Category: China

To Extort U.S. Firms, Xi Passes Laws that Firms Cannot Obey

(p. B1) Doug Guthrie spent 1994 riding a single-speed bicycle between factories in Shanghai for a dissertation on Chinese industry. Within years, he was one of America’s leading experts on China’s turn toward capitalism and was helping companies venture East.

Two decades later, in 2014, Apple hired him to help navigate perhaps its most important market. By then, he was worried about China’s new direction.

China’s new leader, Xi Jinping, was leaning on Western companies to strengthen his grip on the country. Mr. Guthrie realized that few companies were bigger targets, or more vulnerable, than Apple. It assembled nearly every Apple device in China and had made the region its No. 2 sales market.

So Mr. Guthrie began touring the company with a slide show and lecture to ring the alarm. Apple, he said, had no Plan B.

“I was going around to business leaders, and I’m like: ‘Do you guys understand who Xi Jinping is? Are you listening to what’s going on here?’” Mr. Guthrie said in an interview. “That was my big calling card.”

His warnings were prescient. China has taken a nationalist, au-(p. B3)thoritarian turn under Mr. Xi, and American companies like Apple, Nike and the National Basketball Association are facing a dilemma. While doing business in China often remains lucrative, it also increasingly requires uncomfortable compromises.

That trend raises the question of whether, instead of empowering the Chinese people, American investment in the country has empowered the Chinese Communist Party.

. . .

Mr. Guthrie’s career arc and evolving view of China tell the story of Western industry’s complicated dance with the country over the past three decades. Mr. Guthrie and many executives, politicians and academics had bet that Western investment in China would lead the country to liberalize. It is now clear that they miscalculated.

“We were wrong,” said Mr. Guthrie, who left Apple in 2019. “The wild card was Xi Jinping.”

In recent years, China shut down Marriott’s website after it listed Tibet and Taiwan as separate countries in a customer survey. It suspended sign-ups to LinkedIn after the site failed to censor enough political content. And the Communist Party urged a boycott of Western apparel companies that criticized forced-labor practices in Xinjiang, a Chinese region where the government is repressing Uyghurs, the country’s Muslim ethnic minority.

. . .

In 2014, China’s so-called dispatch labor law went into effect, limiting the share of temporary workers in a company’s work force to 10 percent. From Day 1, Apple and its suppliers were in violation.

At a Foxconn plant in Zhengzhou, China, the world’s biggest iPhone factory, temporary workers made up as much as half of the work force, according to a report by China Labor Watch, an advocacy group. After the report, Apple confirmed that the factory broke the law.

Apple executives were concerned and confused, Mr. Guthrie said. They knew the company couldn’t comply because it needed the extra workers to meet periods of intense demand, such as the holidays.

. . .

“‘This is the point. You are supposed to be out of compliance,’” he said he had told them. “‘Not so they can shut you down, but so you’ll figure out what they want you to do and figure out how to do it.’”

Mr. Guthrie, who is often tucking his long, graying hair behind his ears, began giving his lecture on Apple’s risk in China around that time. Its extreme reliance on the country left it with little leverage to resist.

Apple continued to grapple with demands from the government.

. . .

To measure the success of their lobbying, Apple executives looked to the government’s annual corporate social responsibility scores, a proxy for the Communist Party’s view of a company.

. . .

Apple’s score steadily improved. From 2016 to 2020, its ranking among all companies in China rose from No. 141 to No. 30.

Apple didn’t always successfully resist the government’s demands. Over that period, Mr. Cook had agreed to store his Chinese customers’ private data — and the digital keys to unlock that data — on computer servers owned and run by the Chinese government.

For the full story, see:

Jack Nicas. “A Warning On China Is Prescient For Apple.” The New York Times (Friday, June 18, 2021): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date June 17, 2021, and has the title “He Warned Apple About the Risks in China. Then They Became Reality.”)

Chinese Local Governments Run Up $6 Trillion in Debt, Partly to Build Giant Statues and a Full-Size Replica of Titanic

(p. B1) To officials in her corner of China, the statue of Yang Asha, a goddess of beauty, serves as a tribute to the rich culture of the local people and, they hope, a big draw for sightseers and their money. To many others in China, she is another white elephant in a country full of expensive monuments, gaudy tourist traps and wasteful vanity projects that draw money away from real problems.

