China’s Big Tech crackdown: Will Beijing’s efforts kill the country’s most vibrant economic sector?
- China’s full complement of regulators have let loose on Big Tech after receiving Beijing’s blessing last winter to curb the ‘irrational expansion of capital’
- Investors ranging from venture capitalists to secondary market investors are all trying to second-guess what is coming next from regulators
Beijing’s campaign to rein in the power and influence of Big Tech in the country is reaching new heights, pummeling tech stocks and leading many analysts to question if the tougher scrutiny could end up emasculating the most vibrant sector of China’s economy.
China’s full complement of regulators have let loose on Big Tech after receiving Beijing’s blessing last winter to curb the “irrational expansion of capital” and formation of monopolies that may threaten social stability. That escalating effort has now resulted in a market rout amid a rising perception that the country’s leadership does not care if investors are burned.
“There has been strong competition among different government bodies in the recent crackdown on the tech sector,” said Sun Xin, lecturer in Chinese and East Asian Business at King’s College London. “They’re all seeking to take advantage of the Chinese Communist Party’s elevated concerns about Big Tech to strengthen their own authority and advance their own bureaucratic interests.”
Big Tech, including the likes of Alibaba Group Holding, Tencent Holdings, services giant Meituan and rising stars such as ByteDance, was until recently regarded as a poster child for China’s new innovation economy – creating millions of jobs and modernising the country. Now the tech sector is on the back foot, accused by Beijing of abusing market dominance, mistreating gig workers and showing an arrogant disdain for the Party’s leadership and wider socialist principles.
Now many of the innovations China has driven in recent years such as internet shopping, online payments and big data-driven efficiencies – hailed as contributions to civilisation on a par with the invention of the compass and gunpowder – are under regulatory scrutiny.
