China Cracks Down on the Tech Industry
3 Min Read
Chinese leaders fear the instability that social media platforms promote. They consider that allowing them to become dominant on their own endangers the ruling party's tight grip on data in the event of a future crisis.
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Jack Ma, founder of Alibaba Chinese Multinational Company
The AXIOS website mentioned that with the Chinese government stepping up against its own tech industry, China is now favoring Communist Party control of the domestic economy over aggressive worldwide competitiveness.
China and the United States are both playing a lengthy game, with technology as the playground, businesses as the pieces, and global economic supremacy as the payoff.
The Wall Street Journal reported that a state-owned newspaper in China condemned on Tuesday internet gaming and described it as "opium for the mind" pushing down shares of Tencent and other Chinese businesses.
"Within hours, the piece was no longer accessible on the paper's online," according to the report, "before subsequently reappearing with some of its harsher language deleted," including the "opium" phrase.
However, the decision is consistent with several other measures China has taken in the previous eight months to rein in its tech sector, ranging from new restrictions on online tutoring businesses to prohibitions on corporations' foreign investment transactions.
China's own "Techlash" began in November, when the Chinese government banned Ant Financial's initial public offering (IPO), founded by Alibaba tycoon Jack Ma.
The move was followed in April by several antitrust measures, including a $2.8 billion punishment imposed on Alibaba.
Soon after China's ride-hailing powerhouse DiDi's $73 billion IPO, government officials blocked its app from app stores.
Some of these measures were justified based on data security, while others were justified based on increased competitiveness. However, China analysts believe that the common thread is the party's intention to show tech titans and wealthy financiers who the boss is.
"Disruption" is a buzzword for internet entrepreneurs in the United States looking to take on incumbents, but it's a bad term in China for many - and definitely for the government.
Chinese leaders fear instability and see online platforms promoting it in two different ways:
1. Allowing social media platforms to grow independently powerful threatens the ruling party's tight hold on information in any future crisis.
2. Some experts believe that the Chinese government is worried about US-scale inequality driven by tech entrepreneurs amassing Jeff Bezos-scale private wealth.
According to some observers, the Chinese industry and culture favor manufacturing, hardware, and physical products over immaterial goods produced by the software and finance industries.