Those critics point to the statue of Guan Yu, a general from antiquity, in the city of Jingzhou, where he also towers higher than the Statue of Liberty and wields an enormous polearm called the Green Dragon Crescent Blade.

They point to the Jingxingu Hotel, a 24-story wooden building with lots of empty balconies and open spaces but few actual rooms — and it has not accepted guests beyond a few tourists who come to gawk.

They point to the construction of a full-size, $150 million replica of the Titanic in a reservoir deep in China’s interior, 1,200 miles from (p. B5) the ocean.

. . .

Singling out the $38 million Jingxingu Hotel and the $224 million Guan Yu project, which also included an elaborate base and surrounding park, the Ministry of Housing and Urban-Rural Development ordered on Sept. 29 [2020] that communities may not “blindly build large-scale sculptures that are divorced from reality and the masses.”

Chinese government officials have long prized big projects. China now has four-fifths of the world’s 100 tallest bridges, more miles of ultramodern expressways than the American interstate highway system and a bullet-train network long enough to span the continental United States seven times. Those projects have employed millions of people and helped fuel the country’s breakneck growth.

But local officials borrowed heavily to fund those projects. Estimates put the amount of local debt as high as $6 trillion, raising fears of financial bombs lurking in the ledgers of far corners of the country.

Beijing has doubled down on further investment spending this year in an initially successful bid to shake off an economic hangover from the outbreak of coronavirus in China last winter.

Yet with each passing year, as projects are built in ever-more-remote places, the economic kick from each project becomes less and less. China is on track this year to add debt equal to four months’ economic output while its economy grows by an amount equal to less than two weeks’ output.

Local government borrowing “is still out of control,” said Gary Liu, an independent economist in Shanghai.

For the full story, see:

Keith Bradsher. “As China Battles Poverty, Colossal Projects Draw Ire.” The New York Times (Fri., Nov. 27, 2020): B1 & B5.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date Nov. 26, 2020, and has the title “A Soaring Monument to Beauty in China Is Stirring Passions. Mostly Anger.”)

Li Wenliang Was Not an Outlier: Chinese Communists Punished at Least 587 for Speaking Out on Covid-19

(p. A6) At least seven people over the past week have been threatened, detained or arrested after casting doubt over the government’s account of the deaths of Chinese soldiers during a clash last year with Indian troops. Three of them are being detained for between seven and 15 days. The other four face criminal charges, including one man who lives outside China.

“The internet is not a lawless place,” said the police notices issued in their cases. “Blasphemies of heroes and martyrs will not be tolerated.”

Their punishment might have gone unnoticed if it weren’t for an online database of speech crimes in China. A simple Google spreadsheet open for all to see, it lists nearly 2,000 times when the government punished people for what they said online and offline.

The list — which links directly to publicly issued verdicts, police notices and official news reports over the past eight years — is far from complete. Most punishment takes place behind closed doors.

Still, the list paints a bleak picture of a government that punishes its citizens for the slightest hint of criticism. It shows how random and merciless China’s legal system can be when it punishes its citizens for what they say, even though freedom of speech is written into China’s Constitution.

. . .

(p. B3) Perhaps the most depressing items are those about people who were punished for what they said about the Covid-19 pandemic. On top of the list is Dr. Li Wenliang, who was reprimanded on Jan. 1, 2020, along with seven others for trying to warn the country about the coronavirus. He died of the virus in early February last year and is now remembered as the whistle-blower who tried to warn the world about the outbreak. But the spreadsheet lists 587 other cases.

For the full story, see:

Li Yuan. “Spreadsheet on Censorship Shows China’s Human Toll.” The New York Times (Saturday, February 27, 2021): B1 & B3.

(Note: ellipses added.)

(Note: the online version of the story has the date Feb. 26, 2021, and has the title “China Persecutes Those Who Question ‘Heroes.’ A Sleuth Keeps Track.”)

Xi Jinping Only Pays “Mere Lip Service” to “Private Enterprise and Innovation”

(p. A23) Ant Group, China’s biggest fintech conglomerate, was preparing last November for its initial public offering. Analysts projected it would raise $34 billion, the largest sale of shares in history. The company, founded by Jack Ma, had become synonymous with financial innovations, which are often risky.

