Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
This is the third instalment in a four-part series examining the brewing US-China tech war over the development and deployment of artificial intelligence tech
The US is home to five of the world’s top 10 universities in the AI field, which includes computer vision and machine learning, while China has three
For those Chinese with long-term plans to stay in the US, a major obstacle lies in getting work visas, especially in the current trade war environment. Illustration: Perry Tse
After working in the United States for more than a decade, Zheng Yefeng felt he had hit a glass ceiling. He also saw that the gap in artificial intelligence between China and the US was narrowing.
Last year Zheng, who worked as a researcher at Siemens Healthcare in New Jersey, made a decision that addressed both problems. He accepted an offer to head up the medical research and development team at Tencent’s YouTu artificial intelligence lab in Shenzhen, known as China’s Silicon Valley.
“There was almost no room for promotion if I stayed in the US,” he said, expressing a common dilemma faced by experienced Chinese tech workers in America.
With the US-China trade war leading to tighter scrutiny of Chinese nationals working in the US tech industry, people like Zheng are moving back to China to work in the burgeoning AI sector, especially after Beijing designated AI a national priority. The technology’s varied applications have attracted billions of dollars of venture capital investment, created highly valued start-ups like SenseTime and ByteDance, and sparked a talent war among companies.
That has created an odd symbiotic relationship between the two countries vying for AI supremacy. The US, with its superior higher education system, is the training ground for Chinese AI scientists like Zheng, who obtained a PhD from the University of Maryland after earning bachelor’s and master’s degrees at China’s premier Tsinghua University.
“Many professors in China have great academic ability, but in terms of the number [of top professors], the US is ahead,” said Luo Guojie, who himself accepted an offer from Peking University to become an assistant professor after studying computer science in the US.
Among international students majoring in computer science and maths in US universities, Chinese nationals were the third largest group behind Indians and Nepalese in the 2018-2019 academic year, representing 19.9 per cent, according to the Institute of International Education.
[To build] the best universities is not easy. The university is a free speech space, whereas in China, this is not the case Gunther Marten, a senior official with the European Union delegation to China
The South China Morning Post spoke with several Chinese AI engineers who decided to stay and work in the US after their studies. They only agreed to give their surnames because of the sensitivity of the issues being discussed.
A 25-year-old Beijinger surnamed Lin graduated from one of China’s best engineering schools in the capital before heading to a US university for a master’s degree in computer science in 2017. Like some of his peers, he found the teaching methods in China to be outdated.
“It’s hard to imagine that a final exam of a coding course still asked you to hand write code, instead of running and testing it on a computer,” said Lin, who now works as a software engineer for Google in Silicon Valley.
“Although we still had to take writing tests [in the US], we had many practical opportunities in the lab and could do our own projects,” he added.
A Facebook software engineer surnamed Zhuang had a similar experience at his university in Shanghai.
“Many engineering students [in China] still get old-school textbooks and insufficient laboratory training,” he said. “Engineering practices for AI have been through a fast iteration over the past few decades, which means many Chinese students are not exposed to the most updated knowledge in the field, at least not in the classroom.”
Zhuang also noted out that many classes in China are taught in Chinese, meaning engineering graduates are not fluent in English, the preferred language of the global AI research community.
The US is home to five of the world’s top 10 universities in the AI field, which includes computer vision and machine learning, while China has three. Carnegie Mellon University (CMU) in Pennsylvania ranks No 1 while China’s Tsinghua University is No 2, according to CSrankings, which bases the list on papers published since 2009.
US tech chief: China is threatening US’ lead in global AI race
With its top institutions and an open culture that encourages freedom of speech, including unfettered internet access, the US has become a magnet for the brightest AI students the world over.
In 2018, 62.8 per cent of PhD degrees and 65.4 per cent of master’s degrees in computer science, information science and computer engineering programmes in the US were granted to “non-resident aliens”, according to a survey by the Computing Research Association.
“[To build] the best universities is not easy,” Gunther Marten, a senior official with the European Union delegation to China, said on the sidelines of the World Internet Conference in Wuzhen in October. “The university is a free speech space, whereas in China, this is not the case.”
When these US-educated AI scientists finish studying, most take advantage of a rule allowing them to stay in the country for three years to gain work experience.
Of the foreign nationals taking part in last year’s Conference on Neural Information Processing Systems (NIPS), a major machine learning event for AI professionals, 87 per cent of those whose papers made it to the oral presentation stage went to work for American universities or research institutes after earning their PhD, according to MacroPolo, a think tank under the Paulson Institute.
“China has many great universities and companies, especially in certain subfields of AI such as computer vision, but many people remain hesitant to move to China due to the political environment, quality of life concerns and workplace issues,” said Remco Zwetsloot, a research fellow at Georgetown University’s Center for Security and Emerging Technology (CSET).
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Some of the US-trained Chinese AI engineers told the Post they were scared off by China’s “996” working culture: 9am to 9pm, six days a week. Tech firms in China typically expect their employees to work long hours to prove their dedication.
Lin, the Beijinger who now works for Google, used to be an intern at one of China’s largest internet giants. “I worked from the time I woke up until going to bed,” he said, “At Google, I’ve been confused because many people here only work till 5pm but Google is still a global leader.” Lin said he would be happy to return to China if the 996 work culture eases.
Graduates throw their caps in the air as they pose for a group photo during the 2019 commencement ceremony of Tsinghua University in Beijing. Tsinghua ranks as China’s top university for AI. Photo: Xinhua
Chen, a female postgraduate student at Carnegie Mellon, who recently accepted a job offer from Google, once interned at Beijing-based AI unicorn SenseTime, where she worked from 10am to between 8pm and 10pm most days.
A SenseTime spokesperson said the company has adopted flexible working hours for its employees.
Besides a better work-life balance, Chinese graduates look for jobs in Silicon Valley because of the higher pay.
“If you include pre-tax income, many of us get offers that pay more than 1 million yuan (US$142,000) a year but in China the salaries offered to the best batch of fresh undergraduates are about 200,000 to 300,000 yuan (US$28,000 to US$43,000),” Chen said.
Still, for those Chinese with long-term plans to stay in the US, a major obstacle lies in getting work visas, especially in the current trade war environment. Most AI-related workers are on H-1B visas that allow US companies to employ non-US nationals with expertise in specialised fields such as IT, finance and engineering.
However, the number of non-immigrant H-1B visas granted has started to fall since 2016, when it peaked at 180,000, according to the US Department of State, and US tech companies have complained that a policy shift by the Trump administration has made the approval process longer and more complicated.
In 2017, President Donald Trump requested an overhaul of the H-1B visa programme, saying he did not want it to enable US tech companies to hire cheaper foreign workers at the expense of American jobs. He also wants to give priority to highly skilled people and restrict those wanting to move to the US because of family connections.
Science graduates from overseas countries can stay in the US with their student visas for up to three years while competing for the hard to get work visas, which are granted based on undisclosed mechanisms. Overseas students already working in the US can apply for so-called green cards, which offer permanent residency.
After working for a major US tech company for almost three years on a student visa, one Chinese software engineer, who spoke to the Post on condition of anonymity, said she was relocated to the US firm’s Beijing office last year after failing to obtain a H-1B work visa.
“While there might be individual cases, it seems like the current tensions have not – at least as of a few months ago – led to noticeable changes in the overall number of Chinese students staying in the US after graduating,” said CSET’s Zwetsloot.
Some Chinese AI scientists use Twitter to announce their decision to stay. Chen Tianqi, who just obtained a PhD at the University of Washington in Seattle, and Jun-Yan Zhu, a CMU and UC Berkeley alumnus currently working at Adobe, each tweeted that they would join Carnegie Mellon as assistant professors next year.
To achieve the goal of turning China into “the world’s primary AI innovation centre” by 2030, according to a 2017 blueprint issued the State Council, the central government has stepped up efforts to attract US-educated talent.
The Thousand Talents Plan has seen more than 6,000 overseas Chinese students and academics return since its was established in 2008, but because of escalating tensions with the US, Beijing has played down the initiative.
Longer term, Beijing’s willingness to invest significant sums into the AI sector could see more Chinese return for the better employment opportunities. Between 2013 and the first quarter of 2018, China attracted 60 per cent of global investment in AI, according to a Tsinghua University report.
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Chinese authorities are investing heavily in the sector, with the city of Shanghai setting up a 10 billion yuan (US$142 million) AI fund in August and Beijing city government announcing in April it would provide a 340 million yuan (US$48 million) grant to the Beijing Academy of Artificial Intelligence.
“More and more senior people like me have come back, and some start their own businesses,” said Zheng, the Siemens Healthcare researcher who joined Tencent. “It’s easier for Chinese to seek venture capital in China than in other countries.”
Sun Ling became a cyber star in China after she responded to an online question: how can you get an overseas education if you are dirt poor?
