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China to host tech forum in Seattle; President Xi to meet with Gates

Chinese President Xi Jinping speaks in 2014 during a joint news conference with U.S. President Barack Obama at the Great Hall of the People in Beijing. Photo: AP

As President Xi Jinping of China prepares for his first state visit to the United States this month, Washington has warned it could hit Chinese companies with sanctions over digital attacks for trade secrets. Beijing is now pushing back in an unorthodox way: by organizing a technology forum in Seattle to demonstrate its own sway over the American tech industry.

The Sept. 23 meeting is planned to feature China’s Internet czar, Lu Wei, the overseer of China’s restrictions on foreign technology companies.

A number of Chinese tech executives, including Robin Li of Baidu and Jack Ma of Alibaba, along with executives from top U.S. tech companies including Apple, Facebook, IBM, Google and Uber, have been invited, according to people familiar with the plan who spoke on the condition of anonymity because they were not authorized to speak about the meeting.

Some invitees, including Apple CEO Timothy D. Cook, plan to attend, according to one person. The forum is being co-hosted by Microsoft, said another person with knowledge of the matter.

The meeting is rankling the Obama administration by veering off the script agreed to for Xi’s carefully stage-managed visit, two U.S. officials said. There are also concerns the meeting could undercut President Obama’s stern line on China by portraying its leadership as constructively engaging U.S. companies about doing business in China, even as the administration suggests U.S. companies are hurt by anticompetitive Chinese practices.

For many U.S. tech companies, the invitation is hard to turn down because of the vast opportunities of China’s tech market. Google and Facebook are among those blocked by China’s web filters from doing business in the country, the world’s biggest Internet market.

While the tech companies have not taken positions opposing U.S. sanctions and some are conflicted about how to approach China, their appearance at the meeting would signal how much leverage China wields over them.

At the meeting, Xi could briefly address the gathering, or a selected group of American and Chinese executives, according to an Obama administration official. In Seattle, Xi is also set to meet the Microsoft co-founder Bill Gates at his nearby lakeside estate for dinner before heading to Washington to meet Obama.

A Chinese digital-security expert, Zuo Xiaodong, the vice president of the China Information Security Research Institute, who plans to attend what is being called the U.S.-China Internet Industry Forum, described it as an “industry meeting,” adding that “the Chinese government has attached great importance” to it.

“The meeting is mostly to discuss the industry cooperation of the two countries, and big companies from China and the U.S., like Google, will all be there,” Zuo said.

Microsoft, Facebook, IBM, Apple, Uber and Baidu declined to comment, while Alibaba and Google did not respond to requests for comment.

Over the last few years, China and the United States have been engaged in a sort of technological Cold War. American leaders have railed against a series of hackings that they have said emanated from China and they have called for Beijing to relax the regulations that limit the sale of American hardware and block Internet companies.

In turn, China has argued that revelations by Edward J. Snowden, the former contractor who disclosed U.S. government surveillance, show that the United States also hacks Chinese companies and that those attacks justify its restrictive laws against U.S. companies.

At stake is how the global Internet will be managed. While the United States supports an Internet in which companies are allowed to operate worldwide and users are given free online expression, China has said countries should be allowed to force web companies to follow local laws, including censoring content, monitoring users and hosting data about Chinese users within China.

By dangling the carrot of market access to U.S. companies that follow its rules, Chinese officials like Lu want to influence global Internet governance and have its model more widely adopted.

Holding the tech meeting in Seattle can also be cast in Beijing as a sign that the titans of U.S. industry recognize China’s power and give it respect. Abroad, it signals that companies must accommodate Beijing’s wishes to ensure market access.

“This is about putting as much lipstick as possible on the pig in advance of Xi going into Washington where the administration is saying cyberattacks are the problem and the operating environment for U.S. firms is narrowing,” said an industry official with direct knowledge of the planning of Xi’s trip, who spoke on the condition of anonymity.

The planned meeting also reveals the divides within the U.S. tech industry, and between the government and U.S. companies about how to deal with China.

On one hand, China’s more than 600 million Internet users and the hundreds of billions of dollars its companies, government and consumers spend on technology are revenue staples for older U.S. hardware and software companies and are viewed by younger companies as areas of huge potential growth.

On the other hand, a raft of Chinese policies have emerged in the last two years that are meant to wean the country off foreign technology, and Internet blocks have kept out companies like Facebook, Google and Twitter.

Uniting most companies, however, is a fear that sanctions imposed by the Obama administration could lead to a Chinese response that would hit bottom lines and growth prospects alike. Administration officials have made clear they are considering imposing economic sanctions against China for breaches by using an executive order under which Obama has the authority to freeze financial and property assets of foreign companies that engage in commercial digital theft.

Washington state might seem an unlikely first stop for Xi, but it is the largest exporter by dollars to China and Seattle has a rich history of hosting Chinese leaders. In 1993, Jiang Zemin, the Chinese president, met President Clinton in Seattle in the highest-level contact between the two countries after the 1989 crackdown on the Tiananmen Square protests.

During a 2006 visit, the Chinese president at the time, Hu Jintao, met with Gates In an exchange during the trip, Hu said he used Microsoft Windows every day, and Gates offered personal tech support if he ran into problems.

In the nine years since, things have changed. Beijing is developing its own operating system and has placed government procurement bans on Microsoft’s Windows 8. Other companies, like Qualcomm, have faced antitrust investigations in China. Several U.S. business groups also lashed out this year at a Chinese law they said would prevent tech companies based in the United States from selling hardware and software to China’s banking industry.


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