China's President Meets With Tech Leaders In Seattle

Sep 22, 2015
Originally published on September 23, 2015 12:19 pm
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ARI SHAPIRO, HOST:

President President Xi Jinping of China arrived in Seattle today. He released a statement hailing the cooperation between the U.S. and China. Behind the scenes, though, their relationship is more tense. In business, there are tensions over hacking, theft of intellectual property. That subject is bound to come up during Xi's visit. In a moment, we'll hear from someone who will be part of meetings between U.S. and Chinese technology companies. First, we're joined by NPR technology reporter Aarti Shahani. Hi, Aarti.

AARTI SHAHANI, BYLINE: Hi.

SHAPIRO: For a long time, U.S. companies were trying to gain access to Chinese markets - not upsetting that relationship. Are things changing now to become a little more confrontational?

SHAHANI: Yeah. You know, that's right. Now, keep in mind, China is obviously a huge market, but it's not the only market. A lot of Asia and Africa and Latin America are opening up. And when you look at the numbers, the biggest companies in the U.S. don't actually rely on China so heavily - tech companies listed in the S&P 500. According to research by Goldman Sachs, a handful of them, like Qualcomm and the chipmaker Nvidia, they get more than half their revenue from China. Intel gets about a third. But on average, S&P 500 companies get just 2 percent of revenue from China - 2 percent, which is not exactly beholden.

SHAPIRO: OK, so how do companies balance what they stand to gain from doing business in China with what they stand to lose by having their intellectual property stolen?

SHAHANI: Well, it's hard to quantify what they stand to lose, but the conversation is definitely growing. In part, it's become really well-documented, right? U.S. companies that study hackers, firms like FireEye and CrowdStrike - they've pinpointed specific units of the Chinese People's Liberation Army - that's their version of the NSA - specific units that target U.S. and European satellite and aerospace industries.

And you know, back in Silicon Valley, I've spoken with a number of companies in biotechnology, in solar energy and aviation. Their concern is not, how do we sell to China? What they're asking is, how do we get them to stop stealing our multimillion-dollar research?

SHAPIRO: Well, in the short-term, what are tech companies saying they want to get out of this meeting with President Xi?

SHAHANI: You know, I think the companies want basic rules of engagement. You know, it turns out the U.S. and China do hack each other all the time. It's part of statecraft. But publicly, our governments disagree about what acceptable targets are. The Obama administration and top officials here have said military and political agencies - that's fair game, but it's not OK to attack companies.

Though, maybe the U.S. is being a bit hypocritical here. According to documents revealed by Edward Snowden, U.S. intelligence has hacked Huawei, a major Chinese networking company that makes some very popular smart phones. So it'll be huge in these meetings, probably in closed-door meetings, if there's any headway, any agreement on curtailing some of the hacking. And recent news leaks by the White House that Obama's considering economic sanctions - that could nudge the conversation forward.

SHAPIRO: That's NPR's Aarti Shahani in Seattle. Aarti, thanks for talking with us.

SHAHANI: Thank you. Transcript provided by NPR, Copyright NPR.