‘I just put my story out there to show there is a possibility in your life even if you have a low starting point,’ the 29-year-old says
Sun Ling works as a contract software engineer at Google in New York. Photo: Sun Ling
To get where she is today, Sun Ling has beaten very long odds.
Born in a rural hamlet in central China’s Hunan province, Sun shot to Chinese social media stardom for her rags-to-relative-comfort career trajectory. Her story begins in a household of such modest means that her mother had to sell blood to make ends meet and a primary school education interrupted by the need for her hands in the family’s fields.
She has no fancy college degree, having gone to work on the assembly line at a Shenzhen factory directly from high school.
Yet today, the 29-year-old works as a contract software engineer at Google in New York, coding on workdays and playing frisbee on weekends, with an annual salary of about US$120,000.
Sun Ling with her parents, brother, niece and nephews in China. Photo: Sun Ling
Sun’s journey from factory worker to high-paid software engineer has garnered Chinese social media headlines such as “the most inspiring story of all times”, and internet users have applauded her as a “positive energy girl”.
But others have not been as flattering, with some questioning the credibility of her story and saying what she has accomplished is almost too difficult to be true amid growing concern about the lack of opportunity and social mobility in China.
“I don’t consider myself a success and I have no intention to become a role model,” Sun told the South China Morning Post on Thursday. “I just put my story out there to show there is a possibility in your life even if you have a low starting point.”
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Her story became known in China after she posted an answer on Zhihu, the Chinese version of Quora, responding a question: how can you get an overseas education if you are dirt poor?
In the answer she posted earlier last month, Sun detailed her 10-year journey in making the seemingly impossible possible.
“It is not the orthodox way of studying overseas, just for your reference,” Sun wrote in the post, which has received nearly 35,000 likes on Zhihu. The answer was picked up by other social media; one of her most popular stories, which is circulating on WeChat, has been viewed more than 100,000 times.
Sun said her story was not a textbook “American dream” or “Chinese dream comes true” experience, but rather one driven by the simple motivation to forge a better life.
I just put my story out there to show there is a possibility in your life even if you have a low starting point Sun Ling
When Sun was born in 1990, her parents were farmers in a small village about a 2½-hour drive from Hunan province’s capital city, Changsha. Growing up in a place where a middle school education was considered good enough for a girl, Sun was forced to temporarily drop out of school when she was about 13 to ease the financial burden on her parents, who favoured her brother, the only son in the family.
“I begged and begged till my father allowed me to return to school,” she said. “But to be honest, my strong desire to stay at school at the moment was mainly because farming was too hard. The work got calluses on my hands.”
Sun in her home village in Hunan province in 2013. Photo: Sun Ling
Among her 11 village friends, she was the only one who completed high school. But the education she received at the rural school failed to get her into any college in China. So, like her peers in the village, she went to Shenzhen to become a factory worker.
But the routine of shifts spent examining the quality of batteries bored her. “I have no idea what kind of life I want to live, even today. But I am very certain about the life I don’t want to live,” Sun said.
She quit the factory job after eight months and enrolled in a computer training programme to learn what she regarded as the must-have skills to leave the blue-collar life behind.
That is the thing I like about America: they value what you are able to do more than where you come fromSun Ling
To have enough money to complete the training to become an entry-level software engineer, she worked three part-time jobs, including sending out fliers and waitressing at restaurants, and lived on three credit cards.
After more than a year of training and a debt of 10,000 yuan (US$1,450), in September 2011 she was hired as a software engineer by a Shenzhen company responsible for developing an online payroll system. With her own cubicle, a monthly salary of 4,000 yuan and weekends for herself, the job met all of Sun’s expectation as a “white-collar office lady”.
But the excitement of the new life didn’t last. She started to feel small in a big city where “everyone else is so excellent, with fancy degrees”.
To overcome her educational disadvantage, she signed up for an English training programme and a long-distance programme that allowed her to earn a degree from Shenzhen University. All of this took place while she maintained her software engineering job.
To practise her English, in 2014 she picked up ultimate frisbee, a game where in Shenzhen at the time, most of the players were expats. With a different circle of friends, most of whom had overseas experience, Sun started to dream of a life outside China’s borders.
Sun was born in a rural hamlet in central China’s Hunan province. Photo: Sun Ling
In early 2017, she discovered a master’s programme at Maharishi University of Management in Fairfield, Iowa, which features a controversial “consciousness-based education” system that includes the practice of meditation.
Sun applied and was accepted into the university’s computer science programme.
According to her, its design fit her well as it allowed students to have internships or jobs on a work-study visa after months of attending classes on campus. The rest of the programme could be completed remotely.
After nine months studying on campus and 60 job interviews, Sun received a job offer from EPAM Systems, a vendor for Google, late last year.
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Of her work as a contract software engineer at Google’s Manhattan headquarters, Sun said she was very “lucky” since many of her colleagues had a PhD or studied at top-tier American universities.
“But none of them treat me like I don’t deserve all of this,” she said. “That is the thing I like about America: they value what you are able to do more than where you come from.”
However, her story has not been without controversy in China’s cyber world.
Supporters have sent an increasing number of messages from various online channels, thanking her for an inspiring story and seeking her advice on life decisions. Sceptics claim she just got lucky, and some have accused her of being an advertising tool for Maharishi University of Management.
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“At first, I got really angry,” Sun said. “I don’t think I deserve all the criticism for simply sharing my real life experience. But then I realised that not everyone has the same attitude in life.”
“I had no resources and I had very few options,” she said. “It is natural that people think it is difficult or even impossible to do. But for me it is actually not that difficult. Just keep learning and keep trying new things step by step, day by day.”
Her journey continues. Sun has been practising English and trying to fit better into her life in the US by doing short video interviews on the streets of New York streets. She has also taken courses about artificial intelligence online.
“My next goal is to become an in-house Google software engineer,” she said. “It won’t be easy. But your life begins at the end of your comfort zone.”
China’s talent is turning away from multinationals and towards domestic tech champions in the search for a more fulfilling career
Change in sentiment comes amid raging US-China tech war and perceptions of ‘bamboo ceiling’ in the West
An increasing number of Chinese jobseekers are looking towards domestic tech firms. Image: SCMP
Molly Liu left her hometown Beijing to pursue a master’s degree in the United States in the 1990s.
After graduation, she fought hard to win an entry-level position at a US-based consultancy and after a period was later sent back to China to help the company’s expansion.
In the land of opportunity, the ambitious US firm showered her with avenues to pursue her career and she ended up working in Hong Kong as well as being one of the first people on the ground for the consultancy in Shanghai, Beijing, Taipei and Singapore.
Times have changed, though. Recently, her only son, Ben Zhang, turned down a hard-to-get job offer from a Boeing subsidiary in the US after gaining a master’s degree in computer science from Carnegie Mellon University in Pittsburgh, Pennsylvania.
Chinese students educated in the US are now looking more at jobs in China. Photo: SCMP
He decided to return to Beijing in 2018 and now works as a product manager at Chinese smartphone maker Xiaomi. He is convinced that the start-up turned tech major can offer him the same sort of opportunities today that the US tech consultancy offered his mother in the 1990s.
This family story about the career choices of two different generations of US-educated Chinese students reflects a wider trend. Once upon a time, US corporations could cherry-pick top Chinese talent from American universities with the promise of large salaries, generous benefits and the chance to work at market-leading organisations.
Today, China’s cutting-edge technology companies – often referred to as China Tech Corporation (CTC) – are the most sought-after employers among many Chinese students, who want more than just a cushy life.
This marks another blow for multinational corporations (MNCs) already struggling to do business in China amid a myriad of restrictions and growing hostility towards them as the US-China trade and tech war gathers pace.
“What I look for in a job is not money. My parents are not counting on me to support them,” says 28-year-old Zhang, whose team in Xiaomi is working on a wide array of connected devices, from televisions to lamps to smart locks. “What I care about most is personal improvement and access to the best resources a company can offer.”
“In Boeing, I could probably work on a new product once every two to three years. But at Xiaomi, every three months, we can roll out a new product,” he added. “You can bring so many things into people’s everyday lives in China, like using your voice to control a TV or an air conditioner – things you can only imagine in the US.”
Zhang is not alone and many Chinese today perceive a “bamboo ceiling” in the US, where they are more often seen as engineers rather than executives.
One Chinese executive who now oversees the technology unit of a listed finance and insurance firm in China said that he used to lead a team of 20 engineers at one of the world’s most valuable tech companies in Silicon Valley.
“My job was to keep optimising the performance of a product [in Silicon Valley],” he said.
“But within three years in China, I was promoted to the chief scientist of our entire company, leading a team of 1,000,” said the man, who asked to remain anonymous as some of his family still reside in the US.