In the run-up to the I.P.O., Chinese regulators trying to assess financial risks on Ant’s books had been brushed off by Mr. Ma. In an audacious speech, he criticized regulators as too cautious and pilloried state-owned banks for their “pawnshop” mentality of providing loans only to borrowers who could post collateral.

Even oblique attacks on China’s government rarely go unpunished. This was a direct provocation. Yet such was Mr. Ma’s aura, and his apparent imperviousness to government strictures, that domestic and foreign investors were unconcerned.

. . .

Then it all fell apart. Two days before Ant’s shares were to begin trading on the Hong Kong and Shanghai exchanges, the government blocked the I.P.O.

. . .

It seemed that, in bringing the hammer down on the company, the government aimed to limit its growing economic and political power.

But in so doing, the government spooked investors. Suddenly, President Xi Jinping’s pledges to encourage private enterprise and innovation looked like mere lip service.

For the full commentary, see:

Eswar Prasad. “Jack Ma Paid for Taunting China.” The New York Times (Friday, April 30, 2021): A23.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 28, 2021, and has the title “Jack Ma Taunted China. Then Came His Fall.”)

Virologist “Dismayed” That Wuhan Lab Conducted Two Coronavirus Studies “With Only a Modest Level of Safety Measures”

(p. A6) On the heels of President Biden’s abrupt order to U.S. intelligence agencies to investigate the origins of the coronavirus, many scientists reacted positively, reflecting their push in recent weeks for more information about the work of a virus lab in Wuhan, China. But they cautioned against expecting an answer in the three-month time frame of the president’s request.

After long steering clear of the debate, some influential scientists have lately become more open to expressing uncertainties about the origins of the virus. If the two most vocal poles of the argument are natural spillover vs. laboratory leak, these new voices have added a third point of view: a resounding undecided.

“In the beginning, there was a lot of pressure against speaking up, because it was tied to conspiracies and Trump supporters,” said Akiko Iwasaki, an immunologist at Yale University. “There was very little rational discussion going on in the beginning.”

. . .

While researchers generally welcome a sustained search for answers, some warn that those answers may not arrive any time soon — if ever.

“At the end of this process, I would not be surprised if we did not know much more than we know now,” said W. Ian Lipkin, a virologist at the Mailman School of Public Health at Columbia University who was one of the first U.S. scientists to visit China in early 2020 and consult with public health authorities there.

China’s lack of cooperation with the W.H.O. has long fueled suspicions about how the coronavirus, known as SARS-CoV-2, had emerged seemingly from nowhere to seize the world.

. . .

Speaking recently to the former New York Times journalist Donald McNeil Jr., Dr. Lipkin said he was dismayed to learn of two coronavirus studies from the Wuhan Institute of Virology that had been carried out with only a modest level of safety measures, known as BSL-2.

In an interview with The Times, Dr. Lipkin said this fact wasn’t proof in itself that SARS-CoV-2 spread from the lab. “But it certainly does raise the possibility that must be considered,” he said.

A BSL-2 level of research would also add to the difficulty researchers will face trying to pin down clear evidence that a coronavirus infected the staff. At higher levels of security, staff regularly give blood samples that can be studied later for genetic material from viruses and antibodies against them. There may be no such record for SARS-CoV-2.

For the full story, see:

Carl Zimmer, James Gorman, and Benjamin Mueller. “Scientists Welcome a Search That Might Never Bear Fruit.” The New York Times (Friday, May 28, 2021): A6.

(Note: ellipses added.)

(Note: the online version of the story has the date May 27, 2021, and has the title “Scientists Don’t Want to Ignore the ‘Lab Leak’ Theory, Despite No New Evidence.”)

Biden’s “Abrupt Shift” on Wuhan Lab Origin of Covid-19

(p. A1) WASHINGTON — President Biden ordered U.S. intelligence agencies on Wednesday to investigate the origins of the coronavirus, indicating that his administration takes seriously the possibility that the deadly virus was accidentally leaked from a lab, in addition to the prevailing theory that it was transmitted by an animal to humans outside a lab.

. . .

