Time To Get Tough With China

Vice President Biden cooled tensions in his talks with Chinese leaders, but many in Asia and the U.S. now question whether that’s the right course.

By Leslie H. Gelb

“We’re being too soft on China”—such are the increasingly audible whispers of an ever mounting number of China’s neighbors and U.S. foreign policy experts. 

They are still mostly whispering because of the enormity of such a change in policy direction. And they certainly don’t wish to trigger crises. 

But they do feel that the U.S. needs to get tougher with Beijing. 

To them, China unilaterally asserts its rights and demands, doesn’t budge, wears everyone down, waits and waits until everyone shrugs and goes along. 

Vice President Joe Biden handled his visit with Chinese rulers in the traditional manner: that is, he was strong in defending American values and concerns, but always far short of confrontation. And Chinese leaders mistook his care as weakness. 

Perhaps they’ve seen this as weakness all along.
Or as Winston Lord, a former ambassador to China, put it: “The Chinese do not shy from provocation and count on eventual foreign forebearance. It is time to parry this pattern and be willing to risk some dustups."
Such commentary on the Biden visit did not rise above murmurs here and there. 

Those pushing for a tougher line toward China realize such a policy shift takes time, and can’t be decided upon in the space of a week or so, the time it took to digest China’s imposition of its new Air Defense Identification Zone or ADIZ over the Japanese islands in the East China Sea. 

If Washington is to adopt a tougher stance toward Beijing, it needs a lot of methodical calculation. 

And U.S. diplomats would have to ensure beforehand that Asian nations would follow suit, so that Washington did not string itself out alone. 

The Obama administration is not near such a policy departure. 

And so, Biden deftly carried out his prescribed paces, perhaps disturbing no one greatly beyond the Japanese. 

Japan is less and less inclined to let Beijing push it around. In this regard, they’re out in front of the U.S. government, but they are not alone.

Many Asian and American policy experts were quite unhappy about China’s new ADIZ—and with the Obama administration’s quick acceptance of China’s right to do so. 

Washington alerted U.S. commercial airlines (not military aircraft) to comply in order to avoid mishap. 

There was good reason, however, not to do so. 

Washington acknowledges the right to establish ADIZ’s. 

But by U.S. policy, commercial aircraft flying through such zones need identify themselves only if they intend to enter Chinese airspace. 

More to the point, Beijing’s new ADIZ was announced without warning or consultation over an unusually large area, and an area that was in hot dispute with Japan. 

Japan and South Korea did not go along with the new China ADIZ, and the White House or State Department should have coordinated the U.S. response with these and other countries.
It’s not a stretch to assume that Chinese leaders took the U.S. response as caving in to their excessive demands. 

Tokyo certainly came to that precise conclusion. 

Apparently, Biden made no hard line effort to walk this cat back in Beijing. 

Instead, he seems to have asked his Chinese counterparts simply not to “enforce” the new ADIZ rules. 

Later in his Asia trip, in South Korea, the U.S. position appeared to have hardened, with a U.S. briefer saying that the U.S. and others did not accept China’s ADIZ. 

In the familiar refrain of diplomats, only time will tell.
The new ADIZ is only the latest in a long line of lamentations about Chinese treatment of American interests. 

There’s the cyberwarfare against U.S. defense industries. 

There’s Chinese flagrant violation of intellectual property rights. 

There’s the near total resistance to opening up Chinese internal markets to fair competition and to letting outsiders own a majority share of businesses. 

There’s strong resistance to accepting the WTO trade rules on the grounds that though China is an economic juggernaut, it’s really a “developing country” and thus not subject to the same rules as America, Japan, Germany, et al. 

There’s the constant intimidation of American journalists and news organizations. 

Biden did note the latter publicly as a matter of American values. 

Did Beijing even notice?

Asian nations certainly feel Beijing has been pushing them around, increasingly. 

That’s why they pressured the Obama team to “pivot” or “rebalance” its policy and resources from Europe and the Mideast to Asia and the Pacific, a course already favored by the Obama team. 

To be sure, and at the same, Asian leaders worry about being too closely associated with a tougher U.S. They want Americans to be tougher, but they don’t want Beijing to blame them for it. (It’s the old story with America’s friends and allies.)
Then, there’s the question that troubles all serious policy makers—exactly what leverage does Washington actually hold over Beijing? 

No military expert dreams of challenging China’s military power on the Asian mainland. The manpower gap is insurmountable. 

But at sea and on the coastlands, the U.S. Navy and Air Force remain clearly superior. China’s knows all this. 

