Commentary on Political Economy

Tuesday 31 December 2019


Chinese Scientist Is Accused of Smuggling Lab Samples, Amid Crackdown on Research Theft

Zaosong Zheng, a promising cancer researcher, confessed that he had planned to take the stolen samples to Sun Yat-sen Memorial Hospital, and publish the results under his own name.
Credit...Steven Senne/Associated Press
BOSTON — Zaosong Zheng was preparing to board Hainan Airlines Flight 482, nonstop from Boston to Beijing, when customs officers pulled him aside.
Inside his checked luggage, wrapped in a plastic bag and then inserted into a sock, the officers found what they were looking for: 21 vials of brown liquid — cancer cells — that the authorities say Mr. Zheng, 29, a cancer researcher, took from a laboratory at Beth Israel Deaconess Medical Center.
Under questioning, court documents say, Mr. Zheng acknowledged that he had stolen eight of the samples and had replicated 11 more based on a colleague’s research. When he returned to China, he said, he would take the samples to Sun Yat-sen Memorial Hospital and turbocharge his career by publishing the results in China, under his own name.
Mr. Zheng’s arrest on Dec. 10 signified an escalation in the F.B.I.’s efforts to root out scientists who, the authorities say, are stealing research from American laboratories. Federal prosecutors warn that he may be charged with transporting stolen goods or with the theft of trade secrets, a felony that brings a prison term of up to 10 years.
At a hearing on Monday, Magistrate Judge David Hennessy granted prosecutors’ wish to hold Mr. Zheng without bail, noting that the theft appeared to have the support of the Chinese government. Two other Chinese scientists who worked in the same lab as Mr. Zheng had successfully smuggled stolen biological material out of the country, prosecutors say.
Mr. Zheng’s case is the first to unfold in the laboratories clustered around Harvard University, but it is not likely to be the last. Federal officials are investigating hundreds of cases involving the potential theft of intellectual property by visiting scientists, nearly all of them Chinese nationals.
  • The perfect gift for everyone on your list.
Gift subscriptions to The New York Times. Starting at €20.
Christopher Wray, director of the F.B.I., described the researchers as “nontraditional collectors” of intelligence acting at the behest of the Chinese government, part of a collective effort to “steal their way up the economic ladder at our expense.”
Dr. Ross McKinney Jr., chief scientific officer of the Association of American Medical Colleges, said the actions Mr. Zheng was accused of were especially bold.
“This is one of the few cases where there’s been stealing of physical material as well as the stealing of ideas,” he said. “It’s an escalation over most of what we’ve been seeing.”
Researchers of Chinese descent make up nearly half of the work force in American research laboratories, in part because American-born scientists are drawn to the private sector and less interested in academic careers, Dr. McKinney said. Among the 6,000 Chinese scientists who have received grants from the National Institutes of Health, around 180 are under investigation for possible violation of intellectual property law, he said.
Harvard University had sponsored Mr. Zheng’s visa starting on Sept. 4, 2018, according to Jason A. Newton, a spokesman for the university. The visa support ended when Mr. Zheng lost his job at Beth Israel Deaconess Medical Center, he said.
The hospital said in a statement that it was cooperating with the investigation. “Any efforts to compromise research undermine the hard work of our faculty and staff to advance patient care,” said Jennifer Kritz, the hospital’s director of communication.
A message left for Brendan O. Kelley, Mr. Zheng’s lawyer, was not returned.
Court records sketch out a cat-and-mouse game between Mr. Zheng and Kara Spice, the F.B.I. special agent assigned to the case. Customs and Border Protection agents had been warned that he was “a high risk for possibly exporting biological undeclared biological material,” and inspected his luggage in the airline’s bag room.
At first, Mr. Zheng deflected their interest in the 21 vials, telling the agents that they “were not important and had nothing to do with his research.” Then he offered another explanation, saying that they had been given to him by a friend and that he had no plans to do anything with them.
“Zheng could not explain why he was attempting to leave the United States with the vials concealed in a sock in his checked bag,” Ms. Spice’s statement says. Shortly thereafter, he confessed to stealing the material.
Mr. Zheng booked another flight to China the following day, but was detained by F.B.I. agents before he could board it, court documents say. Through a Mandarin interpreter, he waived his Miranda rights and told the agents he intended to use the samples for cancer research. At that point, he was arrested.
Agents learned more when they visited Mr. Zheng’s apartment, according to court documents. His former roommate, a fellow medical researcher named Jialin Li, told them that Mr. Zheng had packed all his possessions in preparation for his Dec. 9 flight, suggesting that he did not intend to return to the United States.
Mr. Li also told them that two other Chinese researchers, Lei Liu and Leina Mo, who had worked in the same laboratory at Beth Israel Deaconess Medical Center, had managed to smuggle biological material into China without getting caught, according to court documents.
Mr. Zheng’s theft “was not an isolated incident,” prosecutors stated in the motion to hold him without bail. “Rather, it appears to have been a coordinated crime, with likely involvement by the Chinese government, as two other Chinese nationals working in the same lab have also stolen biological materials and smuggled them out of the United States.”

