Group items tagged

“Our business is so rooted in China, and touches so many aspects of the Chinese economy, that when people don’t really understand China and have the wrong perception of China, they also have a lot of misconceptions about Alibaba,” Joseph C. Tsai, Alibaba’s executive vice chairman, said in an interview.

“What’s good for China is also good for Alibaba,” Mr. Tsai added. He echoed a phrase often attributed to the former head of General Motors: What’s good for G.M. is good for America.

For Alibaba, the financial stakes are not significant. Estimated to be worth $100 million, the deal represents a relatively small amount for a company with more than $12 billion in annual revenue.

The bigger risk is reputational, as Alibaba leaps into the realm of politics. In owning The South China Morning Post, Alibaba will control a news organization that operates along a border that separates two systems, one in Hong Kong with a relatively free press and another in mainland China with strict censorship controls.

The newspaper, which is not subject to China’s strict censorship rules, has long jumped into controversial issues on the mainland like covering the anniversary of the 1989 pro-democracy protests in Tiananmen Square and last year’s Occupy Central movement in Hong Kong. The newspaper has delved into scandals among China’s elite, including Ling Jihua, who served as an aide to the former Chinese president Hu Jintao.

Willy Lam, a political commentator and former editor at the South China Morning Post, said an Alibaba takeover would most likely exacerbate a trend at the paper toward self-censorship on sensitive political issues.

Alibaba, however, said it had no intention of interfering with the day-to-day operations of the paper and would not censor articles. The company said it would ensure the paper’s journalistic independence and integrity.

But Mr. Tsai did not offer details about how Alibaba would execute its vision for more positive coverage on China without sacrificing editorial independence, two agendas that are seemingly at odds. He said that more “fair and accurate” articles would translate, over time, into a more positive image of the country.

With a print circulation of 100,000, The South China Morning Post is relatively small. But the newspaper, which is 112 years old, has outsize influence in the West because of its proximity to China and its English language format.

Alibaba said it planned to invest in the business, by expanding the staff and developing more digital ventures. The company is also looking to remove the website’s paywall, granting free access to its content. (In 2013, another e-commerce giant, Jeffrey Bezos, the founder of Amazon, purchased The Washington Post.)

baba’s move reflects a broader evolution in China, as some of the country’s biggest companies look to project a different image to the world.

On Wednesday, the board announced that Yahoo would pursue a spinoff of its core Internet business instead, leaving the Alibaba stock in the old company

Although Yahoo’s board said it still believed that the company would prevail in any tax dispute, too many people on Wall Street were worried that challenging Uncle Sam over a possible $10 billion tax bill was just too big a risk, and those fears were depressing Yahoo’s stock price.

Mr. Webb said that after a day and a half of meetings, the nine-member board concluded that it could minimize the tax bill and achieve the same goal — separating the Alibaba investment from the rest of Yahoo — by reversing the direction of the transaction.

The new Yahoo will be two companies: One will have a 15 percent stake in Alibaba, and the other will have everything else, including search, email, the Tumblr social media service, various sites like Yahoo Finance, and Yahoo’s $8.7 billion stake in Yahoo Japan.

Many details of the new spinoff plan remain to be worked out, including who will run the Alibaba shell company and whether the new transaction will incur taxes.

The change in approach comes at a cost: It will add at least a year and a host of complexities to what was already a difficult process.

Mr. Webb said the board determined that another alternative — selling the company — was not the right choice.

nnual sales in excess of $86 billion.

Until recently, Mr. Ma, who is a Communist Party member, was held up as a role model by the Party for his contribution to the “digital economy.”

Regulators regarded the speech as a direct attack against them, and Ant’s public debut was halted just two days before its big day, with Chinese leader Xi Jinping personally intervening to scuttle the market listing,

spoke at a financial forum in Shanghai.

delivered a speech that was highly critical of Chinese regulators, who he said had stifled innovation in the financial industry.

Shortly after the speech, regulators scrapped a planned initial public offering of Ant that would have been the world’s largest to date, raising more than $34 billion from listings in Hong Kong and Shanghai.

Mr. Ma last appeared publicly in late October,

Beijing is now looking to shrink Mr. Ma’s technology and financial empire and potentially take a larger stake in his businesses,

Alibaba is now facing an antitrust probe by Chinese market regulators, who are investigating claims that the company abused its dominant position in the e-commerce industry to pressure some merchants to work only with its platforms.