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According to an April survey by professional networking site LinkedIn, an increasing number of Chinese jobseekers share Zhang’s outlook. LinkedIn compiled a list of the top 25 most desired employers in China, and about 60 per cent were local Chinese companies, with 13 of them internet firms.
CTC bagged four of the top five spots, with e-commerce giant Alibaba, search giant operator Baidu and Bytedance – which operates short video hit TikTok – taking the lead.
Tesla ranked sixth behind its Chinese challenger Nio. Amazon, the only other foreign company in the top ten, ranked eighth.
Alibaba is the owner of the South China Morning Post.
Li Qiang, executive vice-president of Zhaopin, one of China’s largest online recruiters, described the rising status of CTC among jobseekers as “the dawning of a new era”.
“Nowadays, there is nothing a multinational can offer that a domestic firm cannot, be it a compensation package or the chance to be part of international expansion,” said Beijing-based Li.
“Jobseekers are not particularly looking for domestic firms or multinational firms. They are after good firms and most of the good firms in China these days happen to be domestic tech firms,” said Li.
Li’s comments reflect the wider opportunities within the domestic economy for Chinese jobseekers today, after the rise of many successful private-sector companies and a thriving start-up scene over the past 10 years, meaning it’s not just a one-way street to a state-owned enterprise (SOE) any longer.
A survey by Zhaopin in late 2018 found that 28 per cent of Chinese university students said MNCs were their employer of choice, down from 33.6 per cent in 2017.
Even on pay and benefits, CTC is catching up with multinationals. Zhang said Xiaomi matched the offer from the Boeing unit in the US and many leading tech firms offer benefits such as gym memberships and childcare facilities.
And the rags-to-riches stories of many leading China tech entrepreneurs, some of whom have become billionaires, continue to grab media attention and inspire the younger generation.
To be sure, Chinese students would still rather work for an MNC than an SOE – but the rise of CTC can be seen in company rankings and in the total number of CTC companies in the top employer list, according to Zhaopin.
For a growing number of Chinese students, the doors to America are closing
William Wu, China country manager of global employer brand consultancy Universum, said that the one element Chinese jobseekers pay most attention to these days is whether or not a job can be “a good reference point for a future career”. And a growing number of private Chinese companies now have global brand recognition.
A recent survey by Universum shows that Apple and Siemens were the only two Western names in the top 10 ideal employers for Chinese students in the engineering sector this year, while there were four foreign firms in the top 10 list in 2017.
Huawei Technologies, the Chinese telecoms giant that has been put on a US trade blacklist after the Trump administration said it was a national security risk, ranked top in the Universum list. Xiaomi, the smartphone maker Ben Zhang works for, ranked second while Apple, one of the most valuable tech firms in the US, ranked seventh.
It seems that China’s rising clout in the world is now an attractive factor for jobseekers.
“Every engineer would like to see the technology they’ve worked on have the potential to change the world one day,” said Li Yan, head of multimedia understanding at Chinese short video major Kuaishou. “In the old times Chinese companies were at the bottom of the global value chain, now they are climbing up, providing more opportunities for talent to create world-changing products.”
At Beijing-based Kuaishou, Li’s 100-strong artificial intelligence algorithm team – many of whom joined from Microsoft Asia Research – is working to make machines understand content better than humans by studying the millions of user-generated videos on the company’s platform every day.
CTC companies do have a strong home advantage, with big Western firms having to navigate a myriad of restrictions.
For example, the “Great Firewall” lets Chinese authorities control the content and information reaching the country’s 800 million-plus internet population. Western firms also face other forms of red tape, such as having to form joint ventures with local partners.
Amazon earlier this year announced the close of its China marketplace, giving up the brutal fight with Chinese online shopping giants such as Alibaba to capture domestic e-commerce market share. Oracle China reportedly laid off 900 people in March as it winds down its research and development center in the country.
Job applicants visit a provincial job fair at Qujiang International Conference and Exhibition Center in Xian, northwest China’s Shaanxi Province in February. Photo: Xinhua
Oracle has never confirmed the number of lay-offs but said the job cuts formed part of an overall global strategy transformation.
However, there has been little sympathy for those losing their jobs in China, judging by social media posts.
Some people posted that those working for big US tech firms are not “wolf” enough compared with counterparts who work for local tech firms, referring to the long work-hours culture of the domestic tech scene.
A viral story titled “Why there should be no pity for the sacked Oracle China employees” said the company was Beijing’s biggest nursery because of the flexible “work from home” culture and generous compensation package offered to employees.
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“They had every chance to join rising domestic internet firms. But they settled for high salary and low work pressure, which eventually made them frogs in boiling water. Why pity them?” said the article, adding that the earlier people give up on the “glory” of working for MNCs, the quicker they will benefit.
Not all Chinese workers would agree, and there has been a recent backlash against the “996” culture within China’s tech sector, where people routinely work from 9am to 9pm, six days a week.
With geopolitical uncertainty growing day by day, though, many Chinese are asking why leave the family behind for an uncertain fate overseas?
A survey done by consultancy BCG and The Network in 2018 showed that only one in three China residents was willing to move abroad for work, down from 61 per cent in 2014. The country is also the 20th most popular destination worldwide to relocate for a job, compared with 29th in the 2014.
“One of my graduate classmates in the US just gave up a six-digit package at Oracle and joined drone maker DJI in Shenzhen,” said Ben Zhang. “I asked what prompted his return to China. He sent me the viral article and asked, ‘who wants a life that one can see the end of from the very beginning?’”
‘There’s no need for a confrontation in technology because science has no borders,’ says the founder of CloudMinds
Huang has watched from up close as the US gradually descended from its telecoms supremacy and China caught up
Bill Huang in 2018. Photo: YouTube
Bill Huang, a Chinese-American telecoms industry veteran, used to target China and its vast, untapped market with the technological know-how he had learned in the US.
But over the past few years, the tables have turned. In his latest business endeavour, the engineer turned entrepreneur is relying on China for a key technology that would transform mobile communication for the next decade – and it is a technology the US has fallen behind on.
As one of the first young mainland Chinese to attend graduate school in the US after diplomatic relations were resumed 40 years ago, and as one of the early participants in Beijing’s global recruitment programme to attract top talent in science and technology, Huang has a unique perspective on the current bilateral stand-off that centres on technology.
CloudMinds Technology, a privately held robotics sector company he founded in 2015, needs the superfast 5G network to support its cloud-based platforms for operating intelligent robots. The next-generation wireless technology has become a flash point in the escalating US-China tech rivalry, and Huang is at the forefront of it all.
“It’s kind of like a one-sided rivalry. Because the US doesn’t have the [5G] technology,” Huang said on the sidelines of a recent conference on China in Philadelphia.
For months, the US government has waged a campaign to block the Chinese telecoms giant Huawei from dominating global 5G networks, lobbying allies to shun the company for what it says are risks of espionage or sabotage by Beijing.
Huawei is already ahead of its European rivals in market share thanks in part to its lower prices. But so far no companies in the US – which has long led the telecoms industry – can make the equipment needed to build the next generation of networks.
Huang, 57, who spent three decades in the mobile communication sector, has watched from up close as the US gradually descended from its telecoms supremacy and China quietly caught up.
Technology is not like martial arts, or Shakespeare’s book, it’s not like everything is copyrighted Bill Huang, CEO of CloudMinds Technology
In its heyday, US giants like AT&T sold network equipment to countries around the world. Huang himself once worked at AT&T’s research hub Bell Labs, a dominant leader in telecoms innovation known as “the idea factory” and arguably the most innovative scientific institution for a long stretch of the 20th century.
“In the last 20 years, the US went from [being] No 1 in the telecommunications industry to now almost exiting telecommunications equipment manufacturing,” Huang said, citing the acquisition of Lucent and Motorola by European counterparts.
It was a decline Huang witnessed with an initial sense of sadness. As a veteran of Bell Labs, he said, he had felt extremely proud of the company’s contribution not only to America, but to telecoms technology worldwide.
“But secondly I also felt a level of pride for China,” he said, “because it went from nothing in telecommunications to lead the world in telecommunications in less than 30 years.”
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Glenn O’Donnell, an analyst at Forrester Research, said the decline of major US telecoms providers had little to do with politics, but was a function of inadequate interest in innovatation because of their dominance in the field.
“The long lease cycles and until recently the relative maturity of the market really didn’t lend itself well for real innovation,” he said.
“And that’s now changing, and all of those players that decided not to play in telecommunications are now wishing they had a stake because there’s a lucrative new market.”
Also drastically different today is the state of relations between China and the US. As they fight their costly trade war, tensions and acrimony have spilled into other aspects of bilateral relations, from technology, defence and geopolitics to ideology. There are even warnings of “decoupling” – something almost unimaginable to Huang, whose personal trajectory has been shaped by the intertwined ties between his homeland and his adopted country.