Sunday 29 December 2019

Chinese business & finance Add to myFT China boosts lending to small businesses despite risk Concerns grow that campaign is driving up bad loans rather than supporting economy Many of the better-managed small companies are declining the offer of loans

A government-led campaign to boost small business financing by 30 per cent has prompted Chinese banks to relax lending standards and lower interest rates even though the sector is known for high numbers of defaults on loans. The lending spree makes small companies the latest beneficiaries of Beijing’s efforts to rescue the nation’s ailing economy after GDP growth fell to a 30-year low. However, concerns are growing that a surge in lending to subprime borrowers could result in an increase in bad loans rather than a boost to the real economy. Chinese banks lent a record Rmb2tn ($286bn) to small companies with limited access to credit in the first 10 months of this year, the China Banking and Insurance Regulatory Commission announced this month. That is up from Rmb1.7tn in the whole of 2018. Average interest rates paid on small business loans fell from 7.4 per cent to 6.8 per cent over the same period. Large banks are leading the wave. The Industrial and Commercial Bank of China, the nation’s largest lender by assets, reported a 48 per cent jump in outstanding small business loans in the first 11 months of the year, according to a press release. ICBC currently charges small companies as little as 3.9 per cent interest, compared with the benchmark lending rate of 4.35 per cent.

 The Chinese government is sacrificing banking profits to rescue small firms Ji Shaofeng, former regulatory official However, by the end of May, Chinese banks were also reporting a 5.9 per cent non-performing loan ratio for small businesses, according to the People’s Bank of China, against 1.4 per cent on loans to large companies. Even if the borrowers do not default, the increase in lending to small companies is often unprofitable. Many lenders are pricing small business loans at below the 8 per cent average cost of funds for small business loans, according to Ji Shaofeng, a former official at the China Banking and Insurance Regulatory Commission. “The Chinese government is sacrificing banking profits to rescue small firms,” said Mr Ji. The ICBC Branch in Dezhou, a city in Shandong province in China’s east, provides such a large subsidy on its small business loans that it is equivalent to a cut of 60 basis points in its lending rate. “We want to give out profits to business borrowers as much as possible,” said the branch, in a statement. Such generosity, said Mr Ji, was not likely to continue in the long term because lenders had “little incentive to run a lossmaking business”. Unfortunately for the lenders, many of the better-managed small companies are declining the offer of loans. Dong Huaqiang, owner of a leading machine parts factory in the eastern city of Cixi, near Ningbo in Zhejiang province, turned down a loan offer this month from the Agricultural Bank of China at an interest rate of 3.3 per cent, one of the lowest in the nation. “I didn’t want to borrow because I couldn’t find lucrative investment opportunities,” said Mr Dong. Recommended Chinese economy China to introduce market-driven lending rate To meet Beijing’s lending target, banks are forced to work with riskier borrowers. A loan officer at the ABC branch in Ningbo said the lender was allowing borrowers with six overdue credit card payments over the preceding year and 12 credit checks — double the number of three overdue payments and six checks that were the limit a year ago. “Our top priority is to fill the lending quota rather than controlling risks,” said the officer. Analysts said the proliferation of risky loans will lead to a surge in non-performing loans. “The current policy is making banks serve poorly managed firms,” said Mr Ji. “It goes against market principles

