The View | China’s regulation of its spirited tech sector could be a tipping point for the economy

When it comes to the Chinese economy, I have been a congenital optimist for over 25 years. But now I have serious doubts.

The Chinese government has taken dead aim at its dynamic technology sector, the engine of China’s New Economy. Its recent actions are symptomatic of a deeper problem: the state’s efforts to control the energy of animal spirits. The Chinese dream, President Xi Jinping’s aspirational vision of a “great modern socialist country” by 2049, could now be at risk.

At first, it seemed as if the authorities were concerned about a one-off personnel problem when they sent a stern message to the irreverent Jack Ma, founder of Alibaba, the world’s largest e-commerce platform.

In November 2020, a record US$39 billion initial public offering for Ant Group, the behemoth fintech spin-off of Alibaba, was cancelled less than 48 hours before the scheduled listing. Five months later, Alibaba itself was fined a record US$2.8 billion for alleged anti-monopoly violations.

And now it’s Didi Chuxing’s turn. Didi, the Uber-like Chinese ride-sharing service, apparently had the audacity to raise US$4.4 billion in US capital markets, despite rumoured objections from Chinese officials.

After forcing the removal of more than 25 of Didi’s apps from Chinese internet platforms, talk of a fine that might exceed the earlier penalty imposed on Alibaba, or even a possible delisting, is rampant.