It has been the year of crackdowns in China. Under the Chinese Communist Party of General Secretary Xi Jinping, anything under the sun can be banned. Businesses, private education, religion, video games, startups and karaoke songs – they can all be banned anytime. It’s the season of bans and crackdowns in China. In fact, the CCP is strong enough to decimate entire industries, like it did with the real estate, tech and EdTech sectors. All said and done, no industry of China has suffered this year as much as the tech sector has. 2021 has been unforgiving for China’s tech giants, as the CCP’s hammer and sickle were used to dismember one tech company after the other.
It all started when Xi Jinping gave new powers to China’s State Administration for Market Regulation (SAMR). Until November 2020, the SAMR was practically a toothless and useless watchdog. But something changed towards the end of 2020, as Xi Jinping decided to clip the wings of China’s tech sector, its monopolistic behaviour and “irrational”wealth-expansion tendencies.
China’s Tech Giants Fall Victim to the CCP
It was on Christmas eve last year that Xi Jinping ordered SAMR to launch raids on Alibaba Group Holding. With this began the story of China’s tech downfall. Nothing would ever be the same for the Communist nation’s tech sector.
- Signs of impending doom became clear when Jack Ma went missing in November 2020 after Xi Jinping pulled the plug on a mega IPO planned by Alibaba’s fintech affiliate, Ant Group. The IPO was worth $37 billion.
- In February this year, Beijing revealed new anti-monopoly rules for tech companies. These rules would go on to become the biggest impediments for China’s tech sector throughout 2021, and a tremendous cause of pain for private enterprises in the country.
- In April, regulators slapped Alibaba with a $2.8bn antitrust fine, and ordered Ant Group to restructure itself with supervision from China’s central bank.
- The CCP frowns on Chinese companies seeking overseas IPOs. So, when ride-hailing giant Didi launched its $4.4bn IPO in the United States, Chinese regulators banned the company from app stores in July. ByteDance – owner of TikTok put its own foreign IPO on hold after witnessing the massacre underway in China.
- Next came the turn of cryptocurrencies. In September, China banned cryptocurrency transactions. No Chinese institution can deal with cryptocurrencies, and no fund manager is allowed to invest in them.
- In November, China’s Ministry of Industry and Information Technology (MIIT) ordered Tencent to suspend the upgrading of its apps and demanded the tech firm submit new ones for approval.
Xi Jinping’s War on EdTech Sector
Banking on the Coronavirus driven lockdowns and social distancing measures, the Chinese EdTech sector experienced extraordinary growth and allured some 84,000 new operators last year alone. The technology-driven education stocks bagged investments totalling 106 billion Yuan in the period.
This was a direct challenge to Jinping’s attempts at securing his rule. So, the CCP banned EdTech sector companies from teaching school curriculum, making profits, raising capital or going public. This shut all doors for these companies to make any form of capital and for investors to get their desired exits.
Read more: Jinping cracked down on Tech Sector to avoid a “Trump Treatment”
Larry Chen, the former school teacher who became one of the world’s richest people owing to China’s EdTech growth, lost his billionaire status moments within Xi Jinping cracking the whip on the sector. The tycoon’s net worth tumbled from $16 billion to just about $230 million in a matter of six months – a wealth evaporation of 99 per cent.
In August, Beijing also banned teens and young adults from playing video games for more than three hours each week to prevent gaming addiction. This proved to be a major upset for gaming giants like Tencent and others from the tech sector.
How Xi Jinping Will Make China’s Private Sector Bleed More
Take a guess. How much do you think the tech sector of China lost in trying to dodge the many bullets being fired towards it by Xi Jinping and his agencies? $800 billion. That’s right. The tech sector has suffered the most when it comes to the CCP’s war on private enterprises and businesses.
China’s largest companies – which were major drivers of the country’s economy, have lost close to $1 trillion in terms of market capital over the past one year.
If anybody thinks that China is done waging a war on its tech sector, or on private enterprises as a whole, they are living a lie. By all decent calculations, Xi Jinping’s crude socialist policies are only beginning to unfurl themselves.