In November last year, Mr. Ma didn’t appear on an episode of a television show in which he was set to appear as a judge,

An Alibaba spokeswoman said his absence was due to a scheduling conflict, and declined to comment on Mr. Ma’s activities.

t isn’t uncommon for Chinese billionaires to disappear from the public eye for long periods during legal and regulatory investigations.

I

Its market capitalization dropped in the final days of 2020 to less than $600 billion, from a high of $859 billion just before the Ant IPO was scuttled.

Alibaba owns one-third of Ant. Its shares have fallen by a further 2% so far in 2021.

Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,

The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications.

. “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”

Although one of the biggest Asian investors is Japan’s SoftBank Group Corp. , which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.

China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few year

Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period

Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the Yelp equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.

The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.

Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.

One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.

China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030

Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of Alphabet Inc.’s Google and Facebook for dominance in markets outside the English-speaking world and Western Europe.

“All the rest of the world will basically be a land grab between the U.S. and China,

“The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”

Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.

In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China

Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors

“Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chessboard and surround your opponent.”

Both Yahoo and Verizon have staked their future on mobile Internet and video growth. On paper, a deal would make sense. New York-based Verizon has already shown a willingness to buy Internet properties with its $4.4 billion acquisition of AOL in June. Yahoo’s Web business, which could fetch a price of $3 billion to $3.5 billion, based on analysts’ estimates, will be spun out as part of Yahoo’s tax-saving move to return the value of its $31 billion stake in Alibaba Group Holding Ltd. to shareholders.

Yahoo’s board has said that it’s not putting the company up for sale, and that the move is the best way to deal with the Alibaba holdings.

"Yahoo would help check several boxes in what Verizon is looking to build at the moment with a cross-platform ad strategy and new video offerings," said Jan Dawson, an analyst at Jackdaw Research LLC.

Yahoo’s mail, finance, sports and video sites attract more than 1 billion users, a prized asset that would add to AOL’s 2 million users. That kind of Web traffic, along with exclusive content, is just what Verizon, with more than 105 million wireless subscribers, needs to lure and retain a new smartphone-addicted generation.

A Yahoo deal would also give Verizon a new source of revenue, through online advertising, especially from Yahoo’s video-ad unit Brightroll. Verizon has introduced an ad-supported mobile-video service called go90 (named for tilting small screens 90 degrees to watch videos). By seeking users and marketers, Verizon is essentially bulking up to compete with the likes of Facebook Inc. and Google, which are starting to move into the Internet space as a way to drive more users to their online properties.

"Verizon is vying to get a larger share of advertisers’ wallets and adding Yahoo would help strengthen AOL as the No. 3 player," said Brian Wieser, an analyst at Pivotal Research Group. "Yahoo has a lot of users in a well defined environment. That is very valuable to advertisers."

The government has also recently emphasized its dedication to women’s employment rights, especially as it urges women to have more children amid a looming demographic crisis.

Pickup artistry — a practice that arrived in China from the United States — commonly refers to the use of manipulative techniques, including gaslighting, to demean women and lure them into having sex. It became a booming industry in China, with thousands of companies and websites promising to teach techniques, and it has been widely condemned by both the government and social media users.

Women have also been increasingly pushed out of the workplace and into traditional gender roles since China’s leader, Xi Jinping, assumed power. Some fear that the campaign to encourage childbirth could turn coercive.

The gesture, at least, is extensive. As revised, the law would offer the most comprehensive legal definition yet of sexual harassment, to include behaviors such as sending unwanted sexually explicit images or pressuring someone into a relationship in exchange for benefits. It also instructs schools and employers to introduce anti-harassment training and channels for complaints.

The law would also codify women’s right to ask for compensation for housework during divorce proceedings — following the first-of-its-kind decision by a Chinese divorce court last year to award a woman more than $7,700 for her labor during her marriage.

When Peng Shuai, a star tennis player, recently said on social media that a top Chinese leader had pressured her into sex, she was censored within minutes, and many worry that she is under surveillance.

“The priority should be on bottom-up enforcement, where you empower individuals who have been harassed to use the law to protect their rights,” he said.

It is rare for victims of harassment to go to court. An analysis by Mr. Longarino and others found that 93 percent of sexual harassment cases decided in China between 2018 and 2020 were brought not by the alleged victim but by the alleged harasser, claiming defamation or wrongful termination. Women who have made public harassment claims have been forced to pay those they accused.

