies. Many American firms face Chinese competition that receives heavy state subsidies.

These are some of the most stubborn, longstanding issues in American-Chinese economic relations. But they aren’t likely to be fixed overnight, and even if the United States wins concessions, it won’t necessarily affect the trade deficit — especially in the next couple of years.

This helps explain why some prominent advocates of a tougher stance toward China — who applauded President Trump’s tariff threats — are critical of the turn the negotiations have taken.

The tariffs the president threatened “are designed to address China’s technology theft and their plans to dominate advanced and high technology manufacturing,” said Dan DiMicco, chairman of the Coalition for a Prosperous America, which advocates for a hard-line stance, in a statement. By contrast, “an agreement to sell agricultural and energy commodities is the result of bad negotiating and bad economic strategy.”

Exports of agriculture were directly or indirectly responsible for 524,000 jobs in 2014, according to analysis by the International Trade Administration; petroleum and coal products were responsible for an additional 255,000. But combined that is less than 7 percent of the jobs tied to exports that year.

Sectors like computers and electronic products and machinery were responsible for substantially more export-related jobs.

Mr. Hufbauer notes similarities with a strategy that American trade negotiators pursued with Japan in the 1980s, of “voluntary import agreements” in which the Japanese agreed to import more American semiconductors and other products.

Whatever the near-term benefits for particular American exporters, Japanese trade surpluses kept rising.

In some ways the back-and-forth with China in recent days fits a common Trump negotiating pattern: Threaten bold, potentially disruptive action while making major demands, then seek a deal that is considerably more incremental.

Even some who are critical of the administration see value in more systemic rethinking of the relationship between the United States and China.

“Trade is not stuff of immovable structural forces of globalization,” said Jennifer Harris, a fellow at the Roosevelt Institute and former State Department official. “These are political choices that were made, and they could be unmade. So I disagree with a lot of the specific policy choices, but I at least appreciate the space Trump is opening up for us to remind ourselves how much agency we have.”

But, she added, in this round of negotiations “it’s not clear what we’re getting for a lot of the concessions that have been made.”

The Trump administration negotiating team has deep internal fissures, and this is an area where the hard-liners, including U.S. Trade Representative Robert Lighthizer, are advocating the path that includes the highest risk of near-term economic disruption but also the greater likelihood of shifting the Chinese-American economic relationship in the longer run.

The thing to watch in the weeks ahead is whether the administration faction seeking short-term wins and trade peace continues to prevail.

Boosting U.S. Exports to China by $200 Billion Is a Tricky Task


President Trump is trying to broker a deal to bring down the national trade deficit with China. Experts doubt his goal is achievable.

An F18-C Hornet fighter jet on the U.S. navy aircraft carrier the USS Harry S. Truman.CreditAris Messinis/Agence France-Presse — Getty Images

Dear Xi Jinping,

Could we interest you in 500 million metric tons of soybeans?

How about five Ford-class aircraft carriers and 465 F/A-18 fighter jets?

Forty trillion cubic feet of liquefied natural gas? Around 2.8 billion barrels of crude oil? Two and a half million Tesla Model X SUVs?

We’re just trying to make the math work here.

Negotiators from Mr. Xi’s government have offered the Trump administration a deal to buy $200 billion of American goods, in order to defuse escalating trade threats between the United States and China — including Mr. Trump’s vow to impose tariffs on as much as $150 billion of Chinese imports. The purchased goods would be an effort to reduce America’s trade deficit with the Chinese, which reached $375.2 billion last year, and which irritates Mr. Trump to no end.

Administration officials are confident such an agreement could be reached soon. A senior administration official said Friday that the Chinese would commit to reducing tariff and non-tariff barriers that hinder American goods from flowing into that country, allowing an additional $200 billion of American sales to China by 2020.

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The United States exported nearly $20 billion worth of agricultural products to China last year. More than $12 billion of that was soybeans.CreditOrlin Wagner/Associated Press

Mr. Setser estimates that a realistic hope for a near-term increase in soybean exports to China is about $5 billion, which would likely come at the expense of other Chinese trading partners, such as Brazil.