But the last thing anyone desires is a military confrontation. 

There’s no telling where this would lead. 

By the same token, however, China can’t simply be allowed to make its own rules at sea by asserting its unilateral rights and dispatching ships and fighter planes to enforce them. 

So far, China has been doing the asserting in both the East and South China seas, resource rich areas, much to the dismay of the Philippines, Vietnam, South Korea, and Japan.
But the real leverage between the U.S. and China comes down to economic horsepower. 

However much military strength is needed, and it is, policy makers understand full well that power in the region stems from domestic economic strength and vitality, plus trade and investment power. 

China’s economy still marches upward and has already surpassed Japan’s. 

The American economy is limping along. 

Congress hasn’t passed a budget in six years. It regularly brings the nation to debt default. 

It won’t increase funds for physical and intellectual infrastructure, where America is clearly falling behind. 

If China or anyone else, for that matter, is going to pay attention to America’s wishes and demands, Congress will have to stop acting like a Banana Republic. 

The Tea Baggers say they want a strong America; they’re destroying it.
Ambassador Lord provided this perspective: “We need a firmer posture toward Beijing which means getting our domestic political and economic acts together, investing in the future; giving our Asian rebalancing more heft by successfully concluding the critical Pacific trade pact; and helping to reconcile our two most important Asian allies, Japan and South Korea."
Stapleton Roy, another former U.S. ambassador to China, who opposes the tougher line, put his case rather pithily: “You talk about getting tough on China,” he chuckled, “We first should get tough on ourselves.”

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The US Waffles on China’s Air Defense Zone

State Department concerns appear to trump military ones
Asia Sentinel

A computer screens display a map showing the outline of China's air defense zone in the East China late last month.

Asian nations looking for US protection in the face of concerns about China’s hegemonic designs on east and Southeast Asia are left baffled by Washington’s response to China’s controversial declaration of an air defense zone covering most of the East China Sea.
The first US reaction, clearly driven by highest level military concerns, was to send military aircraft through the zone without notifying the Chinese authorities. 

Japan and Korea did likewise and Japan’s civilian aircraft similarly ignored this great leap forward in China’s de facto claims over airspace close to the territorial waters of Japan and South Korea.
But since then the US, seemingly driven by a State Department that often appears to place short- term relations with China ahead of longer-term strategic questions, has adopted a somewhat ambiguous posture. The visit to the region by US Vice-President Joe Biden could have been used to condemn the Chinese action unequivocally and bolster Japanese and South Korean confidence in US determination to stand by them in rejecting Chinese presumptions.
As it happened, however, the US seemed set on avoiding provoking China into yet more aggressive claims – even though it was China’s announcement of the zone shortly before Biden’s visit, which was the immediate provocation.
Much of the western media also appeared to portray the air zone issue as simply an extension of China’s dispute with Japan over the Senkaku islands when even a glance at a map of the Chinese self-proclaimed zone shows it encompasses almost the whole airspace over the East China sea, not just the southwestern portion close to the Senkakus. 

Such misinterpretation must be music to China’s ears.
While in Beijing, Biden is reported to have told Chinese President Xi Jinping that the US rejects the zone claim and looks to China to ease tensions by effectively not doing anything to enforce its claims. 

It could, for example, not do anything about plans, civilian or military, which fail to provide their flight plans to the Chinese authorities. 

Nonetheless, the claims are now on the record and having made them, President Xi may come under nationalist and populist pressure to try to enforce them.
The US position has clearly been weakened by its advising its own airlines to file their flight plans with China – unlike Japan. 

Not surprisingly, Japan has not been pleased with this failure to back its own position of declining to provide civilian flight information to the extent China demands. 

The US has explained its action by reference to the safety needs of civilian aircraft. 

However, that implies that China represents a risk to civilian aircraft which do not comply. 

Clearly China is not going to start shooting down commercial aircraft so the US response is in effect surrender to a theoretical threat. 

Stouter hearts would have called China’s bluff.
Many countries declare air defense zones which go well beyond their territorial waters as well as flight control zones for the safe operation of civilian aircraft. 

But these have no formal international standing and require neighboring countries to cooperate rather than compete in demanding exclusive rights.
The vast extension of China’s zone could be seen, most worryingly, as a preliminary move to be followed at some future date with attempts to enforce it first of all in the vicinity of the Senkakus, islands which the US recognizes as Japanese. 

