China’s Tech Sector Shifts Amid Economic Turmoil
In 2020, China took a firm stance against its tech sector, cracking down on Big Tech companies that had been soaring in value.
The move wiped out a staggering $1.1 trillion from their market value. However, in a surprising turn of events, authorities are now rolling out the red carpet for these very same firms.
The reason behind this shift lies in the deep economic troubles that have befallen the country.
Local governments across China are actively wooing tech giants with multiple deals aimed at enhancing the “platform economy,” as reported by the South China Morning Post.
Beijing-based Qihoo 360, for instance, recently signed an agreement with the government of Hangzhou, the home of Alibaba, to bolster cybersecurity.
Similarly, gaming giant NetEase has inked an AI and esports partnership with the Hangzhou government.
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China’s Tech Sector Gains Favor Amid Economic Struggles
China’s capital city, Beijing, is also showing strong support for the consumer tech sector. In a meeting with major players such as JD.com, Xiaomi, and Kuaishou, Beijing’s Chinese Communist Party chief, Yin Li, pledged his backing for their endeavors, acknowledging the significant role of the private economy in driving the capital city’s high-quality development.
This remarkable shift in stance comes after other cities like Tianjin and Shenzhen have also swiftly signed deals with tech giants, signaling the Chinese government’s opportune interest in homegrown tech companies.
Even Alibaba, which faced a crackdown after its founder Jack Ma criticized Beijing in 2020, has received praise from the country’s state planner.
On July 12, the e-commerce giant was acknowledged as a key contributor to priority sectors like autonomous driving and chip development.
The Chinese government’s newfound interest in nurturing its tech companies aligns with its struggles to recover from three years of intermittent COVID-19 lockdowns.
The world’s second-largest economy has shown signs of potential deflation, and recent economic indicators, including the contraction of manufacturing activity for the fourth consecutive month in July, have been disappointing.
As China navigates the challenging economic landscape, it seems determined to harness the potential of its tech giants to bolster recovery and support key sectors.
The transformation from a crackdown to a supportive approach is indicative of the government’s adaptability in the face of economic challenges, as it aims to revitalize its economy and secure stable growth in the post-pandemic era.
Source: Business Insider
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