China bought $2 billion worth of liquefied natural gas last year from the United States, double the amount from 2016. It bought about $7 billion of other fossil fuel products, including coal and crude oil.CreditMichael Stravato for The New York Times

Again, though, the problem is scale. China bought $2 billion worth of liquefied natural gas last year from the United States, double the amount from 2016. It bought about $7 billion worth of other fossil fuel products, including coal and crude oil. If you optimistically doubled those purchases right away, that would still give you less than $10 billion in additional exports, though the number would grow over time. Such an increase would require a massive ramp-up in energy infrastructure, particularly for gas exports.

“We don’t have the liquefaction facilities constructed yet to automatically turn on the spigot,” said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics.

The Tesla Model X. China could buy more cutting-edge American-made cars, such as Teslas.CreditSusana Bates/Agence France-Presse — Getty Images

China would probably love to go a step further and buy fighter jets, aircraft carriers and other advanced defense weaponry from the United States — but for national security reasons, that pitch would probably never fly.

One way to approach $200 billion would be to put services on the table, and look for ways to enroll more Chinese students in online American university courses.CreditBrian Snyder/Reuters
A production line for domestic appliances in Jiujiang, China. Unless Americans stop buying Chinese TVs, toys and clothing, the trade deficit may not budge as much as Mr. Trump wants.CreditAgence France-Presse — Getty Images

Option 6: Get Americans to Buy Less

Even then, Mr. Setser cautioned, Mr. Trump might not like the resulting math. In nominal dollars, he said, American imports from China are growing by about 10 percent a year. If that rate keeps up, it would wipe out some or all of any trade-balance gains that administration officials secure in their negotiations with China.

Mr. Setser said he suspects the import growth will continue, in part because of Mr. Trump’s tax cut, which is giving consumers more money to spend on electronics, clothing and other Chinese-made goods.

So unless Americans stop buying Chinese TVs, toys and clothing, the trade deficit may not budge as much as Mr. Trump wants.

Op-Ed Columnist: Did China Just Bribe Trump to Undermine National Security?


That investment, by the way, is part of the Belt and Road project, a multinational infrastructure initiative China is using to reinforce its economic centrality — and geopolitical influence — across Eurasia. Meanwhile, whatever happened to that Trump infrastructure plan?

Back to ZTE: Was there a quid pro quo? We may never know. But this wasn’t the first time the Trump administration made a peculiar foreign policy move that seems associated with Trump family business interests. Last year the administration, bizarrely, backed a Saudi blockade of Qatar, a Middle Eastern nation that also happens to be the site of a major U.S. military base. Why? Well, the move came shortly after the Qataris refused to invest $500 million in 666 Fifth Avenue, a troubled property owned by the family of Jared Kushner, the president’s son-in-law.

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Qatar may be about to make a deal on 666 Fifth Avenue, a troubled property owned by the family of Jared Kushner, the president’s son-in-law.CreditKarsten Moran for The New York Times

And now it looks as if Qatar may be about to make a deal on 666 Fifth Avenue after all. I wonder why?

Step back from the details and consider the general picture. High officials have the power to reward or punish both businesses and other governments, so that undue influence is always a problem, even if it takes the form of campaign contributions or indirect financial rewards via the revolving door.

But the problem becomes vastly worse if interested parties can simply funnel money to officials through their business holdings — and Trump and his family, by failing to divest from their international business dealings, have basically hung a sign out declaring themselves open to bribery (and also set the standard for the rest of the administration).

And the problem of undue influence is especially severe when it comes to authoritarian foreign governments. Democracies have ethical rules of their own: Justin Trudeau would be in big trouble if Canada were caught funneling money to the Trump Organization. Corporations can be shamed or sued. But if Xi Jinping or Vladimir Putin make payoffs to U.S. politicians, who’s going to stop them?