It is also noteworthy how close the zone goes to Japan’s territorial waters in the vicinity of the Ryukyu Islands, and of Okinawa, with its US bases in particular.
In another direction, next on China’s agenda could be declaration of a similar zone above the South China sea, following the infamous nine-dash line of its claims there which take it almost up to the territorial waters of Vietnam, the Philippines, Brunei and Malaysia, and very close to Indonesia’s Natuna islands. 

China’s ambassador in Manila Ma Keqing was quoted as saying that China had the right to set up a similar zone over the South China Sea.
Exactly how that “right” is defined has not been made clear. 

But if such a right exists, presumably other countries, such as Vietnam and the Philippines, have similar rights to air defense zones extending close to China’s coast and its military airfields.
Given China’s world view and its history of expansion over most of the past 500 years (only during the period 1840-1945 was it on the defensive, against the west and Japan) it is hard to predict how far its ambitions now go. 

But Asian neighbors might like to see the US put more backbone into its response if they are to believe that its “tilt” towards Asia and the centrality of the western Pacific to US long-term strategic interests.

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China Declares Lunar Defense Obliteration Zone

“China’s historical ties to the moon date back at least five thousand years, perhaps more.” -- Chinese expert

www.miniharm.com

BEIJING — Following the successful launch of its first lunar rover, the Chinese government has declared a defensive zone extending vertically from China into space and encompassing the moon.
The Lunar Defense Obliteration Zone, according to newly appointed space minister Wu Houyi, “will protect China’s core interests and interplanetary sovereignty.” 

All foreign spacecraft, satellites, comets and space debris must notify China before passing through or into the zone.
Due to orbital complications, the boundaries of the LDOZ will shift daily in accordance with the position of the moon relative to its sovereign power. 

China’s Ministry of Space has issued diagrams of the shifting boundaries, dubbed “the lasso.”
Many countries have disputed China’s ability to establish such a zone, but Chinese officials are adamant about the country’s claim to Earth’s only natural satellite.
Orbital variations of the LDOZ.

“China’s historical ties to the moon date back at least five thousand years, perhaps more,” said Chen Guang, an official historian from the Chinese Academy of Social Sciences. 

“We made a whole calendar based on it for Christ’s sake.”
As for the political ramifications, the Ministry of Space has promised not to impose terrestrial laws on the celestial object, nor push immediately for reunification.
“The moon will retain full autonomy,” Wu told reporters on Thursday, “and will continue to orbit the Earth as normal under the ‘One Country, Two Circumgyrating Bodies’ system.”
So far, the LDOZ has received widespread support from the public and government-issued propaganda posters have cropped up around Beijing and Shanghai bearing the slogan “China Dream, Moon Dream.”
One Weibo user, @永远玉兔 (Jade Rabbit Forever), suggested that China should enforce the defensive zone by constructing a giant laser which will point at whichever country is currently meeting with the Dalai Lama, and at Tokyo the rest of the time.
As America and Russia are expected to dispute the territorial boundaries, Chinese scientists, according to leaked classified documents, are investigating the feasibility of striking an obsolete satellite to trigger a chain reaction of space debris that will orbit the earth every 90 minutes, preventing all access to the LDOZ.

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Lonely Chinese Men Are Looking to Vietnam for Love

By Freya Wang

China's imbalanced sex ratio also contributes to the shortage of brides on the Chinese marriage marketplace.

Unlucky in love on the mainland? 

Why not go to Vietnam, where Chinese bachelors can find “true love”, or more specifically, where they can “search for brides who won't demand apartments or private vehicles as a precondition for marriage.” 

This, according to an advertisement from a famous Chinese group-buying website 55 Tuan offering a free trip to Vietnam for a number of lonely hearts in celebration of China's Bachelor's Day on November 11.
Faced with the increasingly high cost of marrying Chinese women, whose families often demand expensive gifts in exchange for their daughter's hand, and the country's imbalanced ratio of men to women, more and more bachelors in China are looking abroad for love. 

All together, 28,629 hopefuls participated in 55 Tuan's give away.

Advertisement from website 55 Tuan offering a free trip to Vietnam for a number of single men in celebration of China's Bachelor's Day on November 11.

China's competitive and expensive marriage marketplace
In the past few years, more and more men have expressed their frustration on the Chinese web with the high cost of marriage in China. 

It is customary that the Chinese bride’s family will make a list of very specific demands for the future groom as a pre-condition of the marriage. 

The ownership of an apartment and a car as well as a steady job with a high salary are the top priorities on the bride's parents’ wish list. 

But it is almost impossible for a bachelor of average income to buy an apartment all by himself.
In contrast, it only cost tens of thousands of yuan (approximately a few thousands US dollars) to marry a Vietnamese girl, which is affordable for most Chinese bachelors. 