Saturday 28 December 2019

In China’s Crackdown on Muslims, Children Have Not Been Spared

In Xinjiang the authorities have separated nearly half a million children from their families, aiming to instill loyalty to China and the Communist Party.
Credit...Giulia Marchi for The New York Times
HOTAN, China — The first grader was a good student and beloved by her classmates, but she was inconsolable, and it was no mystery to her teacher why.
“The most heartbreaking thing is that the girl is often slumped over on the table alone and crying,” he wrote on his blog. “When I asked around, I learned that it was because she missed her mother.”
The mother, he noted, had been sent to a detention camp for Muslim ethnic minorities. The girl’s father had passed away, he added. But instead of letting other relatives raise her, the authorities put her in a state-run boarding school — one of hundreds of such facilities that have opened in China’s far western Xinjiang region.
As many as a million ethnic Uighurs, Kazakhs and others have been sent to internment camps and prisons in Xinjiang over the past three years, an indiscriminate clampdown aimed at weakening the population’s devotion to Islam. Even as these mass detentions have provoked global outrage, though, the Chinese government is pressing ahead with a parallel effort targeting the region’s children.
Nearly a half million children have been separated from their families and placed in boarding schools so far, according to a planning document published on a government website, and the ruling Communist Party has set a goal of operating one to two such schools in each of Xinjiang’s 800-plus townships by the end of next year.
The party has presented the schools as a way to fight poverty, arguing that they make it easier for children to attend classes if their parents live or work in remote areas or are unable to care for them. And it is true that many rural families are eager to send their children to these schools, especially when they are older.
  • The perfect gift for everyone on your list.
Gift subscriptions to The New York Times. Starting at $15.
But the schools are also designed to assimilate and indoctrinate children at an early age, away from the influence of their families, according to the planning document, published in 2017. Students are often forced to enroll because the authorities have detained their parents and other relatives, ordered them to take jobs far from home or judged them unfit guardians.
The schools are off limits to outsiders and tightly guarded, and it is difficult to interview residents in Xinjiang without putting them at risk of arrest. But a troubling picture of these institutions emerges from interviews with Uighur parents living in exile and a review of documents published online, including procurement records, government notices, state media reports and the blogs of teachers in the schools.
Credit...Giulia Marchi for The New York Times
State media and official documents describe education as a key component of President Xi Jinping’s campaign to wipe out extremist violence in Xinjiang, a ruthless and far-reaching effort that also includes the mass internment camps and sweeping surveillance measures. The idea is to use the boarding schools as incubators of a new generation of Uighurs who are secular and more loyal to both the party and the nation.
“The long-term strategy is to conquer, to captivate, to win over the young generation from the beginning,” said Adrian Zenz, a researcher at the Victims of Communism Memorial Foundation in Washington who has studied Chinese policies that break up Uighur families.
To carry out the assimilation campaign, the authorities in Xinjiang have recruited tens of thousands of teachers from across China, often Han Chinese, the nation’s dominant ethnic group. At the same time, prominent Uighur educators have been imprisoned and teachers have been warned they will be sent to the camps if they resist.
Thrust into a regimented environment and immersed in an unfamiliar culture, children in the boarding schools are only allowed visits with family once every week or two — a restriction intended to “break the impact of the religious atmosphere on children at home,” in the words of the 2017 policy document.
The campaign echoes past policies in Canadathe United States and Australia that took indigenous children from their families and placed them in residential schools to forcibly assimilate them.
“The big difference in China is the scale and how systematic it is,” said Darren Byler, an anthropologist at the University of Colorado who studies Uighur culture and society.
Public discussion in China of the trauma inflicted on Uighur children by separating them from their families is rare. References on social media are usually quickly censored. Instead, the state-controlled news media focuses on the party’s goals in the region, where predominantly Muslim minorities make up more than half the population of 25 million.
Visiting a kindergarten near the frontier city of Kashgar this month, Chen Quanguo, the party’s top official in Xinjiang, urged teachers to ensure children learn to “love the party, love the motherland and love the people.”
Credit...The New York Times
Abdurahman Tohti left Xinjiang and immigrated to Turkey in 2013, leaving behind cotton farming to sell used cars in Istanbul. But when his wife and two young children returned to China for a visit a few years ago, they disappeared.
