Towards the end of 2020, Chinese despot Xi Jinping initiated a bloody carnage of his country’s tech sector. For years, China’s tech sector had been driving the economic growth of the Communist nation, along with its real-estate sector and export market. However, the tech sector had grown very powerful by 2020, with Alibaba founder Jack Ma openly criticizing the CCP’s redundant financial regulations. Xi Jinping was quick to initiate a technological massacre, and soon, Chinese tech companies found trillions of dollars of their wealth evaporating in thin air.
However, the massive crackdown on China’s tech sector came with its own set of consequences. You see, Jinping cracked down on a major driver of China’s growth. So, soon enough, the Chinese economy began slumping as well. It was here that the Chinese Communist Party realized that in its campaign for vengeance, the economy would suffer massive collateral damage.
CCP Suspends Tech Crackdown
The Chinese Communist Party has decided to suspend the deadly tech crackdown that has been underway since 2020. According to the Wall Street Journal, regulators are planning to hold off on new rules that limit the time young people spend on mobile apps, according to one of the people, while another person said that Beijing is considering pushing some of its biggest tech companies to offer 1% equity stakes to the state and give the government a direct role in corporate decisions.
Meanwhile, according to the South China Morning Post, China will organize a symposium with the country’s Big Tech firms, after the Politburo met on Friday and decided to provide a breather to the country’s tech sector.
According to two sources quoted by the SCMP, Beijing will stop its sweeping regulatory clampdown on the tech sector and give internet platforms larger roles to help prop up the ailing economy. At the symposium, tech companies will be assured that regulators will no longer demand rectifications or impose surprise fines.
The Politburo has gone on from becoming the Chinese tech sector’s enemy to a friend. At the all-powerful body’s meeting on Friday, Xi Jinping said that China will promote the “healthy development” of the internet platform economy.
Why is China Backtracking on Tech Crackdown?
In March, China set its lowest GDP target in decades. China’s Premier Li Keqiang announced the unusually modest target of around 5.5 percent in the presence of Xi Jinping. What this means is that China will witness the slowest rate of economic growth this financial year since 1991.
The Chinese economy has been unwinding for many reasons. The Covid-19 pandemic has stumped production and consumption within the Communist nation. China’s exports aren’t doing very well either. To make matters worse, China is reeling under the stress of a real estate sector collapse.
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. Most of these belong to the tech sector. China continuing with its crackdown on the tech sector would have rung the death knell for the economy and dashed all hopes of Beijing ever beating Washington in the economic war.
There is another reason why Xi Jinping has relented on the tech front. You see, 2022 is a crucial year for the man. He is seeing an unprecedented third re-selection as the CCP General Secretary, and that means he needs to keep all factions within the CCP happy – or at least prevent them from boiling over.
Read more: China could end up debt-trapping itself with its $2.3 trillion gamble to revive its economy
The tech companies of China, and those that run such companies have good ties with the CCP’s Shanghai faction. Ties between Xi Jinping and the powerful Shanghai faction have turned from bad to worse ever since Beijing steamrolled the country’s tech sector.
In a crucial year like this, Xi Jinping does not want to factionalize the CCP even further. So, his suspension of the tech crackdown is an olive branch to the Shanghai faction. Indeed, Jinping has conceded defeat and proven that his anti-market mindset has devastated the Chinese economy. Whether the CCP forgives him for such blunders will only be seen later this year.
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