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China's Tech Titans: Back in Favor or Just a Temporary Truce? |
Every Lunar New Year, hundreds of millions of Chinese citizens gather around their TVs to watch the Spring Festival Gala, an annual spectacle featuring China's biggest stars. Over the years, the event has showcased global icons like Jackie Chan and Celine Dion, but this year, an unexpected performance stole the spotlight—a troupe of six-foot-tall humanoid robots dancing in red traditional vests, waving handkerchiefs. |
The robots, produced by Unitree Robotics, moved in a way that was both mesmerizing and eerily uncanny. More than just an artistic display, the performance felt like a carefully curated message: China is back to embracing its technology sector. |
And just a week later, President Xi Jinping made an even clearer statement—a meeting with China's most powerful entrepreneurs, including Jack Ma, Huawei founder Ren Zhengfei, and executives from Tencent, BYD, and Unitree Robotics itself. |
For many, this gathering signaled a major shift in Beijing's attitude towards private tech firms—an industry that had been battered by crackdowns since 2020. But the question remains: Is China truly ready to let its tech giants rise again, or is this just a temporary reconciliation driven by economic necessity? |
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To understand why Xi's sudden embrace of big tech is such a big deal, we need to rewind to November 2020, when Beijing shocked the world by pulling the plug on Ant Group's record-breaking IPO just two days before its launch. |
The company, founded by Alibaba's Jack Ma, was set to raise $35 billion, making it the biggest IPO in history. But after Ma criticized Chinese regulators, he was quickly summoned to Beijing, and Ant Group's IPO was suspended indefinitely. |
This marked the beginning of an all-out assault on China's tech sector. Over the next two years: |
Tech companies were hit with massive fines. Alibaba, Tencent, and Didi faced antitrust penalties. Regulations tightened across industries. The government cracked down on monopolies, gaming addiction, and even online education. State media criticized tech giants. They accused platforms of chasing profits over national interests, fueling a shift in public perception. A trillion dollars in market value vanished. Chinese tech stocks suffered, and many companies scaled back ambitions.
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This wasn't just about controlling corporate power—it was a cultural shift. It was no longer seen as "glorious to be rich," and once-celebrated entrepreneurs like Jack Ma retreated from public life. |
The crackdown, combined with U.S. sanctions on Chinese tech, left the sector struggling. Many believed Beijing's message was clear: Big Tech was getting too powerful, and the government was in charge now. |
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Why Is China Reversing Course Now? |
Fast-forward to today, and the economic landscape in China looks very different. The post-COVID recovery has been slower than expected, and several crucial industries are in trouble: |
The property market is in crisis. Major developers like Evergrande have collapsed under massive debt. Consumer sentiment is weak. With slower economic growth, Chinese consumers are spending cautiously. Unemployment is rising. Youth unemployment hit record highs in 2023 before the government stopped publishing the data.
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At the same time, China's rivalry with the U.S. has intensified. The Biden administration has doubled down on tech sanctions, blocking China's access to advanced semiconductors and AI chips. |
With economic pressure mounting, Xi needs the private sector to step up—particularly tech companies that can drive innovation and global competitiveness. |
This is why his meeting with tech leaders was so important. By inviting figures like Jack Ma—who had been sidelined for years—Beijing signaled that it was ready to repair relations with the industry. |
Winners of the Crackdown: Who Survived and Thrived? |
While many companies suffered under Beijing's scrutiny, a few national champions emerged stronger than ever: |
1. Huawei: Turning Sanctions Into Strength |
Blacklisted by the U.S., Huawei was cut off from advanced chips and software. Instead of collapsing, it doubled down on R&D, launching its own Mate 60 Pro smartphone with a locally-made 7nm chip, proving China could still innovate under sanctions.
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2. BYD: China's EV Powerhouse |
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3. DeepSeek: China's AI Breakthrough |
A Chinese AI company that surprised the world by developing high-performance AI models despite limited access to U.S. chips. Forced to optimize its technology under hardware constraints, DeepSeek turned adversity into an advantage—achieving AI efficiency at lower costs.
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These companies embody Beijing's new vision: tech firms that align with national priorities—hardware, artificial intelligence, and green technology. |
Tech Titans Are Back—But With Strings Attached |
While the recent meeting with Xi Jinping is a positive signal, it doesn't mean that China's tech giants will return to their freewheeling, pre-crackdown days. China still wants control over its tech industry, and companies will likely have to: |
Align with state goals – Innovation must serve national interests, whether in AI, semiconductors, or automation. Limit influence on society – The government remains wary of tech firms holding too much power over daily life. Keep political ambitions in check – Entrepreneurs like Jack Ma will need to stay in line if they want to remain in business.
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Can China's Tech Industry Catch Up to the U.S.? |
Even as Beijing extends an olive branch to its tech sector, Chinese firms still face a major roadblock: U.S. restrictions on semiconductors and AI development. |
Washington views Chinese tech as a security threat, blocking access to advanced chips and cutting-edge technologies. The TikTok saga highlights how difficult it is for Chinese companies to operate in the U.S. market. Silicon Valley still leads in AI and deep tech, though China is closing the gap.
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Despite these challenges, China is proving it can innovate under pressure. As seen with DeepSeek and Huawei, companies are adapting, optimizing, and finding ways to bypass U.S. restrictions. |
The Bottom Line: Is This a Real Shift or Just a PR Move? |
China's tech crackdown wiped out trillions in market value, but with economic uncertainty mounting, Beijing now sees tech firms as crucial to its future. |
However, whether this warming relationship is permanent or just a temporary truce remains to be seen. |
Will China's tech industry truly regain its former glory? Or is this just another cycle in Beijing's ever-changing stance on private business? |
One thing is clear: the world is watching. |
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That's all for this week. If you enjoyed this edition, we'd really appreciate if you shared it with a friend, family member or colleague. |
We'll be back in your inbox 2 PM IST next Sunday. Till then, have a productive week! |
Peeyush and Mohit |
Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual. |
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