Nonlegal complaints can bring heavy consequences, too. In December, Alibaba, the e-commerce giant, fired a woman who had accused a superior of raping her. The company said that she had “spread falsehoods,” even though it had earlier fired the man she accused.

Even when women do sue their harassers, they face steep hurdles. Perhaps the most high-profile #MeToo case to go to court was brought by Zhou Xiaoxuan, a former intern at China’s state broadcaster, who asserted that Zhu Jun, a star anchor, had forcibly kissed and groped her. But the case faced years of delays. In September, a court dismissed the claim and said she had not provided enough evidence, though Ms. Zhou said the judges had rejected her efforts to introduce more.

several male bloggers with large followings on the social media platform Weibo denounced the provisions against degrading or harassing women online, saying they would give “radical” feminists too much power to silence their critics.

A woman in southern Guangdong Province who asked to use only her last name, Han, out of fears for her safety, said that she had endured years of physical and emotional abuse by her ex-husband. Even though she managed to secure a divorce last year, he continues to stalk and threaten her, she said. She obtained a restraining order, viewed by The New York Times, that cited chat logs and recordings.

If the law is revised, she continued, the police will be forced to recognize that she has a right to seek their help.

it has invested in more than 800 companies, including a 12 percent stake in Snap and 5 percent in Tesla. By comparison, GV, formerly Google Ventures and the most active corporate venture capital arm in the United States, has invested in more than 500 companies.

Most important, Tencent is a platform operator. It runs WeChat, a mobile messaging app with social media and financial services abilities.

WeChat needs other companies to keep its one billion users glued to the app. An operating system and an app store in its own right, WeChat allows users to run miniprograms created and run by other companie

Those users can make purchases using WeChat’s payment system. Tesla, Airbnb and Starbucks all have their own WeChat miniprograms. So do most of major Chinese websites — barring those that WeChat forbids.

Friendly companies build miniprograms for WeChat. Tencent invested in China’s ride-sharing and bike-sharing companies because their users pay frequently, and Tencent wanted them to use WeChat Pay.

No matter how decent or humble Tencent may act, it’s a giant conglomerate with $24 billion in profit last year and spends much of it on investment. It picks winners and losers, but the winners won’t always be the best out there, thus harming innovation and efficiency.

It limits user access to other products and services. Its WeChat app doesn’t allow users to share links for merchandise on Alibaba’s Taobao online marketplace or for short videos on Douyin, TikTok’s Chinese sister company.

Tencent doesn’t just court the industry. It has also long tried to get close to the government. Compared with the sometimes defiant Alibaba, Tencent has long publicly underscored its willingness to comply fully with rules and regulations.

In April, the company said it would spend $7.8 billion on green energy, education, village revitalization and other pet topics of President Xi Jinping. In the view of Hong Bo, an internet commentator, Tencent is acting for self-preservation.

Housing in the best cities has become too expensive for first-time buyers

Young people who have borrowed from a new generation of online lenders, like Mr. Ma’s Ant Group, have debts they increasingly resent.

For all of China’s economic success, a long-running resentment of the rich, sometimes called the wealthy-hating complex, has long bubbled below the surface. With Mr. Ma, it has emerged with a vengeance.

“An outstanding people’s billionaire like Jack Ma will definitely be hanged on top of the lamppost,”

The Communist Party seems more than willing to tap into that resentment. This could mean trouble ahead for entrepreneurs and private businesses

Some businesspeople say that the hostility toward Ant and Mr. Ma makes them wonder about the fundamental direction of the country.

“You can either have absolute control or you can have a dynamic, innovative economy,”

Mr. Ma has his own high-profile philanthropic projects, like several initiatives in rural education and a prize to help develop entrepreneurial talent in Africa.

He has long enjoyed a better reputation than his peers in manufacturing, real estate and other industries whose edge may derive from cultivating close government ties, ignoring the environmental rules or exploiting employees.

He is as famous for making bold statements and challenging the authorities. In 2003, he created Alipay, which later became part of Ant Group, putting his business empire square in the center of the state-controlled world of finance.

He sometimes subtly dared the government to punish his defiance. Regarding Ant’s business, he said on multiple occasions, “If the government needs it, I can give it to the government.” His top lieutenants repeated the line, too

. “Given what has happened, eventually Ant will have to be controlled or even majority owned by the state,” said Zhiwu Chen, an economist at the University of Hong Kong’s business school.

