A handshake between President Xi Jinping and Alibaba co-founder Jack Ma has sent Chinese tech stocks soaring, signaling a potential thaw in Beijing’s stance toward the private sector. This comes after years of regulatory crackdowns that wiped out billions in market value, leaving many firms reeling. While recent gestures suggest a friendlier approach, analysts urge caution, emphasizing that China’s support for tech firms hinges on their alignment with national priorities.
Since 2020, Beijing has targeted major technology firms with a regulatory blitz, citing concerns over monopolistic practices and financial risks. However, economic challenges including a sluggish property sector and weak consumer demand have prompted a shift. The need for technological self-reliance amid escalating trade tensions with the United States has further encouraged policymakers to adopt a more supportive tone.
The emergence of DeepSeek, an AI chatbot developed by a Hangzhou-based start-up, highlights this changing landscape. DeepSeek’s sophisticated performance at a lower cost compared to U.S. rivals has attracted government praise. Its founder was notably present at a high-profile business symposium where Xi met Ma, reinforcing the idea that China views AI as a key driver of economic and technological advancement.
Regulators have been gradually softening their stance since 2023, introducing measures to bolster business confidence. Local governments have been instructed to integrate AI into governance, and major players like Tencent are accelerating their AI initiatives. The company’s latest chatbot, Hunyuan Turbo S, aims to outperform DeepSeek by offering instant responses.
Despite these developments, experts remain wary. While Beijing appears eager to harness AI for economic recovery and demographic challenges, its history of unpredictable regulatory shifts remains a concern. Past crackdowns on tech giants, despite earlier assurances of support, illustrate the government’s cautious approach toward private-sector expansion.
A draft law to strengthen legal protections for private firms has been introduced, yet its effectiveness remains to be seen. Analysts warn that China’s tech policies can shift rapidly, depending on political priorities. As the nation grapples with economic headwinds, the private sector’s future remains tied to the government’s evolving strategic interests, leaving investors to tread carefully.