The main answer is supposed to be congressional oversight, which used to mean something. If there had been even a whiff of foreign payoffs to, say, Gerald Ford or Jimmy Carter, there would have been bipartisan demands for an investigation — and a high likelihood of impeachment.

But today’s Republicans have made it clear that they won’t hold Trump accountable for anything, even if it borders on treason.

All of which is to say that Trump’s corruption is only a symptom of a bigger problem: a G.O.P. that will do anything, even betray the nation, in its pursuit of partisan advantage.

Chinese Government Expresses Outrage at Allegations Against U.S.C. Doctor


LOS ANGELES — The Chinese government expressed serious concerns about the University of Southern California, days after officials there admitted that a gynecologist at the student health center continued to see patients despite continued allegations of misconduct, including targeting students from China.

“We ask the USC authorities to deal with the case in a serious manner, conduct an immediate investigation and take concrete measures to protect the Chinese students and scholars on campus from being harmed,” the Chinese Consulate General in Los Angeles said in a statement. “The consulate has all along attached great importance to the safety and legitimate rights and interests of Chinese citizens overseas, including Chinese students and scholars.”

For years, medical staff reported that the doctor, George Tyndall, inappropriately touched students during pelvic exams and made sexual and offensive comments about their bodies.

Yet even after university officials suspended Dr. Tyndall in 2016 and forced him to step down a year later, they did not report the accusations to the California Medical Board. When their internal investigation was complete, officials said that the findings were a personnel matter and that there was no legal obligation to notify the state oversight board, which investigates doctors accused of misconduct.

U.S.C. officials said that by late Wednesday, they had received about 85 complaints about Dr. Tyndall, either through a hotline or a website the university set up to receive complaints. (More than 350,000 students and alumni received an email that included information about Dr. Tyndall and how to report any concerns.) About half of the complaints received this week were anonymous and the majority were about comments that Dr. Tyndall made during exams, officials said. It was not yet clear how many of the complaints were from Chinese students.

“China’s sex education isn’t strong, neither with the government or within family,” said Xing Nan, a student at the law school. “Chinese people tend to refrain from talking about this topic so there’s a culture of ignorance, and so you might not be able to protect yourself. You’re also vulnerable when you go in, so you tend to believe or trust whatever the doctor says.”

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Dr. George Tyndall

Dr. Tyndall reportedly made offensive comments to Chinese students as well as those from other backgrounds, according to a lengthy investigation by The Los Angeles Times.

Several medical experts and ethicists said Wednesday that, regardless of the law, the university failed to meet its ethical obligation in not reporting Dr. Tyndall sooner.

Under state law, hospitals and clinics are required to notify the medical board if they suspend or terminate physicians. The board receives nearly 10,000 complaints each year and last year opened more than 1,400 investigations. If it finds serious misconduct, it can revoke a license to practice.

“If we receive a complaint from the member of the public or clinic or another doctor, we look into it,” said Carlos Villatoro, a spokesman for the board. “But the complaint has to come to us in the first place.”

Mr. Villatoro said he could not comment on the U.S.C. case, but added that “any allegation that an entity is not reporting as required by law will be investigated.”

Jonathan Moreno, a professor at the University of Pennsylvania and a medical ethics expert, said the decision not to report Dr. Tyndall “makes the medical board sort of toothless.”

Dr. Moreno added that “it sounds like people were willing to give him the benefit of the doubt more than ought to have with him.”

Isaac Schiff, the former chief of obstetrics-gynecology at Massachusetts General Hospital, said that if a physician’s behavior led to a suspension or removal, “you have an obligation that the medical board knows about it.”

“You should not be turning an eye or making private deals,” he said. “When institutions just sort of say, ‘Go away quietly and we won’t report you,’ I don’t think that’s correct morally.”

“If a university doesn’t set the standard,” he added, “who does?”