Today, Alibaba and its archrival, Tencent, control more personal data and are more intimately involved in everyday life in China than Google, Facebook and other American tech titans are in the United States.

Instead of disrupting the state system, the companies have cozied up to it. Sometimes they even help the authorities track people. Still, the government has increasingly seen their size and influence as a threat.

some pro-market people in China worry that the country is drifting toward the hard line of the 1950s, when the party eliminated the capital class, using language that compared capitalist leanings to impurities, flaws and weaknesses.

To these people, some of the language recently used by Eric Jing, Ant’s chairman, evoked the era. At a conference on Dec. 15, he said the company was “looking into the mirror, finding out our shortcomings and conducting a bodily checkup.”

For years, observers have wondered if Amazon’s shopping business — you know, its main business — could ever really work. Investors gave Mr. Bezos enormous leeway to spend billions building out a distribution-center infrastructure, but it remained a semi-open question if the scale and pace of investments would ever pay off. Could this company ever make a whole lot of money selling so much for so little?

Amazon’s retail operations had reached a “critical scale” or an “inflection point.” They meant that Amazon’s enormous investments in infrastructure and logistics have begun to pay off. The company keeps capturing a larger slice of American and even international purchases. It keeps attracting more users to its Prime fast-shipping subscription program, and, albeit slowly, it is beginning to scratch out higher profits from shoppers.

Now that Amazon has hit this point, it’s difficult to see how any other retailer could catch up anytime soon. I recently asked a couple of Silicon Valley venture capitalists who have previously made huge investments in e-commerce whether they were keen to spend any more in the sector. They weren’t, citing Amazon.

“The truth is they’re building a really insurmountable infrastructure that I don’t see how others can really deal with,”

Amazon also faces a wider set of competitive threats internationally. Although it has reported increasingly brisk sales in India, the company has had a difficult time breaking into the lucrative Chinese market, where Alibaba dominates the shopping scene

Walmart, which on Tuesday published earnings that came in slightly above analysts’ expectations, is also spending billions to slow Amazon’s roll. But Walmart said that in its latest quarter, e-commerce sales had grown only 10 percent from a year ago. Amazon’s retail sales rose 20 percent during the same period.

What has been key to this rise, and missing from many of his competitors’ efforts, is patience. In a very old-fashioned manner, one that is far out of step with a corporate world in which milestones are measured every three months, Amazon has been willing to build its empire methodically and at great cost over almost two decades, despite skepticism from many sectors of the business world.

Amazon has built more than 100 warehouses from which to package and ship goods, and it hasn’t really slowed its pace in establishing more. Because the warehouses speed up Amazon’s shipping, encouraging more shopping, the costs of these centers is becoming an ever-smaller fraction of Amazon’s operations.

Amazon’s investments in Prime, the $99-a-year service that offers free two-day shipping, are also paying off. Last year Mr. Bezos told me that people were increasingly signing up for Prime for the company’s media offerings

Mr. Schachter, of Macquarie Securities, estimates that there will be at least 40 million Prime subscribers by the end of this year, and perhaps as many as 60 million, up from an estimated 30 million at the beginning of 2015

he predicted that by 2020, 50 percent of American households will have joined Prime, “and that’s very conservative,” he said.

its operating margin on the North American retail business was 3.5 percent, while Amazon Web Services’s margin was 25 percent.

“retail gross profit dollars per customer” — a fancy way of measuring how much Amazon makes from each shopper — has accelerated in each of the last four quarters, in part because of Prime. Amazon keeps winning “a larger share of customers’ wallets,” the firm said, eventually “leading to a period of sustained, rising profitability.”

“The thing about retail is, the consumer has near-perfect information,” said Paul Vogel, an analyst at Barclays. “So what’s the differentiator at this point? It’s selection. It’s service. It’s convenience. It’s how easy it is to use their interface. And Amazon’s got all this stuff already. How do you compete with that? I don’t know, man. It’s really hard.

More than 180 countries have already submitted individual national plans, but a climate deal is by no means guaranteed.

Among several sticking points is money - how much rich countries should invest to help poor countries cope with climate change, how much should be invested in renewable energy, and how much traditional oil, gas and coal producers stand to lose if countries agree to forever reduce emissions.

Reviving the rich-poor differences that caused earlier climate talks to fail, Chinese President Xi Jinping said an eventual global deal must include aid for poor countries and acknowledge differences between developing and established economies.