He heard that his wife was sent to prison, like many Uighurs who have traveled abroad and returned to China. His parents were detained too. The fate of his children, though, was a mystery.
Then in January, he spotted his 4-year-old son in a video on Chinese social media that had apparently been recorded by a teacher. The boy seemed to be at a state-run boarding school and was speaking Chinese, a language his family did not use.
Mr. Tohti, 30, said he was excited to see the child, and relieved he was safe — but also gripped by desperation.
“What I fear the most,” he said, “is that the Chinese government is teaching him to hate his parents and Uighur culture.”
Beijing has sought for decades to suppress Uighur resistance to Chinese rule in Xinjiang, in part by using schools in the region to indoctrinate Uighur children. Until recently, though, the government had allowed most classes to be taught in the Uighur language, partly because of a shortage of Chinese-speaking teachers.
Then, after a surge of antigovernment and anti-Chinese violence, including ethnic riots in 2009 in Urumqi, the regional capital, and deadly attacks by Uighur militants in 2014, Mr. Xi ordered the party to take a harder line in Xinjiang, according to internal documents leaked to The New York Times earlier this year.
In December 2016, the party announced that the work of the region’s education bureau was entering a new phase. Schools were to become an extension of the security drive in Xinjiang, with a new emphasis on the Chinese language, patriotism and loyalty to the party.
In the 2017 policy document, posted on the education ministry’s website, officials from Xinjiang outlined their new priorities and ranked expansion of the boarding schools at the top.
Without specifying Islam by name, the document characterized religion as a pernicious influence on children, and said having students live at school would “reduce the shock of going back and forth between learning science in the classroom and listening to scripture at home.”
By early 2017, the document said, nearly 40 percent of all middle-school and elementary-school age children in Xinjiang — or about 497,800 students — were boarding in schools. At the time, the government was ramping up efforts to open boarding schools and add dorms to schools, and more recent reports suggest the push is continuing.
Credit...The New York Times
Chinese is also replacing Uighur as the main language of instruction in Xinjiang. Most elementary and middle school students are now taught in Chinese, up from just 38 percent three years ago. And thousands of new rural preschools have been built to expose minority children to Chinese at an earlier age, state media reported.
The government argues that teaching Chinese is critical to improving the economic prospects of minority children, and many Uighurs agree. But Uighur activists say the overall campaign amounts to an effort to erase what remains of their culture.
Several Uighurs living abroad said the government had put their children in boarding schools without their consent.
Mahmutjan Niyaz, 33, a Uighur businessman who moved to Istanbul in 2016, said his 5-year-old daughter was sent to one after his brother and sister-in-law, the girl’s guardians, were confined in an internment camp.
Other relatives could have cared for her but the authorities refused to let them. Now, Mr. Niyaz said, the school has changed the girl.
“Before, my daughter was playful and outgoing,” he said. “But after she went to the school, she looked very sad in the photos.”
Credit...Giulia Marchi for The New York Times
In a dusty village near the ancient Silk Road city of Hotan in southern Xinjiang, nestled among fields of barren walnut trees and simple concrete homes, the elementary school stood out.
It was surrounded by a tall brick wall with two layers of barbed wire on top. Cameras were mounted on every corner. And at the entrance, a guard wearing a black helmet and a protective vest stood beside a metal detector.
It wasn’t always like this. Last year, officials converted the school in Kasipi village into a full-time boarding school.
Kang Jide, a Chinese language teacher at the school, described the frenzied process on his public blog on the Chinese social media platform WeChat: In just a few days, all the day students were transferred. Classrooms were rearranged. Bunk beds were set up. Then, 270 new children arrived, leaving the school with 430 boarders, each in the sixth grade or below.
Officials called them “kindness students,” referring to the party’s generosity in making special arrangements for their education.
The government says children in Xinjiang’s boarding schools are taught better hygiene and etiquette as well as Chinese and science skills that will help them succeed in modern China.
“My heart suddenly melted after seeing the splendid heartfelt smiles on the faces of these left-behind children,” said a retired official visiting a boarding elementary school in Lop County near Hotan, according to a state media report. He added that the party had given them “an environment to be carefree, study happily, and grow healthy and strong.”
But Mr. Kang wrote that being separated from their families took a toll on the children. Some never received visits from relatives, or remained on campus during the holidays, even after most teachers left. And his pupils often begged to use his phone to call their parents.