Plus, a popular notion says that Vietnamese girls are hardworking, simple and devoted to the family.
China's imbalanced sex ratio also contributes to the shortage of brides on the Chinese marriage marketplace. According to an article [zh] on ifeng news, the current ratio of men to women in China is 119:100. 

In some regions, that the ratio reaches 130:100. 

The imbalance is rooted in feudal Chinese culture, which values boys more than girls. 

Coupled with the one-child policy and modern technology that allows parents to know the gender of a baby early on in the pregnancy, the preference for boys has resulted in extremely lopsized gender ratios in newborns, particularly in some remote rural areas. 

For example, the ratio among infants in Wuxue 武穴, Hubei province, is as high as 198.3:100, according to China's fifth population census [zh].
In the case of Vietnam, it once was the opposite — women outnumbered men. 

But in recent years, the male population has slightly outnumbered the female, and that problem has been exacerbated as more and more Vietnamese girls choose to marry foreigners in order to seek a better life. 

Since the end of last century, more than 294,000 Vietnamese girls from poor areas have married foreigners [zh], among which Chinese and Korean are the most popular choices.
Nevertheless, the frequency of Vietnamese-Chinese cross-border marriage fraud has increased [zh]. 

More and more Vietnamese brides flee their Chinese husbands soon after they arrive in China. 

In some cases, the arranged marriage agents are involved in the scam. 

In response to the situation, the Chinese police department has claimed that[zh] they will crack down on commercial Vietnamese bride arrangement services.

‘Why not marry a foreign girl for cheaper?’
Against such a backdrop, 55 Tuan's advertisement stirred up a lot of discussion online. 

The website defended that the lottery event was to provide a free group tour for lucky bachelors to Vietnam. The marriages, if any, will be purely based on love.
While commercial cross-border arranged marriages and mail-order brides are considered by global civil society to be a form of human trafficking and thus immoral, a substantial number of Chinese netizens on popular microblogging website Sina Weibo are against the police crackdown on these “marriage services”.
Writer Shang Jianguo believed the Chinese consumers’ desire for “group buying” of Vietnamese brides only reflected the escalating problem of the imbalanced gender ratio and its impact on the marriage market:
团购越南新娘折射剩男问题。第六次人口普查数据显示，80后非婚人口男女比例为136:100，70后非婚人口男女性别比例206:100。30-39岁男性中有1195.9万人处于非婚状态。同龄女性中有582万人处于非婚状态。The phenomena of “group buying of Vietnamese brides” indicates the social problem of leftover men. According to the sixth population census, the gender ratio of unmarried post-80s generation is 136:100, 206:100 for post-70s. 11,959,000 males between 30 and 39 years old remained single, while only 5,820,000 females are single.

@Zhazi77 has reached marriage age and has started worrying about his future:
作为一个研究森不知道能不能毕业，毕业能不能找得到超过两千五一个月工资的穷人家的小孩，我要是能在三十五岁之前结婚就真的感谢全世界了。I am a master's student. Born into a poor family, I don't know if I can earn more than 2,500 RMB (approximately 400 US dollars) per month upon graduation. I would be thankful to the whole world if I could get married before I reach 35!

Jiu Hengxing, an IT business microblog account, wrote that marriage is a form of economy and thus it is rational to seek brides overseas:
在大城市里，没有房子、车子，相亲成功概率低，就算姑娘同意，还要过丈母娘这关！随着国内结婚成本的增高，一些中介抓住了空子，比国内结婚更省钱又能娶到国外老婆，有何不可？It is very hard to find a bride on a blind date if you don’t have an apartment or car in a big city. Even if the girl is willing to marry you, you still have to deal with her mother. Since the cost of marriage has increased, why not marry a foreign girl for cheaper?

As the marriage economy is tied up with property development in China, “Big eye brother” mocked the police intention to crack down on “group buying” of Vietnamese bride as serving the interest of property developers:
当然要严打，都去娶越南新娘了，内地的房地产经济怎么办？Of course the police need to take action [against the Vietnamese bride arrangement services], because if all men marry Vietnamese women, what would we do with the real estate economy in mainland China?

But Yuan Yi, a journalist, did not think that such relationships will last long:
看完纪录片对越南新娘嫁到台湾全程有了解，因为贫富悬殊很多越南美女嫁往台湾内地。异国婚姻克服文化习俗差异才能长久。I learned about the whole process of marrying a Vietnamese girl after I watched a documentary on Vietnamese brides in Taiwan. Lots of Vietnamese beauties marry a man in mainland China or Taiwan because of the wealth gap. But cross-border marriages can only last long if the couple can overcome their cultural differences.