Last year, U.S.C. officials changed the way the student health center is run, making it part of the university’s medical center. During the time that Dr. Tyndall worked at the center, it operated independently and had no oversight from physicians or administrators at the medical school. In a letter sent to students Tuesday, the current chairwoman of the student health center said that now, health care providers are faculty in the departments of family medicine and psychiatry and “undergo a demanding credentialing and peer-review process.”

Angela Chen and Tim Arango contributed reporting.

Chinese Government Expresses Outrage at Allegations Against U.S.C. Doctor


LOS ANGELES — The Chinese government expressed serious concerns about the University of Southern California, days after officials there admitted that a gynecologist at the student health center continued to see patients despite continued allegations of misconduct, including targeting students from China.

“We ask the USC authorities to deal with the case in a serious manner, conduct an immediate investigation and take concrete measures to protect the Chinese students and scholars on campus from being harmed,” the Chinese Consulate General in Los Angeles said in a statement. “The consulate has all along attached great importance to the safety and legitimate rights and interests of Chinese citizens overseas, including Chinese students and scholars.”

For years, medical staff reported that the doctor, George Tyndall, inappropriately touched students during pelvic exams and made sexual and offensive comments about their bodies.

Yet even after university officials suspended Dr. Tyndall in 2016 and forced him to step down a year later, they did not report the accusations to the California Medical Board. When their internal investigation was complete, officials said that the findings were a personnel matter and that there was no legal obligation to notify the state oversight board, which investigates doctors accused of misconduct.

U.S.C. officials said that by late Wednesday, they had received about 85 complaints about Dr. Tyndall, either through a hotline or a website the university set up to receive complaints. (More than 350,000 students and alumni received an email that included information about Dr. Tyndall and how to report any concerns.) About half of the complaints received this week were anonymous and the majority were about comments that Dr. Tyndall made during exams, officials said. It was not yet clear how many of the complaints were from Chinese students.

“China’s sex education isn’t strong, neither with the government or within family,” said Xing Nan, a student at the law school. “Chinese people tend to refrain from talking about this topic so there’s a culture of ignorance, and so you might not be able to protect yourself. You’re also vulnerable when you go in, so you tend to believe or trust whatever the doctor says.”

Image
Dr. George Tyndall

Dr. Tyndall reportedly made offensive comments to Chinese students as well as those from other backgrounds, according to a lengthy investigation by The Los Angeles Times.

Several medical experts and ethicists said Wednesday that, regardless of the law, the university failed to meet its ethical obligation in not reporting Dr. Tyndall sooner.

Under state law, hospitals and clinics are required to notify the medical board if they suspend or terminate physicians. The board receives nearly 10,000 complaints each year and last year opened more than 1,400 investigations. If it finds serious misconduct, it can revoke a license to practice.

“If we receive a complaint from the member of the public or clinic or another doctor, we look into it,” said Carlos Villatoro, a spokesman for the board. “But the complaint has to come to us in the first place.”

Mr. Villatoro said he could not comment on the U.S.C. case, but added that “any allegation that an entity is not reporting as required by law will be investigated.”

Jonathan Moreno, a professor at the University of Pennsylvania and a medical ethics expert, said the decision not to report Dr. Tyndall “makes the medical board sort of toothless.”

Dr. Moreno added that “it sounds like people were willing to give him the benefit of the doubt more than ought to have with him.”

Isaac Schiff, the former chief of obstetrics-gynecology at Massachusetts General Hospital, said that if a physician’s behavior led to a suspension or removal, “you have an obligation that the medical board knows about it.”

“You should not be turning an eye or making private deals,” he said. “When institutions just sort of say, ‘Go away quietly and we won’t report you,’ I don’t think that’s correct morally.”

“If a university doesn’t set the standard,” he added, “who does?”

Last year, U.S.C. officials changed the way the student health center is run, making it part of the university’s medical center. During the time that Dr. Tyndall worked at the center, it operated independently and had no oversight from physicians or administrators at the medical school. In a letter sent to students Tuesday, the current chairwoman of the student health center said that now, health care providers are faculty in the departments of family medicine and psychiatry and “undergo a demanding credentialing and peer-review process.”