Many of the leaders said the world must keep the average temperature within 1 degree Celsius (1.8 degrees Fahrenheit) of current levels - and if possible to half that, to spare island nations threatened by rising seas.

The world has already warmed nearly 1 degree Celsius since the beginning of the industrial age, and factories and cars continue to belch pollution around the world.

Many of the leaders framed the problem as a generational issue, where current leaders owe future generations a livable Earth.

Leaders called their attendance in Paris an act of defiance after the Nov. 13 attacks, some of which occurred near the airfield north of the city where the conference is taking place.

Many of the leaders paid their respects at sites linked to the attacks. Obama, in a late-night visit, placed a single flower outside the concert hall where dozens were killed, and bowed his head in silence.

To that end, at least 19 governments and 28 leading world investors were announcing billions of dollars in investments to research and develop clean energy technology, with the goal of making it cheaper. Backers include Obama, Microsoft co-founder Bill Gates, Facebook founder Mark Zuckerberg, billionaires George Soros and Saudi Prince Alaweed bin Talal, and Jack Ma of China's Alibaba.

Under the initiative, 19 countries pledge to double their spending on low- or no-carbon energy over the next five years. They currently spend about $10 billion a year, about half of that from the U.S.

Gates said he and other investors, including the University of California, are pitching in $7 billion so far and hope to raise more this week.

In another announcement, the United States, Canada and nine European countries pledged nearly $250 million to help the most vulnerable countries adapt to rising seas, droughts and other consequences of climate change. Germany pledged $53 million, the U.S. $51 million and Britain $45 million.

The money will be made available to a fund for the least developed countries. Other countries that contributed include Denmark, Finland, France, Ireland, Italy, Sweden and Switzerland.

Tencent's app, WeChat, is currently the largest and most commonly used messaging system in the world, with almost 1 billion users.

"He's regarded as being a sort of low-profile, not particularly interlinked or interconnected premier. He's got probably the worst job in China.

it's not a sort of political power. It's administrative power," he said.

"Power is about initiating, setting frameworks, setting the agenda. Well you can see people doing that, but Li Keqiang is more of an administrator."

The company's founder, Ma Huateng, is China's third richest man, according to Forbes, just behind Jack Ma and Dalian Wanda founder Wang Jianlin.

Ma, who is also known by his nickname "Pony," founded Tencent, the company which owns WeChat, in 1998 with his university classmates.

, Premier Li is number two in China's power structure, but his influence is far from assured.

It is those restrictions which make working in the world of China's internet so complex and potentially dangerous.

China's Great Firewall is rising higher than ever

"One challenge for tech titans like Ma in the coming years is whether they can keep on the good side of the authorities

Since then, Wang has grown to be a powerful, feared figure among Chinese officials.

Jack Ma is without a doubt one of China's most powerful people and possibly the country's most public face internationally next to President Xi.

As a result of Xi and Wang's crackdown, conspicuous spending and flaunting of wealth by officials has shrunk dramatically and as a result, Wang's political capital has continued to rise.

Wang's rise could be complicated by his age. He'll be 69 at the upcoming 19th Party Congress, meaning by custom he should retire.

he's the flamboyant and personable former English teacher who likes to dance to Michael Jackson tunes.

"He's been an essential lieutenant for Xi ... the president would be a weakened force without him at the top table," he said, placing Wang second

Ma, whose Chinese name is Ma Yun, is the executive chairman and founder of Alibaba,

Ma's peer on the China rich list, has had to abandon a series of major international deals after coming under scrutiny from Beijing.

Most people can't see the day after tomorrow."

China's president and, more importantly, the general secretary of the Chinese Communist Party, analysts say Xi is already the country's most powerful leader since Paramount Leader Deng Xiaoping

Xi's power is only set to grow.

far more than his predecessors,

most recently Chen Min'er who was promoted as party secretary of Chongqing.

Guo Wengui, the US-based businessman and perennial thorn in the side of the Chinese Communist Party.

and the chess game itself goes on inside a highly impenetrable black box," he said.

In China, Apple’s products are sold broadly, in electronics chain stores and small booths in shopping malls in addition to the company’s official Apple Stores.

An apparent trove of login information leaked onto the Chinese internet was used to hack more than 20 million accounts on Alibaba’s e-commerce site Taobao, according to news reports.