Fifth-generation mobile telecommunications technology, or 5G, enables data to be transferred at a speed that is 20 times faster than current standards. Photo: Reuters
He calls himself “a product of China-US relations”. Such was his proud conviction that he gave his son the middle name “Nixon”, after the president who put relations with China back on track in 1972 with a historic trip to Beijing that ended over two decades of antagonism and isolation since the Chinese Communist Party took power.
The visit by Richard Nixon – who died in 1994, the same year Huang’s son was born – not only mended bilateral relations, but created an opportunity for Huang and many others like him: to learn the most advanced science and technology from the world’s leading innovation powerhouse.
Born in 1962 into an intellectual family in southwestern China, Huang spent most of his childhood in the turmoil of the Cultural Revolution.
“As professors, my parents had a very difficult time during the Cultural Revolution. But they insisted that we spend time to study,” he said.
Huang recalled being a “wild kid”, going to school to “have fun”. But when the time came to study, he was able to pick up the pace, which he attributed to the academic minds that run in his family.
Hailed as a “child prodigy”, he passed the country’s first university entrance exam in a decade at the age of 15. A year later, in 1978, he was in the first batch of students to enter university after the disruptions of the decade-long upheaval. He chose to major in electrical engineering, following in his father’s footsteps.
In his sophomore year at the Huazhong Institute of Technology, his parents told him to apply for graduate programmes in the US.
“They think the US has the best technology in the world, and they wanted me to come here to study,” he said. “I read everything about the US … and I was very eager to come.”
Arriving at the University of Illinois’ Chicago campus in 1982, at age 20, Huang was one of the first new Chinese graduates to further their studies in the US after the re-establishment of diplomatic relations in 1979. He did not speak English (although he could read it), and had to enrol in a three-month language training program before he could attend lectures.
He studied computer science in addition to electrical engineering, working day and night on projects in the lab – a time he looks back on with fondness.
“It was some of the most intense time in my life, I suppose,” Huang said. “But I was young and relentless, and I could go on for three days without sleep. … I thoroughly enjoyed it.”
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Despite their vastly different cultural backgrounds, Huang made friends with his American classmates and fellow foreign students, some of whom were from India and what was then the Soviet Union.
“I experienced zero racial prejudice,” he said. “That was Chicago in the 1980s. I don’t know what happened today, [but back then] it was thoroughly what I thought was the ‘melting pot’.”
In his computer science classes, Huang learned Unix – a state-of-the-art operating system developed by Bell Labs – from adjunct professors who had helped create the program.
Little did he know he would later become a researcher at Bell Labs. “That was the holy ground of telecommunications,” he said, still beaming with pride when speaking of his former employer, which invented, among other things, the communications satellite and the cellular telephone system.
Bill Huang as a graduate student in Chicago in the early 1980s. Photo: CCTV
In 1994, Huang joined 10 other former Bell Labs engineers at a California-based telecoms infrastructure provider that targeted the vast and underserved Chinese market. A year later, the company merged with a telecoms software company to become UTStarcom, with Huang as its co-founder and chief technology officer.
UTStarcom tapped into the fast-growing Chinese telecoms market with a low-cost, limited-range wireless service known as the Personal Access System (PAS). It went public on the Nasdaq exchange five years later. In 2001, China passed the US as having the most mobile phone customers. The rapidly expanding market propelled UTStarcom’s growth; its revenues increased tenfold between its IPO and 2003, when it controlled 60 per cent of China’s PAS market.
In 2007, having lived in the US for longer than he did in China and having become an American citizen, Huang moved from Silicon Valley to Beijing with his wife and son. China Mobile, the country’s largest telecoms operator, had asked him to help build a “Bell Labs for China” – a request he readily accepted.
“It was not only a simple job, but a responsibility, a challenge I thought I should accept no matter what,” he told Chinese state broadcaster CCTV in 2017.
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As the head of the China Mobile Research Institute, Huang led the carrier’s leap from 3G to 4G, and he was also at the centre of 5G research. “We put a lot of effort into researching what standards are required for the future network,” he said.
His return to China preceded the “Thousand Talents Plan”, a state-backed recruitment drive to lure the world’s brightest scientists and experts – especially those with roots in China – with lavish grants. But when the plan was set up in 2008, Huang was among the first batch of researchers to be enlisted.
“I express my heartfelt thanks to the state and the people for giving me such a good opportunity and condition to return home and serve the country,” Huang was quoted as saying at a forum for recipients of Thousand Talents awards hosted by People’s Daily in 2010.
“I worked for over 20 years abroad, and all my work was in the field of technology. I hope to bring the whole set of things I know back to China,” he added.
The recruitment scheme, much celebrated at the time, has become a sensitive subject today as tensions between the US and China escalate. It has drawn growing scrutiny and suspicion from the US, where investigators are looking for any connection to theft of American intellectual property. In response, China hushed up or deleted references to the programme in universities, companies and cyberspace.
A robot made by CloudMinds Technology showcased at the Mobile World Congress Barcelona in February. Photo: Handout
When asked about US complaints regarding China’s alleged technology theft, Huang gave a vehement defence of China.
“I think these are just basically blatant accusations with no ground,” he said. “Ninety-nine per cent [of the technologies] are not stolen. There are industrial espionage cases … but they’re not systematic cases, and they’re not [the result of the] rivalry between China and the US – they’re the result of competition.”
Huang also dismissed accusations that Chinese scientists and experts have “stolen” US technology.
“Technology is not like martial arts, or Shakespeare’s book, it’s not like everything is copyrighted,” he said.
“Everyone in Silicon Valley in the last 50 years started from somewhere, and then they become an entrepreneur and they move [on] to start their own companies. So in the early days, everyone took a little bit from what they have worked on.”
“It was customary, and then it became very litigious. Then people started saying: wait a minute, you can do that? So there were many exemplary cases, then it became more and more refined in what you can take and what you cannot take; what is protected and what is not protected. All of these things are happening industry-wide, it’s not a single US and China issue.”
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But intellectual property theft is not the only American grievance. Many US companies have accused China of forced technology transfers, with foreign businesses required to hand over technology to their Chinese partners in exchange for access to the market.
Huang said that complaint “has been there since day one”.
“Chinese companies will always complain about American companies. American companies will always complain about Chinese companies. The reason is very simple: every company would want to use regulations and law to their advantage,” he said.
A trained engineer, Huang holds a “globalist” view of technology – at odds with the national security perspective that has become prevalent in Washington.
“There’s no need for a confrontation in technology because science has no borders,” he said.
“In Huawei labs, there are many American engineers. In Intel and Qualcomm’s labs, I can assure you there are many Chinese engineers, and there are many German, French, Swedish engineers in all of these organisations. The fact they’re sold by a Chinese company or they’re sold by an American company has no meaning because behind the technologies is an international effort.”
To make his point, Huang calls the technology created by CloudMinds a “US and China technology”.
“I mean, how do you categorise it? Is it created by China or the US? It’s created by both. Because we have engineers in Silicon Valley, and we have engineers in Beijing.”
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The company has dual headquarters, with its global operation based in Santa Clara, California, and its China operation based in Beijing – a structure Huang says now “makes perfect sense”.
“That was by design, by our lawyers. They kind of foresaw, if there [are] going to be trade tensions, this would be the right way to do it.”
But Huang questions if these tensions – a large part of which he said had been “politicised” – are so deeply embedded in every corner of society.
“I come to the United States very often, and I talk to the industry. I still feel it is the same America.”
“I encountered no scrutiny, no warning, and everyone is encouraging us, both from the US and from China, to continue our practice,” he said, adding that he only felt the tension when speaking to lawyers and government officials.
“But I am worried by all these stories. I think that’s why I said earlier: in the media it all looks very scary, but in practice, it’s all business as usual.”
In 2017 alone, China’s central and local governments allocated US$7.7 billion in subsidies to both carmakers and buyers
But how big should the state’s role be in fostering innovation?
China has fostered development of its own technologies for decades, and the continuing trade war with the US makes it more imperative than ever. Illustration: Yan Jing Tian
It was the 1950s and 60s, a time of high tension among the superpowers.
As one national government was funding elite research institutes and enlisting its country’s top scientific minds to develop military technology, it likely had little inkling the move would form the basis of a broader, civilian technology industry in the coming decades.
The force behind this state-led initiative – a style of innovation commonly associated with China – was the US government, which seeded California’s Silicon Valley with funding for military research at Stanford University.
It was there that the dean of engineering, Frederick Terman, actively encouraged students to launch companies to exploit these technologies for profit – the most famous of his disciples being Hewlett-Packard founders Bill Hewlett and Dave Packard.
“Most people who came here after the 1980s just assumed it’s all silicon and chips,” said Steve Blank, a Silicon Valley entrepreneur and adjunct professor at Stanford.
“But innovation in Silicon Valley actually started in Stanford University, thanks to a single professor who changed the entire culture.”