Angela Chen and Tim Arango contributed reporting.

Xiaomi, a Chinese Start-Up, Picks Hong Kong for a Major I.P.O.


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A Xiaomi store in Shenyang, China. Xiaomi, the world’s fourth-largest smartphone maker, filed on Thursday to list its initial public offering on Hong Kong’s stock exchange instead of on the mainland.

Credit
via Reuters

HONG KONG — Xiaomi, the Chinese gadget maker that has become one of the world’s largest smartphone companies, has picked Hong Kong to list its shares in what is widely expected to be a major initial public offering.

The choice is a victory for the Chinese city, which missed out on blockbuster stock offerings by Alibaba and other rising internet companies in mainland China in recent years. Just days ago, officials at Hong Kong’s stock exchange had loosened its rules to land some big tech stock offerings.

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Lei Jun, center, the chief executive of Xiaomi, will retain control of the company under rules that Hong Kong recently loosened to attract stock offerings.

Credit
Nicolas Asfouri/Agence France-Presse — Getty Images

In a filing on Thursday with Hong Kong’s stock exchange, Xiaomi said it planned to raise an unspecified amount of money through a public sale of shares. It said it would use the money to develop new smartphones, smart TVs, home speakers and other households gadgets, as well as to finance its ambitions to expand beyond the Chinese market.

The filing indicates that Xiaomi will take advantage of Hong Kong rules that now allow companies to issue supervoting shares to top insiders as well as shares with lesser voting rights to the public. Xiaomi said Lei Jun, its founder, chairman and chief executive, would retain control of the company after the offering because of that arrangement.

Xiaomi began as a maker of cheap smartphones that were sometimes criticized for aping Apple’s iPhone. It nurtured a strong following through viral marketing techniques and a community of users it nurtured in China who would suggest tweaks and fixes to the operating system that runs the phones.

The company stumbled two years ago as other Chinese companies, like Huawei Technologies and Oppo, began turning out phones at competitive prices. Since then, Xiaomi has refurbished its lineup and begun an expansion into India and other new markets. The company is now the worlds fourth-largest smartphone maker, according the International Data Corporation, behind Samsung Electronics, Apple and Huawei.

Continue reading the main story

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.

Credit
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.

Credit
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.”

Continue reading the main story

DealBook Briefing: A Delay in a Trade War, but What Comes Next?


____________________________

Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

____________________________

Photo


Credit
Max Whittaker for The New York Times

Customers want C.E.O.s more involved in social movements

Company chiefs increasingly wade into political issues like gun control and climate change. But a poll suggests they may not be moving fast enough.

From the latest Edelman Trust Barometer, which polled 33,000 people across 28 markets worldwide and will be released at the Milken Institute Global Conference this morning:

• 64 percent say C.E.O.s should lead change rather than waiting for government action.

• 56 percent “have no respect for C.E.O.s who remain silent on important issues.”

• All age groups expect C.E.O. to be personally visible in explaining a company’s purpose and vision.

Photo


Credit
Brendan Mcdermid/Reuters

Why John Legere’s success at T-Mobile is a mixed blessing

He took charge of a company with a doubtful future, after regulators had blocked a sale to one of his former employers, AT&T. And he turned it into a credible insurgent in the American wireless wars, with the money and power to buy Sprint for $26.5 billion. He also became the industry’s most colorful executive.

Yet Mr. Legere’s success might make the Sprint deal harder — because, as the research analyst Craig Moffett told Michael, it “proves that regulators’ opposition to the two companies’ effort to merge in 2014 was justified.”

Fear that the transaction would be blocked made yesterday Sprint shares’ worst day in a year.

Another fear, of Chinese dominance in 5G, provides a primary argument for the deal.

On AT&T and Time Warner: Their $85.4 billion merger plan is now in the hands of a federal judge.

