“Only in America” (Are Lawmakers this Clueless about China)
The Internet had a grand time this week mocking members of the U.S. Senate for revealing in their questions to Facebook founder Mark Zuckerberg how little they understand about technology. There was Sen. Orrin Hatch (R-Utah), the senior statesman from my home state, who couldn’t imagine how a “free service” like Facebook could possibly make money. Or Sen. Brian Schatz (D-Hawaii), who seemed flummoxed by the idea that Facebook could read “e-mails” about the movie Black Panther sent via WhatsApp. And how about Sen. Lindsay Graham (R-South Carolina), who wanted to know whether Twitter is to Facebook as Chevy is to Ford?
But for me, the biggest howler came during Zuck’s exchange with Sen. Dan Sullivan (R-Alaska), who apparently thought he was opening with a softball question: “Mr. Zuckerberg, quite a story, right? Dorm room to the global behemoth that you guys are,” he began. “Only in America, would you guys agree with that?”
The query seemed to leave Zuckerberg momentarily perplexed. His reply: “Senator, mostly in America.”
The senator doubled down. “You couldn’t do this is China, right?”
Zuckerberg’s response, which you can watch here, is priceless. You can see him, at 0:17-0:19, genuinely struggle to keep a straight face before eventually mustering a droll understatement. “Well, uh….well, senator, there are some very strong Chinese Internet companies.” But Sullivan just blunders ahead. “Right but, you’re supposed to answer ‘yes’ to this question. Okay, come on, I’m trying to help you, right? Gimme a break. You’re in front of a bunch of senators. The answer is ‘yes’!”
You can’t help wonder what’s going through Zuckerberg’s head at that moment. In the video of the exchange, the hearing room erupts into laughter. Zuckerberg laughs, too, and shrugs awkwardly, as if recognizing the infinite futility of attempting to inject facts and reason into a congressional hearing. Give him credit for restraint. Sullivan’s question wasn’t just clueless, it was monumentally clueless—which Mark Zuckerberg knows as well as anyone.
At Fortune, we’ve been writing at length about the state of innovation and technological development in China. Even a cursory glance at that coverage (not to mention that of our competitors) would dispel the mind-boggling arrogance of Sullivan’s assertion that “only America” can create dynamic Internet companies. We’ve chronicled companies like Huawei Technologies, which last year filed more patent applications than any other company in the world; Tencent Holdings, whose WeChat app allows 900 million Chinese users to chat, shop, pay, play and do just about anything else; Baidu, which has vowed to have autonomous vehicles ready for sale in China long before Tesla or Google are ready to roll out their versions in the United States; and DJI, once an obscure maker of remote controls for toy helicopters and now the world’s leading manufacturer of consumer drones.
As I noted in Fortune last November, China now rivals the U.S. as one of the world’s two true technology superpowers. The founders of Alibaba and Tencent Holdings have origin stories that are every bit as compelling as that of Zuckerberg and Facebook. I would argue that today both companies are, in many ways, more innovative than Facebook, Google or Twitter.
Zuckerberg, perhaps more keenly than any other U.S. Internet mogul, knows this. He has clung tenaciously to the dream that someday his company, which has been banned in China since 2009, will be allowed to compete again there. He visits China regularly, most recently in October 2017, welcomes Chinese officials to Facebook headquarters in Menlo Park, California, and has even learned to speak Mandarin.
And yet, in both Silicon Valley and Washington, the delusion that “only America” can innovate or create “behemoth” tech companies persists. That’s one reason Fortune has launched the Fortune Global Technology Forum, which will be held this year on November 29-30 in Guangzhou, China. The forum will provide a unique opportunity for business and government leaders from around the world to meet face to face with top tech innovators from China. Sen. Sullivan, you’re invited!
More China news below.
Trade and Economy
Surprise shortfall. China posted a surprise trade deficit on Friday, after Chinese exports fell 2.7% year-on-year in March due to the Chinese New Year slowdown this year. Imports increased 14.4 percent, leaving a trade deficit of $4.98 billion, the first since February 2017. The trade surplus with the U.S. widened to $15.4 billion, the most in more than a year. Bloomberg
It’s not you, it’s me. Recent measures announced by China have “nothing to do with the trade disputes with the U.S.”, a Chinese Commerce Ministry spokesman said, insisting they were not concessions. President Xi pledged at the Boao Forum this week to open China’s markets to foreign business, increase imports and raise protections for intellectual property, among other initiatives. Wall Street Journal
Deadlines detailed. China revealed a detailed timeline to open its financial markets to foreign investors. The details were incremental to previously announced pledges but China for the first time set fixed dates for their implementation. Foreign firms will be able to take majority stakes in local JVs by June 30 and launch a trade link between its stock markets and London by end-2018. Bloomberg
We want in. After pulling out of the Trans-Pacific Trade Partnership on his third day in office, Trump now wants back in. Trump called the deal negotiated and signed under the Obama administration “a disaster” and “a rape to our country”, but is now embracing it to gain more leverage in his escalating trade feud with Beijing. Washington Post
Technology and Innovation
Chasing Ants. Alibaba affiliate Ant Financial aims to raise $9 b in a private funding round, which would value the company at $150b, making it the world’s biggest start-up, ahead of Uber. Alibaba plans to acquire a one-third stake in Ant, which operates Alipay, while Singaporean state investment firm Temasek Holdings wants to be the lead investor ahead of Ant’s anticipated IPO. Wall Street Journal
Naked marriage. WeWork has acquired Chinese rival Naked Hub to grow its China presence from its current 10,000 members in Beijing, Shanghai and Hong Kong to a combined 1 million members in Greater China by the end of 2021. Reuters
Alibaba astray. China’s central bank has issued Alipay a fine of around $28,500 US dollars for violating rules in three main aspects: failing to protect consumers’ rights, improperly gathering and using personal data, and for misleading product promotion. CGTN
Plenty of drive. All provincial and city governments in China are now authorised to allow testing of self-driving cars, according to new national guidelines released by the Chinese Ministry of Transport. Only a handful of cities, starting with Beijing four months ago, were allowed to pilot road tests, but the country hopes to keep pace with the U.S. in the global race to develop autonomous vehicles. Quartz
In Case You Missed It
China in push to lure overseas tech talent back home Financial Times
Politics and Policy
Overt Plot. The Belt and Road Initiative, China’s grand plan of connecting over 60 countries in Asia and Europe through infrastructure, and a cornerstone of Xi Jinping’s foreign policy, is not a Chinese conspiracy, said Xi at the Boao Forum this week. “It is neither the post-World War Two Marshall Plan, nor is it a Chinese conspiracy. If you had to (call it something), it’s an ‘overt plot’,” he said, according to state media Xinhua. Reuters
Sun down. Disgraced top Communist cadre Sun Zhengcai has admitted taking bribes of more than $27m in a video confession televised on state broadcaster CCTV this week. The former party chief of southwestern Chongqing was previously considered a contender for top leadership until he was unseated in July by a Xi loyalist as part of Xi’s anti-corruption drive. Nikkei Asian Review