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Joe Biden: The Bull in the China Shop

The vice president creates waves with comments in China, but he was right to make them.
By Elizabeth C. Economy

In the midst of an already diplomatically challenging trip to Japan, China, and South Korea, U.S. vice president Joe Biden managed to make life just that much more difficult for himself. 

The vice president had a number of thorny issues already on his agenda, such as advancing the cause of the Trans-Pacific Partnership, discussing how to make progress on North Korea, trying to get Japan and South Korea on the same page, and most importantly, trying to persuade Beijing to step back and renounce its establishment of an Air Defense Identification Zone (ADIZ) that overlapped with the pre-established ADIZs of South Korea, Japan, and Taiwan or at the very least, to avoid declaring any new ADIZs.
Despite this full plate of unenviable tasks, Vice President Biden couldn’t resist igniting a mini-media firestorm in Beijing when, in the name of creativity and innovation, he called on young Chinese seeking to visit the United States to “challenge the government, challenge your teachers, challenge religious leaders.” 

He went on to praise the importance of new immigrants to the United States in reinvigorating “the spirit of America” and reinforced that “stamped in the DNA of every American” is an “inherent rejection of orthodoxy.”
At first glance, his remarks seem at best impolitic, at worst downright harmful to the overall cause of furthering cooperation with China. 

Yet, upon further reflection—which the vice president may or may not have undertaken prior to uttering his call to arms—his comments signaled one of the most important policy thrusts of the entire visit.
As China cracks down politically at home and promulgates its own ideals abroad through its Confucius Institutes and state-run media, it matters that U.S. officials reiterate American political values. 

Not doing so in an effort to appease Chinese sensibilities not only is craven but also doesn’t win any favors from Beijing. 

This past week during his own visit to China, U.K. Prime Minister David Cameron showered nothing but praise upon his Chinese hosts; in return he earned a scathing editorial in the Global Times and was forced to stand by and watch as one of his journalist countrymen was barred from his press conference with Chinese President Xi Jinping. 

Similarly, when Bloomberg fired star reporter Michael Forsythe in November—apparently for leaking to the New York Times that Bloomberg was kowtowing to Chinese pressure by holding back on the publication of a politically sensitive piece—the news corporation was rewarded with nothing better than visits by Chinese police to their newsrooms in Beijing and Shanghai.
In fact, Vice President Biden took on the issue of Chinese treatment of U.S. journalists and media companies directly in his talks with Chinese president Xi Jinping. 

U.S. media companies have long been stymied in their efforts to report openly and critically on China for fear of reprisals from Beijing. 

As Mark Landler reported in the New York Times, nearly two dozen New York Times and Bloomberg journalists are awaiting accreditation from Beijing; without it they will be expelled, effectively shutting down their China bureaus. 

The question now is whether the U.S. government will take further steps to pressure China on this issue. Would Washington be willing to delay the visas of Chinese journalists? 

Is there an issue of market access that could be advanced through the World Trade Organization? 

It may seem foolish to risk the overall relationship with China for such issues: The ADIZ, for example, represents a more immediate threat to regional security than access to China for U.S. journalists. 

However, the political values the vice president is advancing—transparency, openness, and accountability—in the final analysis are reflected not only in the way that China does business at home but also in how it behaves abroad. 

Biden is right to hold China to account on both fronts.

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The Thorny Challenge of Covering China

By MARGARET SULLIVAN

HOW do major American news organizations write about a Communist country with the world’s second-largest economy — a country that doesn’t believe in press rights and that punishes tough-minded coverage?
Aggressively? Cautiously? Fearlessly? Competitively?
The country is China. 

The news organizations include The New York Times, as well as its closest competitors. 

And those questions are on the minds of top editors and executives of news organizations. 

The Chinese market is a lucrative one, important to their profitability; and, separately, news value is high. There are crucial stories to be reported in this fast-changing nation of more than 1.3 billion people, the most populous country in the world.
The answers are playing out on newspaper front pages and websites, in newsroom personnel decisions and on corporate balance sheets.
Consider some of what’s happened:
• Last year, The Times published a story by David Barboza about the enormous wealth of China’s ruling family. 

The article won a Pulitzer Prize — and caused the Chinese government to shut down The Times’s website in China, an important part of its growth as a global business, at a cost of about $3 million in lost revenue to The Times so far.
• On Nov. 9, The Times published an article on its front page about one of its chief business-news competitors, Bloomberg News, describing how the organization had decided against the planned publication of an article for fear of reprisal by the Chinese government. 