The political flyaround

• Among Robert Mueller’s proposed questions for President Trump: What discussions did you have during the campaign regarding Russian sanctions? Why did you fire James Comey? What efforts were made to reach out to Mr. Flynn about seeking immunity or possible pardon? (NYT)

• Nearly 200 Democrats are suing Mr. Trump over payments to his companies from foreign governments. (Bloomberg)

• Paul Manafort is being sued, too, over a failed deal involving his former son-in-law. And he has asked the judge in his criminal case to investigate leaks of grand jury information.

Why WhatsApp’s co-founder is leaving Facebook

Jan Koum, an executive who also sat on Facebook’s board, had grown increasingly concerned about its collection of user data.

More from Elizabeth Dwoskin of the WaPo:

The independence and protection of its users’ data is a core tenet of WhatsApp that Koum and his co-founder, Brian Acton, promised to preserve when they sold their tiny start-up to Facebook. It doubled down on its pledge by adding encryption in 2016.

What will Mr. Koum do next? Spend more time with his car collection, for starters:

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Elsewhere in Facebook: As the company’s F8 developer conference opens this week, some developers are rankled by sudden change to its privacy policies. “Facebook threw us under the bus,” one told the NYT.

Elsewhere in privacy: Your concerns probably reflect your politics. A demonstration against Moscow’s effort to block Telegram became a protest against Vladimir Putin.

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Richard Vogel/Associated Press

The tech flyaround

• The California Supreme Court made it harder to classify workers as contractors, a blow to Uber and other start-ups. (NYT)

• Autonomy’s former financial chief was found guilty of fraud around its sale to Hewlett-Packard. (WSJ)

• Are hacked companies allowed to retaliate? (The New Yorker)

• The ride-hailing giant Didi Chuxing and Volkswagen are close to agreeing on a joint venture in China. (WSJ)

• And Didi’s battle with Meituan is escalating as they prepare to go public. (The Information)

• What happened when Airbnb took control of a Florida apartment complex. (Bloomberg)

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Ben Gabbe/Getty Images

Anthony Scaramucci is returning to SkyBridge

Before joining the Trump administration as communications director, he quit the investment firm, having struck a deal to sell it to HNA of China. But the White House job lasted 10 days, and now the deal with HNA is off, too, so he’ll come back as co-managing partner.

Why? Blame Cfius, the federal panel that reviews foreign takeovers of U.S. companies for national security concerns.

Elsewhere in deals: Boeing will buy KLX, which makes plane parts, for about $3.2 billion. Yesterday’s Merger Monday could net investment bankers $330 million in fees. Can Moelis & Company outlive Ken Moelis? Demand for the I.P.O. of Ping An’s health care unit is weaker than expected.

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Jordan Strauss/Invision, via Associated Press

Ashley Judd’s new fight with Harvey Weinstein

She helped the investigations that took down the former movie mogul. Now she’s suing him for damaging her acting career, saying he spread lies after she rejected his sexual requests. (One movie she says she might otherwise have been in: “The Lord of the Rings.”)

More from Brooks Barnes of the NYT:

Jeannie Suk Gersen, a professor at Harvard Law School who specializes in gender and sexual harassment issues, said Ms. Judd’s complaint is notable because it “speaks to the fact that this is not just a sexual issue — that, beyond physical and emotional harm, it also involves economic harm.”

Meanwhile, The Weinstein Company’s assets look likely to go to the hedge fund Lantern Capital — because no one else bid.

Elsewhere in harassment news: Meet Tina Tchen, who is building the Time’s Up Legal Defense Fund. Roy Moore has sued four of his accusers for defamation. Three associates sued the law firm Morrison & Foerster, alleging discrimination after they became pregnant. It’s harder to fight sexual harassment at smaller companies.