After the second world war, Terman, whose background was in electrical engineering, drew upon his wartime experience heading a radio research lab at Harvard to help turn Stanford into a top-tier university specialising in electronic warfare and with government contracts.
“Americans are not smarter than the Chinese. The only thing that holds China back, is that the nature of dissent and creativity are related.”Steve Blank, Silicon Valley entrepreneur
Since then, Silicon Valley has been seen as the mecca of technology innovation, producing some of the world’s largest tech companies, such as Intel, Amazon, Facebook and Google.
The region has been lauded for its culture and openness, with countries globally hoping to learn from its success and emulate it by design.
“There’s something special that happens in a city or a region when people are able to pursue new ideas in a very free way,” said Eric Ries, author of the book The Lean Startup.
“When I first came to Silicon Valley, I had a failed start-up on my resume … nobody saw that as a negative, they saw it as a sign that I showed initiative, tried to do something new.
“It’s not that Silicon Valley embraces failure, but it has a different understanding of the likelihood of success of anything new.”
The fact that Silicon Valley also had its beginnings in federal funding suggests that the state has an important role to play when it comes to fostering innovation.
Countries like China, Singapore and Israel have sought to emulate Silicon Valley’s success by designing strategies at a government level to encourage entrepreneurship and innovation.
The US government seeded California’s Silicon Valley with funding for military research at Stanford University in Palo Alto, California. Photo: Alamy
For China, the need to foster innovation comes at a critical time. The country is caught in an escalating trade and tech war with the US.
As the two nations slap billions in tariffs on each other, the US has also moved to cut off some Chinese technology firms from accessing US technology, with the country’s 5G champion, Huawei Technologies, directly in the firing line.
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The Chinese government has now vowed to double down on developing core competencies, including semiconductor manufacturing – a central part of its Made in China 2025 plan which aims to locally produce 70 per cent of the chips the country needs within 10 years.
But Silicon Valley’s history and China’s push in state-led innovation also beg the question: how much of a role does the state play in fostering innovation?
China’s efforts to strengthen its indigenous technology have been ongoing for several decades.
The first big push to boost modern technology capabilities came during the 1980s, putting in place the Torch programme – resulting in Zhongguancun Science Park in Beijing and a variety of other parks across the country.
The period also saw the establishing of the 973 and 863 programmes, which focused on developing basic research and hi-tech R&D, respectively.
The world’s fastest supercomputer, Tianhe-2, and China’s self-developed spacecraft, Shenzhou, were among the fruits of the 863 programme, which was set up in 1988, while 1997’s 973 programme funded research projects in agriculture, energy, material science and other areas.
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In 2006, China proposed a 15-year road map for the nation to join the ranks of innovation-oriented countries by the end of 2020. Science and research spending would rise above 2.5 per cent of GDP under the guide to future goals, known as the National Medium to Long-Term Plan for Science and Technology Development.
The master plan identified industries, technologies and research areas such as energy, biotech, human health and diseases that were considered of “utmost importance to the technological advancement of China”.
These goals were elaborated on in three separate five-year plans, the blueprint for China’s social and economic policies, and translated to a string of government efforts in building the infrastructure to support the country’s technology ambitions.
Screens show Chinese President Xi Jinping speaking at an international economic forum in St. Petersburg, Russia on June 7. Xi has called for the construction of an “innovation-driven economy” to make China a global innovation leader by 2035. Photo: EPA-EFE
This came in the form of industrial estates and the Thousand Talents plan to nurture and attract talent back to the country, not to mention a wealth of funding that ranged from research grants and subsidies to tax cuts for the private sector and academia.
China’s tech ambitions strengthened under President Xi Jinping, who, on numerous occasions, has called for the construction of an “innovation-driven economy” to make the country a global innovation leader by 2035.
An important initiative under Xi’s leadership was Made in China 2025. First announced in 2015, the programme called for upgrading China’s manufacturing model to better take on the US in strategic industries such as robotics, aerospace and new-energy vehicles.
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These efforts have boosted some of Beijing’s favoured industries, turning them into rivals of global peers. In 2001, China identified electric vehicles (EV) as a major technology.
Sixteen years later, Shenzhen company BYD has become the world’s biggest EV maker, and a crop of start-ups including WM Motor, Xpeng Motors and the US-listed NIO have joined the race with funding from some of the country’s biggest tech companies and property developers.
In 2017 alone, China’s central and local governments allocated US$7.7 billion in subsidies to both carmakers and the consumers who bought their vehicles, cementing the country’s position as the world’s largest EV market.
Some 770,000 EVs were made and sold in China in 2017, compared with just 199,000 in the US that year.
The planning for domestic integrated circuit (IC) production, a strategically important sector identified in the 15-year programme, was further developed in the 12th and 13th five-year plans.
Those concepts grew into an industry involving over 20,000 researchers that aimed to reduce reliance on foreign chip technology, according to China’s Ministry of Science and Technology in 2017.
Yet, as self-reliance is more relevant than ever to China amid the tech war, it still lags behind the US and Taiwan in chip making, despite the billions of dollars in state backing the sector has received.
China’s semiconductor industry needs more than 10 years to catch up with global peers, Jay Huang Jie, founding partner of Jadestone Capital and former Intel managing director in China, said in May.
Some have pointed to China’s tech gap with the US as evidence that the Asian giant does not have what it takes to achieve technological competitiveness.
China, however, is still in the early stages when it comes to developing technology, according to Andy Mok, senior research fellow at the Centre for China and Globalisation, a Beijing-based non-government think tank.
A visitor at the Consumer Electronics Show in Shanghai on June 11 checks a Huawei 3D Virtual Reality headset. Huawei, China’s 56 champion, is feeling the brunt of US efforts to cut Chinese tech firms’ access to US technology amid the trade war. Photo: AFP
“A lot of research universities in the US – like MIT, Caltech – they’ve had decades of operations [since the second world war and the cold war],” said Mok.
“It’d be quite a myth to say that the US system is so successful technologically because of its political or economic system.”
While semiconductors may not have been a top priority for China until recently, threats of a tech cold war which could cut off the country from US technology, including chips, mean China will double down on developing its own proprietary technology.
In the short term, China could fall further behind the US, Mok said.
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“Some of these indigenously produced components were a ‘nice to have’ but not a ‘must-have’ before … it was one priority among many,” Mok said. “Will China’s chips be cutting edge? Probably not, but they will be good enough to be used in the short term.”
But while state-led innovation has helped drive industries, broadly labelling China’s technology achievements as state-driven could be an inaccurate generalisation, said Zhang Jun, dean of the School of Economics at Fudan University and director of the China Centre for Economic Studies, a Shanghai-based think tank.
Some of the more notable innovations in China – like mobile payments – took place on the application level and were driven by private companies such as Alibaba and Tencent.
Alibaba owns the South China Morning Post.
“These companies succeeded by banking on the huge consumer market in China in the internet age,” Zhang said.
Zhang pointed out that while the state did not actively drive those innovations, it too contributed by giving the companies leeway to experiment instead of immediately regulating the industries, which could have stifled innovation.
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China’s state support comes primarily in basic science and core technology, where it needs to play catch-up with countries like the US, and in the form of investment in universities and research labs that is likely to accelerate due to the trade war with the US.
“Basic scientific research will still rely on the state’s continuous investment into the academic field and into nurturing talents, but in terms of the application of the technology, the government will need to work with the market, and control less,” Zhang said.
Researchers wearing suits work inside a semiconductor fabrication lab. China is 10 years behind the US in chips, according to one expert. Photo: AFP
Countries that adopt a largely top-down approach to innovation are not uncommon.
In Singapore, a tiny island-nation that lacks natural resources, the Economic Development Board has been instrumental in providing grants and incentives to small business, including low-rent office space for start-ups.
The country also has a nationally-supported artificial intelligence programme called AI Singapore, which is aimed at fostering AI research and talent and bringing private and public sectors closer together when it comes to AI applications.
Israel, which has billed itself as a start-up nation, also has a central agency in charge of planning and executing its innovation policy.
It can also trace its leadership in cybersecurity to the Israel defence forces, whose military intelligence unit 8200 has trained and provided a lot of the manpower for the civilian sector.
Ultimately, despite the role the US and Chinese governments play in driving their respective tech ecosystems, many other factors contribute to the flourishing of an innovation cluster, including private capital and a culture that accepts failure and allows individuals to exercise creativity.
“Getting the state out of the tech ecosystem should be the goal for private capital to take over,” said Stanford’s Blank. “At some point, the government needs to let go.”
Federal funding in the US helped get technology and innovation off the ground in Silicon Valley, but once venture capital started to flow into the region, a culture where innovation was left to the entrepreneurs and tech talent was created.