The Times story, which came from unidentified Bloomberg employees, included denials by Bloomberg news executives, including the editor in chief, Matthew Winkler, that the story was killed.
A few days later, Bloomberg made a written complaint to me, through its ethics consultant Tom Goldstein, a former Columbia journalism dean. 

Mr. Goldstein called the article unfair and inaccurate. 

He criticized The Times for “sabotaging a competitor” by describing the news in the unpublished article.
After I began investigating the complaint by interviewing journalists at Bloomberg and at The Times, Bloomberg postponed and then canceled my scheduled interview with Mr. Winkler. 

A public relations representative told me that a follow-up Times article on Nov. 25— a broader look at Bloomberg’s corporate mission — was “much more accurate” and made the interview unnecessary.

The core of the Times story had to do with media self-censorship in China: A top American news executive’s telling his reporters that a story was being pulled back at least partly because it might get their news organization kicked out of the country. 

The details of Mr. Winkler’s conference call, in which he spoke to the reporters, are “verifiable,” The Times’s foreign editor, Joseph Kahn, told me. 

Other journalists, inside and outside The Times, mentioned the existence of audio recordings of that call.
I believe the initial Times article was essentially solid — and certainly eye-opening. 

Still, one can reasonably question whether it was sound judgment to put an article focused on a competitor’s news decision at the top of The Times’s front page.
• Fortune magazine reported last week that Chinese authorities barged into Bloomberg News offices in Shanghai and Beijing to conduct inspections shortly after The Times wrote about the disputed and still unpublished article. 

Chinese officials also demanded an apology from Mr. Winkler, Fortune reported. 

Mr. Winkler has built Bloomberg News into a top-flight news organization, one that has clearly done some of the best reporting from China. 

Publicly, Bloomberg has continued to say that its article was held back for more reporting, not permanently killed. 

One of the reporters of that article, Michael Forsythe, was suspended from Bloomberg; he later left the company. It would not be surprising if Mr. Forsythe soon joined the reporting staff of The Times.

• American reporters in China are having problems getting their residency visas renewed and soon may be forced to leave the country. 

What once was “an annual nonevent” has become “a very big worry,” said Jill Abramson, the executive editor at The Times. 

“I’m concerned that we won’t be able to do the unfettered coverage we need to do for our readers.”
The Times has a dozen people reporting on China who have New York Times accreditations from the Chinese government, including a photographer and a videographer. 

All are in Beijing except Mr. Barboza, who is based in Shanghai. 

The Times also has several correspondents and an editing operation in Hong Kong.
• The websites of The Wall Street Journal and Reuters were both recently blocked, and Bloomberg’s has been blocked for many months. 

And after officials ordered some companies to stop paying for Bloomberg’s data terminals — central to the company’s distinctive business model — the growth in sales slowed in China, a major potential market.
In short, the stakes are high and the circumstances difficult, both for news gathering and for news-based businesses.
From a news perspective, The Times has an advantage: It is still that rarity, a family-owned news organization. 

As Ms. Abramson noted, its publisher, Arthur Sulzberger Jr., “doesn’t flinch” from running critical China stories.
James L. McGregor, former Beijing bureau chief for The Wall Street Journal, offered this blunt assessment in The Times’s Nov. 25 article: “It’s looking increasingly like as a media company, you have a choice in China. You either do news or you do business, but it’s hard to do both.”
So far, The Times — and, to varying degrees, its competitors — has continued to “do news.” 

That’s worthwhile, and challenging, and not very likely to get easier.

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Bank Charted Business Linked to China Hiring

By BEN PROTESS and JESSICA SILVER-GREENBERG

An office of JPMorgan Chase in Beijing.

Tang Shuangning of the China Everbright Group. After his son was hired by JPMorgan, the bank’s business with China Everbright and a subsidiary appeared to pick up.

Federal authorities have obtained confidential documents that shed new light on JPMorgan Chase’s decision to hire the children of China’s ruling elite, securing emails that show how the bank linked one prominent hire to “existing and potential business opportunities” from a Chinese government-run company.
The documents, which also include spreadsheets that list the bank’s “track record” for converting hires into business deals, offer the most detailed account yet of JPMorgan’s “Sons and Daughters” hiring program, which has been at the center of a federal bribery investigation for months. 