Revolving door

• The American Petroleum Institute reportedly wants Mike Sommers, previously chief of staff to the former House Speaker John Boehner, as its next C.E.O. (Bloomberg)

Charlie Kindel stepped down as the head of Amazon’s smart home division, saying he needed to “relax and goof off.” (The Information)

The speed read

• Blackstone is expanding in the nearly $300 billion U.S. market for subprime car loans. (FT)

• Panasonic agreed to pay $280 million in the U.S. to settle a bribery case, sending its shares down more than 2 percent. (FT)

• California is preparing for a fight over car emissions. (NYT)

• McKinsey is big in bankruptcy, yet discloses fewer potential conflicts of interest than other advisers. (WSJ)

• BP’s chief executive, Bob Dudley, fled Moscow in a former post because blood tests suggested he was being slowly poisoned, according to a former employee. (Telegraph)

• San Diego’s City Council is expected to vote on whether to let residents buy power in bulk, bypassing the local utility. (NYT)

• A new book, “Big Is Beautiful,” questions the virtues of small businesses. (NYT)

• Nearly 3,000 freelance journalists have won a $9 million settlement in a 17-year class action against big publishers. (NYT)

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White House Considers Restricting Chinese Researchers Over Espionage Fears


The details are still under discussion and it is not known how many people could be affected, but restrictions would probably fall most heavily on graduate students, postdoctoral researchers and employees of technology companies in the United States on temporary visas. More than one million foreign students study in the United States each year, with roughly one-third coming from China.

The restrictions would cover Chinese nationals, but with two exceptions: those with green cards, which give them the right to permanent residency in the United States, and those who have been granted asylum because of persecution in their home country. Also exempt would be former Chinese nationals who renounce their citizenship and become naturalized Americans.

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Chinese graduates in New York in 2016. Throwing up barriers to protect American technology could come at a high cost, including potential discrimination and threatening the substantial profits that American universities earn from foreign students, who often pay full tuition.

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Li Muzi/Xinhua, via Getty Images

An attempt to crack down on Chinese citizens could further chill relations between the two nations, whose closely integrated markets support the most prominent companies around the globe. Technology companies like Apple, Qualcomm, IBM and General Electric have hitched their future growth to access to the Chinese market, which the Trump administration is now threatening to curtail.

This week, a delegation of administration officials, including the Treasury secretary, Steven Mnuchin, will head to China for discussions to help avoid a brewing trade war. But additional curbs on Chinese citizens could make those tough discussions even harder.

President Trump has threatened tariffs on roughly $150 billion of Chinese goods in retaliation for unfair trade practices — a proposal that sparked tariff threats of China’s own. The administration is expected to detail new plans for restrictions on Chinese investment in the United States by the end of May. Congress is also considering giving the United States broader authority to restrict Chinese investments.

These measures could prompt more damaging retaliation from China, which has already promised to place tariffs on at least $50 billion of American products. They also appear to be fueling anti-American sentiment within Chinese borders. China has tightened measures against possible spying, even posting public service announcements in subway trains warning citizens to watch foreigners for signs of espionage.

In America, research institutes look particularly vulnerable to espionage. According to Defense Department statistics, nearly a quarter of all foreign efforts to obtain sensitive or classified information in 2014 were routed through academic institutions. At a congressional hearing in April, Michelle Van Cleave, a former national counterintelligence executive, said the freedom and openness of the United States made the country a “spy’s paradise.” Chinese and Russian agents both come to the United States with “detailed shopping lists,” she added.

Yet throwing up barriers to protect American technology could come at a high cost. Restricting the free flow of people and information could disrupt innovation at American laboratories, a key destination for talented researchers from around the globe. It could threaten the substantial profits that American universities earn from foreign students, who often pay full tuition.

And it could lead to discrimination. Some fear that the Trump administration’s comprehensive challenge to China — always an easy political target in the United States — is cultivating a xenophobic, Cold War mentality in Washington that casts all Chinese people as enemies.

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Trump administration officials fear technologies with military applications could make their way to China.