Blank pointed out that culture also has a big part to play. The US, for example, encourages individualism. Furthermore, in technology hubs like Silicon Valley, Boston and New York, failure is seen as good experience rather than as shameful.
“Americans are not smarter than the Chinese,” said Blank. “The only thing that holds China back, is that the nature of dissent and creativity are related.”
“Great entrepreneurs, great founders are dissidents. Steve Job was a dissident, Elon Musk is a dissident,” he said.
“They tell the status quo, the leadership of whatever industry they’re in that they’re wrong. In the US, that’s in fact part of our culture and we encourage that, but in China you can only do that within the bounds of what the [Communist] Party allows you to do.”
However, Mok disagrees. “Many of the most valuable US companies today are seen as tech leaders because they were able to piggyback on US hegemony,” he said. “If you could win in the US, you could probably win everywhere else.”
SAN FRANCISCO, March 16 (Xinhua) — A group of U.S. and Chinese scholars and experts met Saturday in Silicon Valley to discuss opportunities and challenges in smart energy application and building smart villages in the United States and China.
Representatives from Microsoft Corporation, the Global Energy Interconnection Research Institute (GEIRI) North America, and other professionals in energy industry shared their experience and expertise on developing smart energy at a seminar launched by the U.S.-China Green Energy Council in San Jose, California.
Chen Xi, Chief Information Officer of GEIRI North America, affiliated to the State Grid Corporation of China (SGCC), said the SGCC, the largest electricity utility company in China, boasts advanced electricity technology and abundant experience in construction of power networks in the country.
The United States has accumulated a lot of experience on power market, high efficiency and the ability of profit-making of utility companies, which can be learned by China in developing a better and more efficient power network in the future, Chen said.
The seminar held two panels for in-depth discussions on smart energy cooperation between the United States and China, present and future challenges, artificial intelligent (AI) technology in power development, business development and building smart villages.
Panel speakers included Scott Mauvais, director of Microsoft Cities, who talked on AI for sustainability, Zhiwei Wang, president of GEIRI North America, and Professor Tom Kosnik, a partner of FoundersX Ventures, an early stage venture capital firm dedicated to investment in AI and big data.
The African Union headquarters in Addis Ababa is a shiny spaceship-like structure that glistens in the afternoon sun.
With its accompanying skyscraper, it stands out in the Ethiopian capital.
Greetings in Mandarin welcome visitors as they enter the lifts, and the plastic palm trees bear the logos of the China Development Bank.
African Union HQ, Addis Ababa
Everywhere, there are small indications that the building was made possible through Chinese financial aid.
In 2006, Beijing pledged $200m to build the headquarters. Completed in 2012, everything was custom-built by the Chinese – including a state-of-the-art computer system.
For several years, the building stood as a proud testament to ever-closer ties between China and Africa. Trade has rocketed over the past two decades, growing by about 20% a year, according to international consultancy McKinsey. China is Africa’s largest economic partner.
But in January 2018, French newspaper Le Monde Afrique dropped a bombshell.
It reported that the AU’s computer system had been compromised.
The newspaper, citing multiple sources, said that for five years, between the hours of midnight and 0200, data from the AU’s servers was transferred more than 8,000km away – to servers in Shanghai.
This had allegedly continued for 1,825 days in a row.
Le Monde Afrique reported that it had come to light in 2017, when a conscientious scientist working for the AU recorded an unusually high amount of computer activity on its servers during hours when the offices would have been deserted.
It was also reported that microphones and listening devices had been discovered in the walls and desks of the building, following a sweep for bugs.
The reaction was swift.
Both AU and Chinese officials publicly condemned the report as false and sensationalist – an attempt by the Western media to damage relations between a more assertive China and an increasingly independent Africa.
But Le Monde Afrique said that AU officials had privately expressed concerns about just how dependent they were on Chinese aid – and what the consequences of that could be.
In the midst of all of this, one fact remained largely unreported.
The main supplier of information and communication technology systems to the AU headquarters was China’s best-known telecoms equipment company – Huawei.
The company says it had “nothing” to do with any alleged breach.
Huawei “served as the key ICT provider inside the AU’s headquarters”, said Danielle Cave of the Australian Strategic Policy Institute, in a review of the alleged incident.
Huawei headquarters in Shenzhen, China
“This doesn’t mean the company was complicit in any theft of data. But… it’s hard to see how – given Huawei’s role in providing equipment and key ICT services to the AU building and specifically to the AU’s data centre – the company could have remained completely unaware of the apparent theft of large amounts of data, every day, for five years.”
There is no evidence to indicate that Huawei’s telecoms network equipment was ever used by the Chinese government – or anyone else – to gain access to the data of their customers.
Indeed, no-one has ever gone on record to confirm that the AU system was compromised in the first place.
But these reports played into years of suspicions about Huawei – that a large Chinese company might find itself unduly influenced by the Chinese government.
Ren and the rise of Huawei
“When I first started out 30 years ago… we didn’t really have any telephones. The only phones we had were those hand-cranked phones that you see in old World War II films. We were pretty undeveloped then.”
Huawei’s founder and chairman Ren Zhengfei is reminiscing to the BBC about the origins of the world’s second-biggest smartphone firm, while sitting in the Huawei headquarters in Shenzhen – a symbol of the success that he’s worked his whole lifetime for.
A long marbled staircase, covered in plush red carpet, greets you as you first walk in.
At the top of the stairs, a giant painting depicts a traditional Chinese New Year scene.
Inside Huawei’s Shenzhen HQ
A few kilometres away in Dongguan, Huawei’s latest campus is even more eye-catching.
The site – designed to accommodate the company’s 25,000 R&D staff – comprises 12 “villages”, each of which recreates the architecture of a different European city, among them Paris, Bologna and Granada.
It’s as if Silicon Valley had been re-imagined by Walt Disney. Long corridors of Roman pillars and picturesque French cafes adorn the campus, with a train connecting the different areas, running through manicured gardens and past an artificial lake.
It’s a world away from the environment that Mr Ren found himself in when he first started the company in 1987. “I founded Huawei when China began to implement its reform and opening up policy,” he says. “At that time, China was shifting from a planned economy to a market economy. Not only people like myself, but even the most senior government officials, did not have the vaguest idea of what a market economy was. It seemed it was hard to survive.”
Ren was born in 1944 in Southern China – a tumultuous, chaotic place, one of the poorest regions in an already destitute country.
For a long time, hardship was all he ever knew.
He was from a family of seven children. “They were very poor,” says David De Cremer, who has co-written a book on Ren and Huawei.
“I think hardship is something that you can see throughout his life, and which he keeps emphasising himself.”
To escape that life of poverty and drudgery, Ren did what many young Chinese men of that era did. He joined the army.
Soldiers from the People’s Liberation Army, 1972
“I was a very low-ranking officer in the People’s Liberation Army,” he says. “I served in an ordinary construction project, not a field unit. At the time, I was a technician of a company in the military, and then I became an engineer.”
He left the military in 1983 when China began to downsize its forces, and went into the electronics business.
By his own admission, he wasn’t a great businessman at first.
“I was someone who had been in the military all my life at the time, used to doing what I was told,” he says. “Suddenly, I began to work in a market economy. I was at a total loss. So I too suffered losses, I too was deceived, and I was cheated.”
But he was quick to learn, and was a keen student of Western business practices and European history.
“I did research on what exactly a market economy was all about,” he says. “I read books on laws, including those about European and US laws. At that time, there were very few books on Chinese laws, and I had to read those on European and US laws.”
Five years later, he founded Huawei – the name can be translated as “splendid achievement” or “China is able” – to sell simple telecoms equipment to the rural Chinese market. Within a few years, Huawei was developing and producing the equipment itself.
Sometime in the early 90s, Huawei won a government contract to provide telecoms equipment for the People’s Liberation Army.
By 1995, the company was generating sales of around US$220,000, mainly from selling to the rural market.
The following year Huawei was given the status of a Chinese “national champion”. In practice, this meant the government closed the market to foreign competition.
At a time when China’s economy was growing by an average of 10% per year, this was no small advantage. But it was only when Huawei started to expand overseas in 2000, that it really saw its sales soar.
In 2002, Huawei made US$552m from its international market sales. By 2005 its international market contracts exceeded its domestic business for the first time.
Ren’s early days in business instilled in him a desire to protect his company from the whims and fancies of the stock market. Huawei is privately held and employee-owned. This gave Ren the power to plough more money back into research and development. Each year, Huawei spends US$20bn on R&D – one of the biggest such budgets in the world.
“Publicly listed companies have to pay a lot of attention to their balance sheets,” he says. “They can’t invest too much, otherwise profits will drop and so will their share prices. At Huawei, we fight for our ideals. We know that if we fertilise our ‘soil’ it will become more bountiful. That’s how we’ve managed to pull ahead and succeed.”