The spreadsheets and emails — recently submitted by JPMorgan to authorities — illuminate how the bank created the program to prevent questionable hiring practices but ultimately viewed it as a gateway to doing business with state-owned companies in China, which commonly issue stock with the help of Wall Street banks.
The hiring practices seemed to have been an open secret at the bank’s headquarters in Hong Kong, according to the documents, copies of which were reviewed by The New York Times. 

In the email citing the “existing and potential business opportunities,” a senior JPMorgan executive in Hong Kong emphasized that the father of a job candidate was the chairman of the China Everbright Group, a state-controlled financial conglomerate. 

The executive also extolled the broader benefits of the hiring program, telling colleagues in another email: “You all know I have always been a big believer of the Sons and Daughters program — it almost has a linear relationship” with winning assignments to advise Chinese companies. 

Until now, the indications of a connection between the hires and business deals have not been so explicit.
In addition to the documents, interviews with current and former JPMorgan employees suggest that some people inside or affiliated with the bank bristled at the hiring strategy. 

At least two whistle-blowers have raised concerns, with one filing a complaint in April 2011 with the Hong Kong stock exchange and another coming forward to American authorities this year. 

Underscoring the worries, a junior banker in Hong Kong resigned from JPMorgan in December 2011, writing in an email that “I do not think my family is in a position to help you to the extent as others did: bring their family business to the firm.”
The scrutiny of JPMorgan, which has not been accused of any wrongdoing, could provide a template for federal authorities as they expand their investigation to include the hiring practices of at least five other Wall Street banks conducting business in China, according to interviews with people briefed in the inquiry who were not authorized to speak publicly. 

Those investigations from the Securities and Exchange Commission, which are at an early stage, involve Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley. 

All five banks declined to comment.
JPMorgan is cooperating with the government inquiries from the S.E.C. and the United States attorney’s office in Brooklyn, which are examining whether the bank improperly swapped job offers and consulting contracts for business with state-owned Chinese companies. 

China’s economy is highly regulated, and many of its biggest companies are state-controlled.
There is no indication that executives at JPMorgan’s headquarters in New York were aware of the hiring practices described in the documents. 

And authorities might ultimately conclude that the bank’s hiring, while aggressive, did not cross a legal line.
JPMorgan declined to comment.
The S.E.C. and the prosecutors in Brooklyn also declined to comment.
The breadth of the investigations underscore how pervasive the hiring practices may have become in China. For two decades, Wall Street banks have sought out China’s so-called princelings, turning family and friends of senior officials into bank employees and consultants.
The documents reviewed by The Times, along with the interviews, suggest that some executives at JPMorgan felt a need to scramble to compete with Wall Street rivals that already had footholds in China. JPMorgan may have adopted some of their hiring strategies — and even shared employees and consultants.
Fullmark Consultants, a firm that JPMorgan hired in 2006 to help improve its standing in China, also did business with Credit Suisse, according to interviews. 

Fullmark, which received a $75,000-a-month contract over two years from JPMorgan, was run by Wen Ruchun, the only daughter of Wen Jiabao, who at the time was China’s prime minister, with ultimate responsibility over state-owned companies. 

In the contract with JPMorgan and other clients, which is now at the center of the federal bribery investigation, Ms. Wen used the alias “Lily Chang.”
The S.E.C. and prosecutors are building their investigation around the Foreign Corrupt Practices Act, a 1977 law that makes it illegal for United States companies to exchange “anything of value” with foreign officials to win “an improper advantage” in obtaining business. 

Federal authorities have adopted a tougher stance in recent years, taking aim at American companies suspected of acting with “corrupt intent,” or with an expectation of trading a job for government business.
It is unclear whether JPMorgan ever reached an upfront agreement with Chinese government officials. 

And the records reviewed by The Times do not suggest that the employees were unqualified. 

According to documents and interviews with current and former employees, JPMorgan created the “Sons and Daughters” program in 2006 with the expectation that the hires would receive heightened scrutiny.
But by 2009, the “Sons and Daughters” program was putting the job candidates on the fast track to employment. 

The documents show that applicants from prominent Chinese families faced less stringent hiring standards — and fewer job interviews — than the average junior-level hire.
The bank once proposed another program for “full-time referrals” that would have offered the well-connected hires a one-year contract worth $70,000 to $100,000. 

The program, internal documents said, might offer “directly attributable linkage to business opportunity.”
JPMorgan also briefly kept “historical deal conversion” spreadsheets, according to interviews with people briefed on the investigation. 

In one column, JPMorgan listed job candidates; in another, the bank recorded its “track record” for winning business from companies tied to those candidates. 

