Chinese local governments roll out the red carpet for Big Tech firms as Beijing shifts stance

Several Chinese cities, such as Beijing and Hangzhou, have already inked cooperation deals with internet giants
The Chinese government is ending more than two years of crackdowns on the tech sector amid a slowing economy

Alibaba

Ben Jiangin Beijing

Published: 10:00am, 30 Jul 2023

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Local Chinese governments are rushing to build rapport with Big Tech companies in the country, as Beijing is once again pinning its hopes on the so-called platform economy to deliver growth and jobs.

This year, several Chinese municipalities have already inked cooperation deals with internet giants, whose ability to expand their businesses had been curtailed by Beijing’s two-year effort to prevent the “irrational expansion of capital”.

Qihoo 360 is the latest among major Chinese tech companies to sign an agreement with authorities in Hangzhou, capital of eastern Zhejiang province, to bolster cybersecurity in the city, according to a statement published on Friday on the government’s website.

The Beijing-based company said it will set up a regional headquarters in Hangzhou, with a focus on local innovations.

Visitors tour the Qihoo 360 booth at a 5G convention in Beijing in November 2019. Photo: Xinhua

This comes after Hangzhou-based mobile gaming giant NetEase forged an expansive partnership earlier this month with the municipal government, encompassing artificial intelligence (AI) and esports, among other areas.

The deal-signing ceremony was attended by mayor Yao Gaoyuan and NetEase founder and CEO Ding Lei.

In Beijing, the city’s Communist Party chief Yin Li promised support for the consumer tech industry in a meeting on Thursday with executives from e-commerce juggernaut JD.com, short-video king Kuaishou Technology and Chinese smartphone giant Xiaomi.

It followed another meeting a few days earlier between Beijing mayor Yin Yong, outgoing Alibaba chairman and CEO Daniel Zhang Yong and Xiaomi founder and CEO Lei Jun, where the business leaders were assured that the “private economy plays an important role in boosting the high-quality development of the capital city”.

The Baidu sign is seen at the World Artificial Intelligence Conference in Shanghai on July 6. Photo: Reuters

Other cities have also rushed to boost ties with tech companies. The northern port city Tianjin and southern tech hub Shenzhen each signed a deal with internet search giant Baidu in May and July, respectively, to raise efficiency of local enterprises and traditional industries with generative AI technology.

Baidu’s tie-up with Tianjin will see the adoption of the company’s ChatGPT-style service Ernie Bot in an array of businesses from finance and logistics to electronics, new energy and port operation sectors in the city’s Economic-Technological Development Area.

In January, the Hangzhou government and Alibaba, owner of the South China Morning Post, made a pact to deepen “strategic cooperation” in an event attended by company CEO Zhang and the city’s party secretary Liu Jie.

The logo of Alibaba is seen at the World Artificial Intelligence Conference in Shanghai on July 6. Photo: AFP

In his speech, Liu thanked Alibaba for its contribution to the city and praised the firm’s “courage to face the problems during the rectification campaign of the platform economy”.

“In retrospect, the strategic collaborations between governments and enterprises have borne plenty of fruit,” he was quoted as saying.

Half a year later, Alibaba’s fintech affiliate Ant Group received a financial penalty of US$984 million from the People’s Bank of China for a range of violations, far smaller than the US$2.8 billion fine slapped on Alibaba in April 2021.

Soon after, Chinese premier Li Qiang summoned Big Tech firms for a meeting, in which he said the government would set up a regular communication mechanism with internet companies.

The moves were widely viewed as signs that Beijing is finally ending more than two years of sweeping clampdowns on the tech sector.