Between widespread malware campaigns and a large number of new internet users, China has become a playground for internet fraudsters. Last year, China tried 361 criminal cases involving violation of personal data, up from 176 in 2015, said Xie Yongjiang, associate director for the Institute of Internet Governance and Law at the Beijing University of Posts and Telecommunications.

he arrests are part of a set of broader difficulties in China for Apple, which is based in Cupertino, Calif. Sales of iPhones, still a sign of middle-class aspiration in China, have slowed, according to analysts, as the public waits for new models and as Chinese manufacturers of cheaper phones step up their quality and marketing.

The problem is not even new to Apple. Last year, 10 employees of an Apple contractor in China were also found with data from more than 80,000 users.

He is facing escalating Western criticism of Chinese policies toward ethnic Uighurs in Xin­jiang, where as many as 3 million people have been put into reeducation camps. He is dealing with an increasingly assertive Taiwan at the same time a pro-democracy movement swells in Hong Kong.

Xi is trying to harden the party’s internal resolve to fend off these threats — most acutely, a United States that many observers say seems intent on containing China.“Xi has a legion of internal critics, including over his handling of relations with Washington,” McGregor said. “One way to bring them to heel is by demanding fealty and loyalty to the party, and by extension, to himself.”

Since taking power, Xi has rewritten the party’s rules — including ending term limits, setting himself up to be leader indefinitely — and launched huge study campaigns to instill his personal ideology across society, starting with toddlers, through schools and universities and through the Central Committee Party School in Beijing. The party has developed an app through which Chinese can study “Xi Jinping Thought.”

China’s leaders have intensively studied the collapse of the Soviet Union — Xi even had top officials watch a four-part documentary about it soon after he came into office — and concluded that Mikhail Gorbachev made a strategic error by opting to liberalize rather than tighten political controls.

Meanwhile, the party’s increasingly repressive actions inside China, such as the crackdown in the Xinjiang region and the growing use of surveillance technology, “reflect heightened fear and insecurity, not a self-confident China aspiring to enhanced leadership in global and regional affairs,”

Because of this sense of insecurity, party leaders view the Trump administration’s declaration of a trade war not as a purely economic matter but as a broader, strategic effort to contain China

This theory got a boost from none other than John Bolton, Trump’s national security adviser, late last year. “This is not just an economic issue,” he told Fox Business. “This is not just talking about tariffs and the terms of trade. This is a question of power.”

As the trade negotiations rumble on, more people in China are subscribing to the view that the dispute is about geopolitics rather than economics, scholars say. That it’s all about keeping China down.

The perception gap between China and the United States is huge, the academic said, searching around for the appropriate English analogy before arriving at “women are from Venus, men are from Mars.” 

This is because the United States looks at the development and wealth in Chinese cities like Beijing, Shanghai and Shenzhen, and at Chinese technology companies like Alibaba and Huawei, and sees an increasingly powerful economic player.

But Beijing doesn’t look at the situation only through the lens of the past few decades, the academic said. It looks at it from the perspective of the past few centuries. 

China can’t back down anymore. If you read the editorials, you see that China is determined,

“I think some would even compare it with the unequal treaties of 100 years ago,” he continued, harking back to the British victory in the Opium Wars of the 19th century and the occupations of the early 20th century.

With these old humiliations still raw, party leaders are trying to fuel an inner resolve

China’s technology tycoons also slipped in the rankings after the United States placed hefty restrictions on tech exports to China. Zhang Yiming, the 39-year-old founder of ByteDance, TikTok’s parent company, stayed in second place — but his net worth dwindled 28 per cent to $35 billion.

Ma Huateng, also known as Pony Ma, 51, founder of the tech giant Tencent, fell to fifth place with a drop of $14.6 billion — almost a third of his wealth

Jack Ma, 58, founder of the Alibaba e-commerce company, slipped to ninth place from last year’s fifth spot after his net worth dropped 29 per cent.

Of particular concern to Commerce are so-called frontier models. The phrase, popularized in the Washington lexicon by some of the very companies that seek to build these models—Microsoft, Google, OpenAI, Anthropic—describes a kind of “advanced” artificial intelligence with flexible and wide-ranging uses that could also develop unexpected and dangerous capabilities. By their determination, frontier models do not exist yet. But an influential white paper published in July and co-authored by a consortium of researchers, including representatives from most of those tech firms, suggests that these models could result from the further development of large language models—the technology underpinning ChatGPT

The threats of frontier models are nebulous, tied to speculation about how new skill sets could suddenly “emerge” in AI programs.