Other spreadsheets listed well-connected hires and the revenue JPMorgan earned from deals with private and state-owned Chinese companies linked to those hires, documents show.
In discussions with authorities, the people briefed on the investigation said, JPMorgan has explained that it did not connect revenue to the “Sons and Daughters” program. 

Instead, the bank has said, the spreadsheets were meant to assess whether JPMorgan bankers, in hopes of securing full-time jobs for some interns in the program, had exaggerated the revenue received from state-owned companies.
The spreadsheets included about 30 employees with ties to state-owned companies or Communist Party officials, including the daughter of the deputy minister of propaganda, a relative of a Chinese financial regulator and the nephew of the executive chairman at Sinotruk, which is part of a state-owned trucking enterprise.
JPMorgan also tracked the revenue it received from private Asian companies that referred job candidates to the bank, a practice that would not fall under the Foreign Corrupt Practices Act. 

One hire was connected to Fubon Financial Holding, a financial services conglomerate in Taiwan that, according to the spreadsheet, produced 2009 revenue of $900,000 for JPMorgan.
JPMorgan bankers in Hong Kong coveted the business with Fubon. 

In an August 2010 email reviewed by The Times, a JPMorgan banker in Hong Kong explained that the bank had “picked up a new mandate in Taiwan today,” but that holding onto the deal would depend on securing a job for someone related to a company executive.
“All we have to do,” the banker said, is secure the relative “a full-time analyst job at JPM in N.Y.”
The problem, another employee in Hong Kong acknowledged, was that the candidate’s “napping habit will be an eye-opening experience for our N.Y. colleagues.”
While the email appears to suggest a quid pro quo, the message is unlikely to alarm federal authorities, because it involves a private company rather than a state-owned enterprise.
But the bank’s hiring of Tang Xiaoning, a onetime Goldman and Citigroup employee whose father is the chairman of the China Everbright Group, appeared to encapsulate the spirit of the “Sons and Daughters” program for state-owned clients.
The father, Tang Shuangning, approached a JPMorgan executive in Hong Kong in March 2010 about a position for his son, records and interviews show. 

The executive, who led JPMorgan’s China investment banking unit, welcomed the request and urged his colleagues in an email a day later to discuss “how we can leverage more on this account going forward.” 

But in an internal compliance form, the executive played down the significance of hiring Mr. Tang, documents show, saying there was “no expected benefit.”
By that point in March 2010, JPMorgan appeared to do little if any business with China Everbright, according to securities filings and news reports.
But shortly after Mr. Tang’s father approached JPMorgan, a China Everbright subsidiary hired the bank to advise on a $300 million private offering of shares, according to interviews. 

And in 2011, after Mr. Tang worked at JPMorgan for several months, China Everbright’s banking subsidiary hired JPMorgan as one of several financial advisers on its decision to become a public company, a deal that was delayed amid turmoil on the world’s markets.
About that time, JPMorgan offered a second one-year contract to Mr. Tang, who was prevented from having any role in working on China Everbright deals. 

Mr. Tang, executives said at the time, had received generally positive performance reviews. 

He also had previously earned a master’s degree in international affairs from Columbia University.
While Mr. Tang worked at JPMorgan, the assignments from his father’s company continued to pile up for the bank. 

In 2012, China Everbright International, a subsidiary focused on alternative energy businesses, hired JPMorgan to advise on a $162 million sale of shares, according to Standard & Poor’s Capital IQ, a research service.
In May of that year, as Mr. Tang’s contract was expiring, JPMorgan faced a turning point. 

But at the urging of the JPMorgan investment banking executive, Mr. Tang received another extension.
“Given where we are on China Everbright, I think we may need another contract for Xiaoning,” the executive wrote.
Zhang Rong, the junior banker who resigned from JPMorgan in December 2011, also highlighted the bank’s hiring strategy. 

On an overnight flight from Hong Kong to the United States, Mr. Zhang drafted a resignation letter that lamented how “All of my efforts seemed meaningless to you and you tend to judge me solely on the relation part of me.”
Mr. Zhang said he was quitting because he could no longer “live under the shadow of my father.” 

The father, he indicated, had ties to the China Post Group, which runs the Chinese postal service and other subsidiaries.
In a statement, the China Post Group denied that Zhang Rong was connected to the company or its top executives. 

The company declined to provide further details.
Mr. Zhang promised in the email that his father would still “try his best to coordinate the meeting” between JPMorgan and China Post. 

And Mr. Zhang, who sent the email just days before Christmas, assured JPMorgan that he did not harbor any hard feelings.
“Wish you and your family merry Xmas and happy New Year!”

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