The rise of the Chinese companies in mainland, challenging the dominance of Communist Party results in clipped wings and bleeding Chinese stocks. The crackdown triggers massive sell-off with fleeing investors, disappearing CEO and a $1.5 Trillion hole in the Chinese market.
The Chines private sector experiences pressure from the governments steps to ramp up regulations for high profile industries. Chinese companies in the “Global Top 10” list have decreased over the years on market capitalisation.
In year 2007 their existed four out ten Chinese company in this list. In 2020 it dropped to two company Alibaba and Tencent and zero in 2021. The only Asian company to hold a position in Top 10 List is Taiwan Semiconductor Manufacturing Company (TSMC). Looks like a defeat of hybrid communism.
After the 2008 Chinese financial crisis it was predicted that the Chinese company will conquer the world. But then, Xi Jinping happened. The Chinese President Xi, is a man without bias. He crackdown everything under the sun be it big tech, private tuitions, gaming world, social media or real estate one that is killing the Chinese growth story.
Under Xi’s guidance the government has now begun a campaign to bring Tech under a strict State control. Regulations turned vendetta makes it impossible for tech companies to works. The South China Morning Post published the review data compiled from the Ministry of Industry and Information Technology (MIIT) stating “in 2018, there were 4.5 million apps in the Chinese app market and today only 2.8 million exist”. In the last three years 38% of Chinese apps have disappeared due to new data laws and clean-up campaigns stating apps to “rectify their problems”.
Big Tech, are the biggest victim of the crackdown and now live in fear. Until 2019 the CCP believed “companies do not exist for public service, they exist for profit”. But now business climate in China suffers from a hurricane.
Jack Ma, the titian of Chinese entrepreneurship gained a big entrance in the US but his almost bigger than China image was intolerable by the Chinese government The CCP first milked the likes of Alibaba and marketed it as a Chinese dream. But, on acquiring power and on the verge releasing the biggest IPO by the company, Xi Jinping suddenly remembered socialism and sabotaged the IPO. Even the possibility of private sector getting the power seems threating to the CCP.
Recent change has led to shocking pull outs like Microsoft pulled LinkedIn from China due to an increased censorship. ByteDance, owner of short video app TikTok and its Chinese sibling Douyin have recoded a significant low revenue last year and now shrinks its investments in response to the harsh tech crackdown. The workers of the strategic wing in TikTok were encouraged for other job opportunities.
Even Social media influencers do not escape this crackdown. Chinese top media regulators call for a boycott of the “sissy idols” as they do not conform to the “macho” male stereotype. Beijing couldn’t stand the Chinese influencer Wang Wei Aka, one of the top fashion influencers on the internet and has been told to pay $210 million (1.341 billion RMB) as fine for tax envasion, and her social media accounts with over 120 million followers have been taken town.
These fines are not just about money rather, they are a message. A warning from the regime to back off. In 2018 Chinese actress Fan Bing Bing was fined $129 million for tax evasion. More importantly she was booted from the film industry and has zero movies in the last three years.
Same with online gaming and tuitions. Beijing now decides a time for children to play games i.e., three hours per week. Tencent, a video gaming and messaging software. GuJian game franchise and WeChat has now focused on adjusting to the new regulatory environment that among other things limits video gaming. Private tuitions are supposed to sacrifice profits as they cannot charge for their classes. Looks like the CCP doesn’t understand what private means.
The communist government now dominates online brokers and bars them from offering offshore services. Meaning a ban on stock trading in foreign markets and keeping Chinese money in borders. Evergrande, a giant firm in China dealing in real estate and several other ventures now run in a debt problem than required government intervention.
In an attempt to control and dominate, the CCP has forgotten the role of the tech in creating a livelihood for the Han population. By intervening it is creating a graveyard for the dragon it claims to be. It is no longer a crackdown, rather a symbol of the insecure dragon trying to dominate Chinese mind and body from challengers like big tech and social media.