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Agence France-Presse — Getty Images

The Committee of 100, a group of prominent Chinese-Americans, has denounced government assertions that Chinese professors, scientists and students in the United States may be gathering intelligence for the Chinese government as “disturbing and prejudicial” and warned that it has overtones of anti-Japanese sentiment that was rampant during World War II.

“To target a whole group of people as being subject to greater suspicion, based purely on race and national origin, and in advance of any facts or evidence, goes against the fundamental American ideals of the presumption of innocence, due process and equal protection for all. It also fans the flames of hysteria,” the group said in a statement.

Administration officials have been debating restricting visas offered to Chinese nationals for months as part of the broad package of measures targeting China economically. But the new plan under discussion by the White House would be a much more targeted measure, and one with potentially big consequences for American industry. While the Obama administration also proposed barring foreign students from company-sponsored research at American universities with national security implications, the Trump administration’s measures could apply more broadly to private research facilities as well as new products and technologies.

The United States already restricts who can work on sensitive technology. Researchers on projects deemed classified are carefully vetted and must obtain security clearances. The next level down are research projects that are subject to so-called export controls — including many with potential military applications, such as computer programs and hardware that might be used to model nuclear explosions. Universities and companies working on this material need to obtain a special license from the government to employ foreign researchers.

These products do not need to leave the United States to fall under export rules. All it takes to trigger export controls is for citizens from certain countries — including China, Russia and many former Soviet republics — to be involved in almost any way. That ranges from physical possession of the product to written descriptions and even verbal discussions of it. The administration is considering broadening the range of goods and services traded with China that would be subject to these so-called deemed export rules.

If the proposal is approved by the Commerce Department, and ultimately by Mr. Trump, American companies and universities would be required to obtain special licenses for Chinese nationals who have any contact whatsoever with a much wider range of goods — making it harder for Chinese citizens to work on a range of scientific research and product development programs.

Fueling the push are instances like the one involving Ruopeng Liu, a Chinese citizen and a promising student at Duke who was helping to develop a cloak that shields objects from a broad spectrum of wave frequencies. The professor leading the Pentagon-funded lab, David R. Smith, became suspicious of Mr. Liu, who seemed intent on collaborating with old colleagues in China, and even invited them to tour the lab and photograph Duke’s equipment.

It became clear to Mr. Smith that Mr. Liu was trying to share the cutting-edge technology he was studying in the United States with colleagues in China. The institute he founded on his return to China eventually received millions of dollars of investment, registered thousands of patents and even played host to President Xi Jinping of China.

Mr. Liu did not respond to interview requests, but in past interviews, he has maintained that he did nothing wrong, beyond taking advantage of an open and collaborative university atmosphere. Like many projects in the United States, most of Mr. Smith’s work at Duke was early-stage research that was not classified or categorized as a deemed export.

Daniel Golden, who tells Mr. Liu’s story in his book, “Spy Schools,” said Mr. Liu exploited a gray area that allows a large amount of sensitive, taxpayer-funded technology to flow to foreign governments. “Globalization has transformed American universities into a front line for espionage,” Mr. Golden said.

Yet the academic community is likely to push back on the administration’s efforts over concerns that tighter controls on Chinese nationals could hurt American universities’ ability to collaborate on cutting-edge research and wind up benefiting China even more.

Many students at graduate programs in the United States in computer science, physics, chemistry and other sciences are from China. If the United States makes it harder for aerospace manufacturers, defense contractors and others to employ Chinese nationals, more of these recently trained Chinese graduate students may return to China, taking their skills with them.

Stephen A. Orlins, the president of the National Committee on U.S.-China Relations, said that restricting Chinese researchers would be “tragic” for American universities. “It’s important that we don’t let the security fears overwhelm what has made America great,” he said.

Even Mr. Smith said he did not support tougher restrictions on Chinese researchers. Instead, he said, universities should better educate researchers about existing rules and what to do in case of intellectual property theft.

“With reasonable safeguards I think we can manage it,” he said. “If we were to overreact, I think it could be very damaging to our universities.”

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