One story from the early days of the company tells how Ren was cooking for his staff (he loves to cook, or so the story goes). Suddenly he rushed out of the kitchen and announced to the room: “Huawei will be a top three player in the global communications market 20 years from now!”
And that’s exactly what happened. In fact, those ambitions were surpassed.
Today, Huawei is the world’s biggest seller of network telecommunications equipment.
From aspiring to be a company like Apple, it now sells more smartphones than Apple.
But shadows have continued to loom over Huawei’s international success.
Ren and Huawei’s links to the Chinese Communist Party have raised suspicions that the company owes its meteoric rise to its powerful political connections in China. The US has accused Huawei of being a tool of the Chinese government.
It’s an accusation which Ren denies. “Please don’t think that Huawei has become what it is today because we have special connections,” he says. “Even 100% state-owned companies have failed. Do good connections mean you will succeed then? Huawei’s success is still very much due to our hard work.”
The case against
It was 1 December 2018. US President Donald Trump and China’s President Xi Jinping were dining on grilled sirloin followed by caramel rolled pancakes at the G20 summit in Buenos Aires.
They had a lot to discuss. The US and China were in the middle of a trade war – imposing tariffs on each other’s goods – and growth forecasts for both countries had recently been cut as a result. This was adding to the fear of a slowing global economy.
In the event, the two leaders agreed a truce in the trade war, with Donald Trump tweeting that “Relations with China have taken a BIG leap forward!”
Xi Jinping and Donald Trump at dinner, December 2018
But thousands of kilometres north in Canada, an arrest was taking place that would throw doubt on this rapprochement.
Meng Wanzhou, Huawei’s chief financial officer and Ren Zhengfei’s eldest daughter, had been detained by Canadian officials while transferring between flights at Vancouver airport.
The arrest had come at the request of the US, who accused her of breaking sanctions against Iran.
“When she was detained, as her father, my heart broke,” says Ren, visibly emotional. “How could I watch my child suffer like this? But what happened, has happened. We can only depend on the law to solve this problem.”
Meng Wanzhou being driven to court in Canada
Huawei’s problems were just beginning. Nearly two months later, the US Department of Justice filed two indictments against Huawei and Ms Meng.
Under the first indictment, Huawei and Ms Meng were charged with misleading banks and the US government about their business in Iran.
The second indictment – against Huawei – involved criminal charges including obstruction of justice and the attempted theft of trade secrets.
Both Huawei and Ms Meng deny the charges.
January 2019: Acting US attorney general Matthew Whittaker announces charges against Huawei and Meng Wanzhou
The charge of stealing trade secrets centres on a robotic tool – developed by T-Mobile – known as Tappy.
According to legal documents, Huawei had tried to buy Tappy, a device which mimicked human fingers by tapping mobile phone screens rapidly to test responsiveness.
T-Mobile was in partnership with Huawei at the time, but it rebuffed the Chinese firm’s offers, fearing it would use the technology to make phones for T-Mobile’s competitors.
It’s alleged that one of Huawei’s US employees then smuggled Tappy’s robotic arm into his satchel so that he could send its details to colleagues in China.
After the alleged theft was discovered, the Huawei employee claimed that the arm had mistakenly fallen into his bag.
Huawei claimed that the employee had been acting alone, and the case was settled out of court in 2014. But the latest case is built on email trails between managers in China and the company’s US employees, linking Huawei management to the alleged theft.
The indictment also details evidence of a bonus scheme from 2013, offering Huawei employees financial rewards for stealing confidential information from competitors.
Huawei has denied any such scheme exists.
Meng Wanzhou, photographed in 2014
This is not the first time that Huawei has been accused of stealing trade secrets. Over the years companies like Cisco, Nortel and Motorola have all pointed the finger at the Chinese firm.
But US fears about Huawei are about much more than industrial espionage. For more than a decade, the US government has seen the company as little more than an arm of the Chinese Communist Party.
These concerns have been brought to the fore with the advent of “fifth generation” or 5G mobile internet, which promises download speeds 10 or 20 times faster than at present, and much greater connectivity between devices.
As the world’s biggest telecoms infrastructure provider, Huawei is one of the companies best placed to build new 5G networks. But the US has warned its intelligence partners that awarding contracts to Huawei would be tantamount to allowing the Chinese spy on them.
US Secretary of State Mike Pompeo recently cautioned against Huawei, saying, “If a country adopts this and puts it in some of their critical information systems, we won’t be able to share information with them.”
US Secretary of State Mike Pompeo
The UK, Germany and Canada are reviewing whether Huawei’s products pose a security threat.
Australia went a step further last year, and banned equipment suppliers “likely to be subject to extrajudicial directions from a foreign government”.
Huawei was not mentioned by name, but Danielle Cave of the Australian Strategic Policy Institute says the company posed a national security risk because of its government links.
She cites an article in Chinese law that makes it impossible for any company to refuse to help the Chinese Communist Party in intelligence gathering.
“Admittedly, what is missing from this debate is the smoking gun,” she says.
“For the average person who has a Huawei smartphone it’s not a big deal. But if you’re a Western government that has key national security to protect – why would you allow this access to a company that is in the political system that China is in?”
For his part, Ren says that Huawei’s resources have never and would never be used to spy for the Chinese government.
“The Chinese government has clearly said that it won’t ask companies to install backdoors,” he says. A “backdoor” is a term used to describe a secret entry point in software or a computer system that gives access to the person or entity who installed it to the inner workings of the system.
“Huawei will not do it either,” he continues. “Our sales revenues are now hundreds of billions of dollars. We are not going to risk the disgust of our country and our customers all over the world because of something like that. We will lose all our business. I’m not going to take that risk.”
Xi’s China
Zhou Daiqi is Huawei’s chief ethics and compliance officer.
He’s been with the company for nearly 25 years, in a number of different positions – chief engineer, director of the hardware department, head of the research centre in Xi’an, according to his biography on the company’s website. He is also understood to combine his high-ranking executive duties with another role – party secretary of Huawei’s Communist Party committee.
All companies in China are required by law to have a Communist Party committee.
Zhou Daiqi’s profile on Huawei’s website
The official line is that they exist to ensure that employees uphold the country’s moral and social values. Representatives of the committee are also often tasked with helping workers with financial problems.
But critics of China’s one-party system argue that they allow the state to exert control on corporate China. And they say the level of this control has increased in recent years.
“[President] Xi Jinping is exerting greater control over the business community in China,” says Elliott Zaagman, who regularly advises Chinese companies on their PR strategy. “As these companies gain power and influence overseas, the party doesn’t want to lose control over them.”
Ren, however, argues that the role of Huawei’s Communist Party committee is far less important than many in the West believe.
“[It] serves only to educate its employees,” he says. “It is not involved in any business decisions.”
In China, most chief executives are Communist Party members.
Every year, they dutifully turn up to the National People’s Congress along with local and national party chiefs, officials and chief executives.
It’s where the big economic decisions are voted on – although no proposal is put forward which hasn’t already been agreed upon.
Still, big CEOs come to show their commitment to the party, and to contribute to working papers that are meant to help the government understand the concerns of the business community.
Being a member of the party is very much a networking opportunity – in the way one would join a business association.
Elliott Zaagman argues that this is a system that demands loyalty.
“There is no separation from the party and the state,” he says.
“The system in China encourages the lack of transparency in companies like Huawei.”
The worry is that these close links mean that if the Communist Party asked a company to do something, they would have no choice but to comply.
And if that company is one that is involved in sensitive global telecoms infrastructure projects, it’s easy to see why Western observers would be worried.
There is no evidence to indicate that Huawei is in any way under the orders of the Chinese government, or that Beijing has any plans to dictate business plans and strategy at Huawei – particularly when it comes to spying.
But the way in which the Chinese Communist Party has robustly defended Huawei has raised questions about how independent the company is of its influence.
For example, Beijing stated that Ms Meng’s detention was a rights abuse .
And while her extradition case to the US was moving forward, China detained two Canadian citizens and accused them of stealing state secrets. Critics say the detentions are linked to Ms Meng’s arrest.
December 2018: Chinese police patrol outside Canada’s embassy in Beijing
While not commenting on the arrest of the Canadians, Ren says China’s defence of Huawei is understandable.
“It is the Chinese government’s duty to protect its people,” he says. “If the US attempts to gain competitive edge by undermining China’s most outstanding hi-tech talent, then it is understandable if the Chinese government, in turn, protects its hi-tech companies.”
Over the past few years, there have been signs of a bigger push by the government to get private companies, and in particular tech firms, to cooperate with party rules – even when they are firmly resistant.
A Didi Chuxing logo adorns a building in Hangzhou, China
China’s ride-hailing giant Didi Chuxing’s troubles are an example of the struggles Chinese firms face when they try to uphold their independence in the face of government pressure.