But the president’s carefully worded directive underscored a new surge in interest about the lab, which President Donald J. Trump and some of his top aides repeatedly blamed for the pandemic. Some scientists attributed the renewed focus on the lab to Mr. Trump’s departure from the White House — and being less identified with the theory — while others said it reflected the deep frustrations with the recent W.H.O. report that was co-written by Chinese scientists.

. . .

(p. A8) “For over a year, anyone asking questions about the Wuhan Institute of Virology has been branded as a conspiracy theorist,” Mr. Hawley said. “The world needs to know if this pandemic was the product of negligence at the Wuhan lab, but the C.C.P. has done everything it can to block a credible investigation.”

In the past several days, the White House had played down the need for an investigation led by the United States and insisted that the W.H.O. was the proper place for an international inquiry. Mr. Biden’s statement on Wednesday was an abrupt shift.

. . .

Scientists had been reluctant to discuss the lab leak hypothesis last year because they had been on guard against disinformation, said Marc Lipsitch, a Harvard epidemiologist.

“Nobody wants to succumb to conspiracy theories,” he said.

But the March report by the group of W.H.O.-chosen experts in collaboration with Chinese scientists, dismissing the possibility of a lab leak as “extremely unlikely,” compelled some scientists to speak out.

“When I read that, I was very frustrated,” said Akiko Iwasaki, an immunologist at Yale University. Along with Professor Lipsitch, she signed a letter published in the journal Science this month saying that there was not enough evidence to decide whether a natural origin or an accidental laboratory leak caused the coronavirus pandemic.

“I think it’s really an unanswered question that really needs more rigorous investigation,” Dr. Iwasaki added.

From the earliest weeks of the outbreak, the Chinese government has worked to delay, deflect or block independent investigation of the virus’s origins.

Chinese officials said in early 2020 that the outbreak began at a Wuhan market, and they blamed illegal wildlife sales there. They did so despite having evidence that undermined that theory: Early data showed that four of the first five coronavirus patients had no clear links to the market. The government resisted accepting an international scientific mission.

For the full story, see:

Michael D. Shear, Julian E. Barnes, Carl Zimmer, and Benjamin Mueller. “President Orders Report in 90 Days on Virus Origins.” The New York Times (Thursday, May 27, 2021): A1 & A6.

(Note: ellipses added.)

(Note: the online version of the story was updated May 27, 2021, and has the title “Biden Orders Intelligence Inquiry Into Origins of Virus.” Where the wording in the online and print versions of the passages quoted above differs, the passages quoted above follow the online version.)

Mainstream Elevates Wuhan Lab COVID-19 Origin That They “Once Dismissed as a Conspiracy Theory”

(p. A1) DANAOSHAN, China—On the outskirts of a village deep in the mountains of southwest China, a lone surveillance camera peers down toward a disused copper mine smothered in dense bamboo. As night approaches, bats swoop overhead.

This is the subterranean home of the closest known virus on Earth to the one that causes Covid-19. It is also now a touchpoint for escalating calls for a more thorough probe into whether the pandemic could have stemmed from a Chinese laboratory.

In April 2012, six miners here fell sick with a mysterious illness after entering the mine to clear bat guano. Three of them died.

Chinese scientists from the Wuhan Institute of Virology were called in to investigate and, after taking samples from bats in the mine, identified several new coronaviruses.

Now, unanswered questions about the miners’ illness, the viruses found at the site and the research done with them have elevated (p. A12) into the mainstream an idea once dismissed as a conspiracy theory: that SARS-CoV-2, the virus that causes Covid-19, might have leaked from a lab in Wuhan, the city where the first cases were found in December 2019. Continue reading “Mainstream Elevates Wuhan Lab COVID-19 Origin That They “Once Dismissed as a Conspiracy Theory””

Three Wuhan Lab Researchers Sought Hospital Care at Time When Covid-19 Is Thought to Have Emerged

(p. A1) WASHINGTON—Three researchers from China’s Wuhan Institute of Virology became sick enough in November 2019 that they sought hospital care, according to a previously undisclosed U.S. intelligence report that could add weight to growing calls for a fuller probe of whether the Covid-19 virus may have escaped from the laboratory.

