Apple CEO signed secret $275 billion deal to placate, modernize China

Apple chief executive Tim Cook reportedly paid a personal visit to China in 2016 and signed a secret agreement with the government of the communist superpower worth $275 billion.

The deal was "an effort to appease Chinese officials and improve business in the country," according to The Hill, citing internal Apple documents obtained by the news outlet The Information. 

In the deal, which had not been previously disclosed even to Apple shareholders, the company promised to help improve China’s economy and technology sector with investments, workforce trainings, and other business deals over the next five years.

This was the beginning of Apple’s turnaround in the country. At the time, Chinese authorities were cold to the company because, according to Apple Insider it was “not doing enough to help the local economy, internal documents supposedly state." 

Cook made multiple visits to lobby officials on Apple’s behalf, especially against regulations that would have affected staple services in the Apple ecosystem like the App Store and Apple Pay.

The key deal was a 1,250-word agreement where Apple pledged to work with Chinese manufacturers to create “the most advanced manufacturing technologies” and to “support the training of high-quality Chinese talents.” It also agreed to increase the use of Chinese-manufactured components and collaborate with Chinese software firms and universities for future projects.

Both Apple and the Chinese government kept quiet about the deal, which allowed Apple to placate China as a major market and manufacturing base while not appearing to appease China to outside countries.  

"Apple likely wanted to avoid the optics of groveling to the Chinese government," said Victor Shih, a political economist.

The deal was first reported by The Information, a subscription-only news website aimed at tech executives. There also was an option to extend for an extra year, to May 2022.

The agreement also says Apple would “strictly abide by Chinese laws and regulations,” a phrase that popped up whenever it discussed privacy issues in the communist country.

Apple is the No. 1 cellphone maker in China today, even setting a record for quarterly revenue last June. The company continues to expand both its retail and research presence in the country.

"The decision to hide the deal from shareholders will make it even harder for Cook to justify now," according to Reuters. "The heightened geopolitical tension also augurs greater blowback at home."