Among the proposals the authors offer, in their 51-page document, to get ahead of this problem: creating some kind of licensing process that requires companies to gain approval before they can release, or perhaps even develop, frontier AI. “We think that it is important to begin taking practical steps to regulate frontier AI today,” the authors write.

Microsoft, Google, OpenAI, and Anthropic subsequently launched the Frontier Model Forum, an industry group for producing research and recommendations on “safe and responsible” frontier-model development.

Shortly after the paper’s publication, the White House used some of the language and framing in its voluntary AI commitments, a set of guidelines for leading AI firms that are intended to ensure the safe deployment of the technology without sacrificing its supposed benefit

AI models advance rapidly, he reasoned, which necessitates forward thinking. “I don’t know what the next generation of models will be capable of, but I’m really worried about a situation where decisions about what models are put out there in the world are just up to these private companies,” he said.

For the four private companies at the center of discussions about frontier models, though, this kind of regulation could prove advantageous.

Convincing regulators to control frontier models could restrict the ability of Meta and any other firms to continue publishing and developing their best AI models through open-source communities on the internet; if the technology must be regulated, better for it to happen on terms that favor the bottom line.

The obsession with frontier models has now collided with mounting panic about China, fully intertwining ideas for the models’ regulation with national-security concerns. Over the past few months, members of Commerce have met with experts to hash out what controlling frontier models could look like and whether it would be feasible to keep them out of reach of Beijing

That the white paper took hold in this way speaks to a precarious dynamic playing out in Washington. The tech industry has been readily asserting its power, and the AI panic has made policy makers uniquely receptive to their messaging,

“Parts of the administration are grasping onto whatever they can because they want to do something,” Weinstein told me.

The department’s previous chip-export controls “really set the stage for focusing on AI at the cutting edge”; now export controls on frontier models could be seen as a natural continuation. Weinstein, however, called it “a weak strategy”; other AI and tech-policy experts I spoke with sounded their own warnings as well.

The decision would represent an escalation against China, further destabilizing a fractured relationship

Many Chinese AI researchers I’ve spoken with in the past year have expressed deep frustration and sadness over having their work—on things such as drug discovery and image generation—turned into collateral in the U.S.-China tech competition. Most told me that they see themselves as global citizens contributing to global technology advancement, not as assets of the state. Many still harbor dreams of working at American companies.

“If the export controls are broadly defined to include open-source, that would touch on a third-rail issue,” says Matt Sheehan, a Carnegie Endowment for International Peace fellow who studies global technology issues with a focus on China.

What’s frequently left out of considerations as well is how much this collaboration happens across borders in ways that strengthen, rather than detract from, American AI leadership. As the two countries that produce the most AI researchers and research in the world, the U.S. and China are each other’s No. 1 collaborator in the technology’s development.

Assuming they’re even enforceable, export controls on frontier models could thus “be a pretty direct hit” to the large community of Chinese developers who build on U.S. models and in turn contribute their own research and advancements to U.S. AI development,

Within a month of the Commerce Department announcing its blockade on powerful chips last year, the California-based chipmaker Nvidia announced a less powerful chip that fell right below the export controls’ technical specifications, and was able to continue selling to China. Bytedance, Baidu, Tencent, and Alibaba have each since placed orders for about 100,000 of Nvidia’s China chips to be delivered this year, and more for future delivery—deals that are worth roughly $5 billion, according to the Financial Times.

In some cases, fixating on AI models would serve as a distraction from addressing the root challenge: The bottleneck for producing novel biochemical weapons, for example, is not finding a recipe, says Weinstein, but rather obtaining the materials and equipment to actually synthesize the armaments. Restricting access to AI models would do little to solve that problem.

there could be another benefit to the four companies pushing for frontier-model regulation. Evoking the specter of future threats shifts the regulatory attention away from present-day harms of their existing models, such as privacy violations, copyright infringements, and job automation

“People overestimate how much this is in the interest of these companies,”

AI safety as a domain even a few years ago was much more heterogeneous,” West told me. Now? “We’re not talking about the effects on workers and the labor impacts of these systems. We’re not talking about the environmental concerns.” It’s no wonder: When resources, expertise, and power have concentrated so heavily in a few companies, and policy makers are seeped in their own cocktail of fears, the landscape of policy ideas collapses under pressure, eroding the base of a healthy democracy.