China's Xi Jinping signals shift toward supporting private tech sector

A recent article from The Economist explores the changing mood of China’s relationship with private enterprise, particularly the technology sector, under President Xi Jinping’s leadership. Five years after a crackdown that heavily impacted tech giants like Alibaba and eroded investor confidence, the Chinese government is signaling a shift towards a more supportive stance for private entrepreneurs, albeit with important conditions.

The article highlights a notable event on February 17th when Xi hosted a “symposium” with a select group of tech bosses, including Alibaba founder Jack Ma, signaling a thaw in the government’s previous hardline approach. This high-profile meeting indicates that the Chinese Communist Party (CCP) is now willing to support private enterprise again, acknowledging the critical role these entrepreneurs play in driving China’s economic growth. The presence of figures like Ma and Liang Wenfeng, the founder of DeepSeek—a startup that has made significant strides in artificial intelligence (AI)—emphasizes the government’s desire to harness the potential of private innovation.

This shift has already had a visible impact on the stock market, with tech stocks listed in Hong Kong rising by 23% in just a month, buoyed by expectations of robust AI-related demand. This uptick is seen as a potential catalyst to inject vitality into China’s economy, which has been struggling with a prolonged property slump, weak consumer confidence, and deflationary pressures. The CCP hopes that a tech-driven stock market rally could offer the economic stimulus that other measures, such as consumer spending and government spending, have not been able to provide.

However, the article also emphasizes that the CCP’s warming stance towards private enterprise is not without caveats. Five years ago, China’s tech giants amassed vast amounts of data, sometimes exceeding the state’s own knowledge of its citizens, and were expanding globally. This raised concerns within the CCP, which feared that these companies were growing too powerful and independent. The government has since implemented stricter regulations on data collection, overseas listings, and the internal structure of private companies, ensuring that party committees hold influence within these firms.

The current geopolitical context, including growing tensions between the U.S. and China, has further shifted the landscape. With foreign capital and markets becoming less accessible due to sanctions and trade restrictions, Chinese tech companies are increasingly focusing on domestic markets. This shift is aligned with Xi’s broader vision for “Chinese-style modernization,” where the private sector plays a crucial role but is expected to align with national goals and party directives.

Xi’s message to tech entrepreneurs is clear: while the government is ready to support them, it will not offer them unbridled freedom. Private capital must operate within the framework of the party’s objectives, with an emphasis on self-reliance and contributing to China’s economic and technological goals. The article concludes that Xi’s vision for China’s tech sector is one of controlled growth, where innovation thrives under the watchful eye of the state.

By Vugar Khalilov