Alibaba co-founder claims many Americans 'want to stop China' from upgrading its tech

  • Alibaba Co-Founder and Executive Vice President Joe Tsai told audiences at Recode's Code Conference that many Americans want to stop China from upgrading its technology and from becoming more innovative.
  • His comments came after Senator Mark Warner told an audience at the Code Conference that Chinese tech firms were "penetrated deeply" by the Chinese Communist Party.
Alibaba Co-Founder and Executive Vice President Joe Tsai speaking at the 2018 Code Conference.
Asa Mathat | Vox Media
Alibaba Co-Founder and Executive Vice President Joe Tsai speaking at the 2018 Code Conference.

An Alibaba co-founder alleged on Wednesday that many Americans want to stop China from upgrading its technology and from becoming more innovative.

Joe Tsai, who co-founded the tech juggernaut and is an executive vice president there, made that claim at a conference in California in response to a U.S. senator saying earlier at the event that Chinese tech firms may serve as agents of Beijing.

Those competing claims come amid the on-again off-again trade tensions between the U.S. and China. American officials allege that Chinese companies have thrived on innovations stolen from U.S. firms. And, on Tuesday, officials said they may yet impose tariffs on $50 billion of imports from China unless Beijing addressed the theft of American intellectual property.

In response, China said it was both surprised and saw the move as contrary to an agreement reached by both sides recently — and that it was ready to fight to protect its own interests.

The U.S. has also said that China often forced American companies looking to enter the Chinese market to transfer their technology to local state-owned or state-directed firms. Beijing has rejected those claims and said its regulatory measures do not require transfers from foreign companies.

In fact, Chinese media outlets have repeatedly asserted that American complaints about the tech sector are really just efforts to slow the country's rise as a global power.

"There's nothing wrong with a country wanting to upgrade its own manufacturing sector, go higher tech, be more innovative," Tsai said. "But then, from the Chinese perspective, what we're seeing is there are a lot of people in America that want to stop China from doing that."

After three decades of producing low-end manufacturing goods, Tsai said, China recognizes the need to develop better technology, upgrade its manufacturing sector and focus more on value-added areas like robotics, aeronautics and high-tech medical equipment.

Recently, Beijing made a major push with its "Made in China 2025" strategy, outlining the key tech sectors on which it would focus. The goal is to catch up with rivals like the United States and Germany. Those sectors include: chips that are used in smartphones, powerful computers and cloud computing systems, robotics, renewable energy equipment and fully electric and plug-in hybrid cars.

The Alibaba executive's comments came after U.S. Senator Mark Warner spoke onstage at the annual Code Conference, where he said that Chinese tech companies like Alibaba, Baidu and Tencent were all "penetrated deeply by the Communist Party." He claimed those firms owed as much loyalty to the Chinese government as they did to their shareholders.

Tsai, for his part, latched onto the senator's mention of China's single party, saying the "Communist Party, per se, seems like a dirty word here, but in China, that's the form of government."

He added that he disagreed with Warner's "characterization of Chinese companies" and claimed the senator was part of the group of Americans wanting to hold China back from advancing its technology.

"I still don't understand it," the Alibaba executive said.

Major Chinese smartphone makers Huawei and ZTE have come under intense scrutiny in the U.S. for their ties to China's government. Six top U.S. intelligence officials expressed distrust about the two companies to a Senate committee in February, and, when prompted, they indicated they would not recommend private citizens use products from the firms.

"We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks," FBI Director Chris Wray testified.

Earlier this year, the United States stopped American firms from selling to ZTE based on the company's business dealings with Iran and North Korea. Beijing and Washington have since been talking to work out a solution to help ZTE.

Amid the unpredictability of the trade tensions, Tsai said, Alibaba plans to continue focusing on how best to help American farmers and small businesses tap into the huge consumer market in China. He pointed to the country's middle class now demanding access to better goods and services, including many imported products.

"That's a great, huge opportunity for the producers, all around the world, including farmers, including small businesses in the United States. And that's what we're focused on."

Tsai, who heads Alibaba's global mergers and acquisitions plans, also said the company has not tried to conduct large acquisitions in the U.S. Instead, he added, it is looking for companies and entrepreneurs who want its help to expand into China.

— Reuters contributed to this report.