Chinese attitudes to data collection and data privacy are different to those in the West – many people don’t care if businesses have access to their data, arguing that it adds to the convenience of life and work.
Government access to data in China is not the free-for-all that many outside of China assume it to be
Samm Sacks, CSIS
So it wasn’t unusual when, after the murders of two of its passengers by Didi drivers, regulators used the scandal to force Didi to share more corporate data with the government. But Didi resisted – citing customer privacy. Under Chinese law, it had no choice but to comply.
When it did, it handed over “three boxes of data printed on paper, including 95 hard copies for authorities to review”.
According to Samm Sacks of the Center for Strategic and International Studies (CSIS), the case demonstrates that “government access to data in China is not the free-for-all that many outside China assume it to be”.
She says this indicates that there appears to be “a kind of tug of war between the government and companies over data”.
How this plays out will determine how Chinese companies are viewed by foreign governments when they do business overseas.
Companies like Huawei have grown up in a system where to survive and thrive they needed strong links to the Chinese government – there was and is no other choice. But these links could harm their reputation abroad.
“It’s two different systems,” says Zaagman. “Think of it like an electrical outlet. China’s plug doesn’t fit in to the outlets we have in the West.”
What’s at stake
“Basically you want to connect to everything that can be connected.”
Zhu Peiying, head of Huawei’s 5G wireless labs, is showing off devices that can connect to the new technology. From a smart toothbrush that collects data about how well you brush your teeth, to a smart cup that reminds you when you should drink some water, this is a world where everything you can think of is being measured and analysed.
At its most sophisticated, everything in entire cities would be connected – driverless cars, the temperature of buildings, the speed of public transport – the list is endless.
Huawei is thought to be a year ahead of its competitors in terms of its technological expertise and what it can offer customers, according to industry sources.
It’s also thought that the company can offer prices that are about 10% cheaper than its competitors, although critics claim this is because of state support.
Ren dismisses this, saying that Huawei doesn’t receive government subsidies.
He says the real reason behind the US resistance to Huawei is its superior technology.
“There’s no way the US can crush us,” he says. “The world needs Huawei because we are more advanced. Even if they persuade more countries not to use us temporarily we could just scale things down a bit.”
Many analysts say that Huawei’s exclusion from US networks could actually cause the US to fall behind in its 5G capabilities.
“It would mean we wouldn’t be able to participate in any blended network [using Huawei] in Europe or Asia,” says Samm Sacks of CSIS. “That would put us at a significant disadvantage.”
What this would mean in reality is a world of two internets – or what analysts are calling a “digital iron curtain” – dividing the world into parts that do business with Chinese companies like Huawei, and those that don’t.
Because of US pressure on its allies, Huawei has been on an aggressive public relations campaign to win over customers and government stakeholders.
In recent days, Vodafone’s boss Nick Read called on the US to share any evidence it has about Huawei, while Andrus Ansip, the European Commission’s vice president for the digital single market, said in a tweet that he had met with Huawei’s rotating CEO to discuss the importance of being open and transparent, as they explored ways of working together.
But suspicions about Huawei remain.
One security firm reports a sharp rise in inquiries by Asian government clients about Huawei.
“Some have asked us how much they should worry about whether Huawei is really a liability,” says an analyst who consults to Asian governments, on condition of anonymity.
Ren is sanguine about such concerns.
“For countries who believe in them [suspicions about Huawei] we will hold off,” he says. “For countries who feel Huawei is trustworthy, we may move a little faster. The world is so big. We can’t walk across every corner of it.”
But this is about more than just one company or one CEO and his family.
Increasingly, this is perceived as a battle between two world orders, and which one is the future.
In the early days of China opening up, US presidents like George HW Bush espoused the merits of engagement.
“No nation on Earth has discovered a way to import the world’s goods and services while stopping foreign ideas at the border,” he said in a 1991 speech. “Just as the democratic idea has transformed nations on every continent, so, too, change will inevitably come to China.”
1989: George HW Bush in Beijing – he encouraged economic engagement with China
Previous US administrations believed that economic engagement in China would lead to China following a freer, more “liberal” path.
There’s no denying China has made remarkable strides in the past 40 years. The economy grew by an annual average of 10% for three decades, helping to lift 800 million people out of poverty. It is now the second-largest economy in the world, only surpassed by the US.
Some estimates put China’s economy ahead of America’s by 2030.
It achieved this while maintaining one-party rule and the supremacy of the Communist Party.
But its success has raised concerns that it is only possible with a huge amount of government control over the country’s companies. The fear is that control could be used to achieve the Communist Party’s goals – which are at this point unclear.
“It’s a double-edged sword for China,” says Danielle Cave. “[Because of its laws] the Chinese Communist Party has made it virtually impossible for Chinese companies to expand without attracting understandable and legitimate suspicion.”
Added to this, China has become more authoritarian under Xi Jinping’s rule.
President Xi Jinping
“Xi is systematically undermining virtually every feature that made China so distinct and helped it work so well in the past,” writes Jonathan Tepperman, editor in chief of Foreign Policy.
“His efforts may boost his own power and prestige in the short term and reduce some forms of corruption. On balance, however, Xi’s campaign will have disastrous long-term consequences for his country and the world.”
But Ren dismisses this, insisting that China is more open than ever before.
“If this meeting took place 30 years ago,” he says of our interview, “it would have been very dangerous for me. Today, I can be straightforward when answering difficult questions. This shows that China has a more open political environment.”
Still, Ren is hopeful of the direction China will take in the future.
“China has more or less tried to close itself off from the outside world for 5,000 years,” he says. “Yet we had found ourselves poor, lagging behind other nations. It was only in the past 30 years since Deng Xiaoping opened China’s doors to the world that China has become more prosperous. Therefore, China must continue to move forward on the path of reform and opening-up.”
In one of Huawei’s vast campus sites across Shenzen, lies a man-made lake. Swimming in these serene waters are two black swans.
There is a story that Ren put the birds here to remind employees of “black swan” events – unpredictable and catastrophic financial eventualities that are impossible to prepare for. He dismisses this as an urban myth, but it’s hard not to read something into it.
For Huawei, and Ren, these are highly uncertain times with no way of telling what lies ahead.
Policy statement outlines broad goals including plan to revive domestic soybean production
A farmer picks tea leaves in Mianxian county, Shaanxi province. Beijing’s policy document reiterated a strategy to improve income levels and living standards in China’s countryside. Photo: Xinhua
China will deepen reforms of its agriculture sector to promote its rural economy, the government said in its first policy statement of 2019, as it seeks to bolster growth and offset trade challenges.
Beijing’s statement, released late on Tuesday, comes after the world’s second-largest economy saw its weakest growth in 28 years in 2018 and remains entangled in a trade war with Washington.
“Under the complicated situation of increasing downward pressure on the economy and profound changes in the external environment, it is of special importance to do a good job in agriculture and rural areas,” the government said in the document issued by the State Council and published by official news agency Xinhua.
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Known as the “No 1 document”, this year’s policy reiterated a rural rejuvenation strategy first laid out in 2017 to improve income levels and living standards in China’s countryside.
It also highlighted a plan to boost domestic soybean production but did not offer further details.
Chinese President Xi Jinping visits a farm in northeastern Heilongjiang province during an inspection tour in September. Photo: Xinhua via AP
Industry analysts said on Wednesday they were eagerly awaiting further details to assess the impact of the plan, which had already been flagged by Agriculture Minister Han Changfu earlier this month.
China has been overhauling its crop structure in recent years, reducing support for corn after stocks ballooned, and seeking to promote more planting of oilseeds that it mostly imports.
That goal has become increasingly important since a trade war with the United States, which led China to slap tariffs on soybean imports, tightening domestic supplies.
Han has previously urged authorities in China’s northeast to support soybean production through subsidies and called for rotating of soybeans with other crops including corn and wheat.
Beijing also aims to support the production of rapeseed in the Yangtze River Basin, according to the document.
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As in previous years, it also called for stable grain production, but also an increase in imports of agriculture products where there are shortages in the domestic market.
“The focus now is on retaining production capacity, in the form of high quality farmland, and using the international market to make up production shortfalls,” said Even Rogers Pay, an agriculture analyst at China Policy, a Beijing-based consultancy.
The reference to imports is positive for trade partners like the United States, said Cherry Zhang, analyst with Shanghai JC Intelligence, who said it raised the likelihood that China will buy more US agriculture products.
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Shares of Chinese livestock companies, along with pig and poultry breeders, rose on Wednesday following the release of the policy paper.
The document also outlines plans to accelerate development of a new farm subsidy policy system and further crack down on the smuggling of agriculture products.
Additionally, the government said it plans to strengthen the monitoring and control of African swine fever outbreaks, after more than 100 cases were reported in China since August.
Other plans include continuing to tackle rural pollution and promoting recycling of agricultural waste such as manure and agricultural film.
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