The details of the reporting go beyond a State Department fact sheet, issued during the final days of the Trump administration, which said that several researchers at the lab, a center for the study of coronaviruses and other pathogens, became sick in autumn 2019 “with symptoms consistent with both Covid-19 and common seasonal illness.”

The disclosure of the number of researchers, the timing of their illnesses and their hospital visits come on the eve of a meeting of the World Health Organization’s decision-making body, which is expected to discuss the next phase of an investigation into Covid-19’s origins.

Current and former officials familiar with the intelligence (p. 8) about the lab researchers expressed differing views about the strength of the supporting evidence for the assessment. One person said that it was provided by an international partner and was potentially significant but still in need of further investigation and additional corroboration.

Another person described the intelligence as stronger. “The information that we had coming from the various sources was of exquisite quality. It was very precise. What it didn’t tell you was exactly why they got sick,” he said, referring to the researchers.

November 2019 is roughly when many epidemiologists and virologists believe SARS-CoV-2, the virus behind the pandemic, first began circulating around the central Chinese city of Wuhan, where Beijing says that the first confirmed case was a man who fell ill on Dec. 8, 2019.

The Wuhan Institute hasn’t shared raw data, safety logs and lab records on its extensive work with coronaviruses in bats, which many consider the most likely source of the virus.

. . .

The Biden administration declined to comment on the intelligence but said that all technically credible theories on the origin of the pandemic should be investigated by the WHO and international experts.

“We continue to have serious questions about the earliest days of the Covid-19 pandemic, including its origins within the People’s Republic of China,” said a spokeswoman for the National Security Council.

. . .

David Asher, a former U.S. official who led a State Department task force on the origins of the virus for then-Secretary of State Mike Pompeo, told a Hudson Institute seminar in March that he doubted that the lab researchers became sick because of the ordinary flu.

“I’m very doubtful that three people in highly protected circumstances in a level three laboratory working on coronaviruses would all get sick with influenza that put them in the hospital or in severe conditions all in the same week, and it didn’t have anything to do with the coronavirus,” he said, adding that the researchers’ illness may represent “the first known cluster” of Covid-19 cases.

For the full story, see:

Michael R. Gordon, Warren P. Strobel, and Drew Hinshaw. “Report on Wuhan Lab Fuels Covid-19 Debate.” The Wall Street Journal (Monday, May 24, 2021): A1 & A8.

(Note: ellipses added.)

(Note: the online version of the story has the date May 23, 2021, and has the title “Intelligence on Sick Staff at Wuhan Lab Fuels Debate On Covid-19 Origin.”)

Bipartisan Central Planners Support $50 Billion Subsidy to Semiconductor Industry

“Industrial policy” is a misleadingly soothing phrase meaning “central planning.” Just because China is making the mistake of pursuing industrial policy, doesn’t imply that U.S. worries about China should lead us to make the same mistake. In fact, their following industrial policy should lead us to worry less.

(p. A4) Lurking just behind the domestic debate breaking out over President Biden’s $2.3 trillion infrastructure plans is a powerful foreign force: China.

. . .

. . . elements of the plan are clearly constructed with an eye toward better competing with China, and in ways generally supported in both parties:

—Providing $50 billion for semiconductor manufacturing and research. This proposal would put oomph and dollars behind a bipartisan initiative Congress pushed into a defense bill late last year, called the CHIPS Act, authorizing research and subsidies to increase domestic manufacturing of semiconductors and lessen dependence on China for the computer chips now essential to all manner of products.

The leaders of the congressional push to help the semiconductor industry include Sen. Tom Cotton of Arkansas, a conservative who agrees with the Biden administration on very little. The current shortage of chips plaguing the American auto industry underscores the arguments for this piece of the package. This is one of several areas where traditional conservative arguments against federal “industrial policy,” in which the government picks specific industries to boost with support from Washington, have fallen by the wayside in the face of Chinese advances.

For the full commentary, see:

Gerald F. Seib. “CAPITAL JOURNAL; China Looms Over Infrastructure Plan.” The Wall Street Journal (Tuesday, April 6, 2021): A4.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 5, 2021, and has the title “CAPITAL JOURNAL; China Looms Large in Biden Infrastructure Plan.”)