“Sometimes, when they hear the voice on the other end of the call, the children will start crying and they hide in the corner because they don’t want me to see,” he wrote.
“It’s not just the children,” he added. “The parents on the other end also miss their children of course, so much so that it breaks their hearts and they’re trembling.”
The internment camps, which the government describes as job training centers, have cast a shadow even on students who are not boarders. Before the conversion of the school, Mr. Kang posted a photo of a letter that an 8-year-old girl had written to her father, who had been sent to a camp.
“Daddy, where are you?” the girl wrote in an uneven scrawl. “Daddy, why don’t you come back?”
“I’m sorry, Daddy,” she continued. “You must study hard too.”
Credit...Giulia Marchi for The New York Times
Nevertheless, Mr. Kang was generally supportive of the schools. On his blog, he described teaching Uighur students as an opportunity to “water the flowers of the motherland.”
“Kindness students” receive more attention and resources than day students. Boarding schools are required to offer psychological counseling, for example, and in Kasipi, the children were given a set of supplies that included textbooks, clothes and a red Young Pioneer scarf.
Learning Chinese was the priority, Mr. Kang wrote, though students were also immersed in traditional Chinese culture, including classical poetry, and taught songs praising the party.
On a recent visit to the school, children in red and blue uniforms could be seen playing in a yard beside buildings marked “cafeteria” and “student dormitory.” At the entrance, school officials refused to answer questions.
Tighter security has become the norm at schools in Xinjiang. In Hotan alone, more than a million dollars has been allocated in the past three years to buy surveillance and security equipment for schools, including helmets, shields and spiked batons, according to procurement records. At the entrance to one elementary school, a facial recognition system had been installed.
Mr. Kang recently wrote on his blog that he had moved on to a new job teaching in northern Xinjiang. Reached by telephone there, he declined to be interviewed. But before hanging up, he said his students in Kasipi had made rapid progress in learning Chinese.
“Every day I feel very fulfilled,” he said.
Credit...Giulia Marchi for The New York Times
To carry out its campaign, the party needed not only new schools but also an army of teachers, an overhaul of the curriculum — and political discipline. Teachers suspected of dissent were punished, and textbooks were rewritten to weed out material deemed subversive.
“Teachers are the engineers of the human soul,” the education bureau of Urumqi recently wrote in an open letter, deploying a phrase first used by Stalin to describe writers and other cultural workers.
The party launched an intensive effort to recruit teachers for Xinjiang from across China. Last year, nearly 90,000 were brought in, chosen partly for their political reliability, officials said at a news conference this year. The influx amounted to about a fifth of Xinjiang’s teachers last year, according to government data.
The new recruits, often ethnic Han, and the teachers they joined, mostly Uighurs, were both warned to toe the line. Those who opposed the Chinese-language policy or resisted the new curriculum were labeled “two-faced” and punished.
The deputy secretary-general of the oasis town of Turpan, writing earlier this year, described such teachers as “scum of the Chinese people” and accused them of being “bewitched by extremist religious ideology.”
Teachers were urged to express their loyalty, and the public was urged to keep an eye on them. A sign outside a kindergarten in Hotan invited parents to report teachers who made “irresponsible remarks” or participated in unauthorized religious worship.
Officials in Xinjiang also spent two years inspecting and revising hundreds of textbooks and other teaching material, according to the 2017 policy document.
Some who helped the party write and edit the old textbooks ended up in prison, including Yalqun Rozi, a prominent scholar and literary critic who helped compile a set of textbooks on Uighur literature that were used for more than a decade.
Mr. Rozi was charged with attempted subversion and sentenced to 15 years in prison last year, according to his son, Kamaltürk Yalqun. Several other members of the committee that compiled the textbooks were arrested too, he said.
“Instead of welcoming the cultural diversity of Uighurs, China labeled it a malignant tumor,” said Mr. Yalqun, who lives in Philadelphia.
There is evidence that some Uighur children have been sent to boarding schools far from their homes.
Kalbinur Tursun, 36, entrusted five of her children to relatives when she left Xinjiang to give birth in Istanbul but has been unable to contact them for several years.
Last year, she saw her daughter Ayshe, then 6, in a video circulating on Chinese social media. It had been posted by a user who appeared to be a teacher at a school in Hotan — more than 300 miles away from their home in Kashgar.
“My children are so young, they just need their mother and father,” Ms. Tursun said, expressing concern about how the authorities were raising them. “I fear they will think that I’m the enemy — that they won’t accept me and will hate me.”
Credit...The New York Times
Fatima Er contributed reporting from Istanbul.