China’s Economic Surge Not Shared by Consumers and Small Businesses

(p. B1) Factories are whirring, new apartments are being snapped up, and more jobs are up for grabs. When China released its new economic figures on Friday, they showed a remarkable postpandemic surge.

The question is whether small businesses and Chinese consumers can fully share in the good times.

China reported on Friday that its economy grew by a jaw-dropping 18.3 percent in the first three months of the year compared with the same period last year. While the figure is steep, it is as much a reflection of the past — the country’s output shrank 6.8 percent in the first quarter of 2020 from a year earlier — as it is an indication of how China is doing now.

A year ago, entire cities were shut down, planes were grounded and highways were blocked to control the spread of a relentless virus. Today, global demand for computer screens and video consoles that China makes is soaring as people work from home and as a pandemic recovery beckons. That demand has continued as Americans with stimulus checks look to spend money on patio furniture, electronics and other goods made in Chinese factories.

China’s recovery has also been powered by big infrastructure. Cranes dot city skylines. Construction projects for highways and railroads have provided short-term jobs. Property sales have also helped strengthen economic activity.

But exports and property investment can carry China’s growth only so far.

. . .

(p. B3) A slow vaccination rollout and fresh memories of lockdowns have left many consumers in the country skittish.  . . .  When virus outbreaks occur, the Chinese authorities are quick to put new lockdowns in place, hurting small businesses and their customers.

. . .

Families continue to save at a higher rate than they did before the pandemic, something that worries economists like Louis Kuijs, who is head of Asian economics at Oxford Economics. Mr. Kuijs is looking at household savings as an indication of whether Chinese consumers are ready to start splurging after months of being stuck at home.

“More people still seem to not go all the way in terms of carefree spending,” he said. “At times there are still some lingering Covid concerns, but there is perhaps also a concern about the general economic situation.”

. . .

Mr. [Jinqiu] Li, who is recently married and has a baby at home, is still choosing to save instead of spend. He had planned to work for the family business, but it has been hit by the pandemic and he doesn’t think there is much opportunity for him if he stays.

“The whole family has some sense of crisis,” Mr. Li said. “Because of the pandemic and because of family business, I have a sense of crisis.”

For the full story, see:

Alexandra Stevenson and Cao Li. “China’s Gain Is Hardly Felt by the People.” The New York Times (Friday, April 16, 2021): B1 & B3.

(Note: ellipses, and bracketed first name, added.)

(Note: the online version of the article has the date April 15, 2021, and has the title “China’s Economy Is Booming. Shoppers Are Skittish Anyway.” The quote starting “More people” appeared in the print, but not in the online, version of the article.)

More Evidence Xi Jinping Believes in Marx’s Communism

(p. A11) Mr. Biden this month published his Interim National Security Strategic Guidance. The document puts China in a category by itself as “the only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system.”

In his signed introduction to the document, Mr. Biden wrote: “I believe we are in the midst of a historic and fundamental debate about the future direction of our world. There are those who argue that, given all the challenges we face, autocracy is the best way forward. . . . We must prove that our model isn’t a relic of history; it’s the single best way to realize the promise of our future.”

This candor is helpful. Beijing’s dirty secret is that Mr. Xi, in his internal speeches, has for years been describing the competition in precisely these ideological terms. Consider a passage from his seminal speech—kept secret for six years—to the Communist Party Central Committee on Jan. 5, 2013.

“There are people who believe that communism is an unattainable hope, or even that it is beyond hoping for—that communism is an illusion. . . . Facts have repeatedly told us that Marx and Engels’s analysis of the basic contradictions in capitalist society is not outdated, nor is the historical-materialist view that capitalism is bound to die out and socialism is bound to win. This is an inevitable trend in social and historical development. But the road is tortuous. The eventual demise of capitalism and the ultimate victory of socialism will require a long historical process to reach completion.”

The Biden and Xi quotations are almost mirror images of each other. The president’s quotation serves as a belated American rejoinder to Mr. Xi’s furtive call for the defeat of capitalism and democracy, which he made during President Obama’s first term.

For the full commentary, see:

Matt Pottinger. “Beijing Targets American Business.” The Wall Street Journal Saturday, March 27, 2021): A11.

(Note: ellipses in original.)

(Note: the online version of the commentary has the date March 26, 2021, and has the same title as the print version.)