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China is trying to strike a conciliatory tone after a nearly year-long regulatory crackdown on the tech industry has dampened market enthusiasm. Photo: Reuters

Xinhua: China needs Big Tech to grow but companies should avoid ‘winner takes all’

  • A commentary by the official Xinhua news agency urged tech giants to refrain from taking advantage of smaller businesses
  • Beijing seeks to strike a balance between regulating and promoting the country’s tech industry, as authorities shore up confidence after a regulatory crackdown

Big Tech companies in China should not expand at the cost of smaller businesses, the state-run Xinhua news agency said in a commentary, providing additional clues on Beijing’s next steps after embarking on an almost year-long regulatory crackdown.

“The digital economy should not be ‘winner takes all’,” said the article published on Wednesday. “Platforms must lead and drive the development of small, medium and micro enterprises along the entire industry chain. They should not act as ‘landlords’ who take advantage of [smaller businesses].”

Xi highlights role of digital economy in national development

The commentary comes as Chinese authorities have been tightening its oversight on the country’s tech giants in a crackdown that has wiped out more than US$1 trillion in value from major tech stocks, including Hong Kong and New York-listed Alibaba Group Holding, owner of the South China Morning Post, and Hong Kong-listed video gaming and social media giant Tencent Holdings.

While the article, which did not name any company, it called on tech firms to answer the nation’s needs. It also struck a conciliatory tone, suggesting that China’s development depends on a strong digital economy led by enterprises.

“Enterprises are the main players of the market economy and digital economy,” the commentary said. “China’s socialist market economic system is a fertile ground for … the growth of the nation’s digital enterprises.”

The article echoes a speech by President Xi Jinping earlier this week, urging the country to strike a balance between regulation and development of the tech sector.

Beijing’s campaign to impose tighter discipline on the tech industry, which kicked off last winter, has shocked investors and curbed enthusiasm in one of China’s most dynamic economic sectors.

Some of the country’s most successful young entrepreneurs, such as Zhang Yiming, founder of TikTok owner ByteDance, and Colin Huang, founder of the e-commerce giant Pinduoduo, have chosen to step down from leadership positions and retreat from the limelight. Wang Xing, founder and CEO of on-demand service platform Meituan, recently removed thousands of his social media posts in the past decade from public view.

As Chinese tech tycoons retreat, some wonder about true motives

To appease authorities, the country’s biggest tech companies have scrambled to heed Beijing’s call to fulfil social responsibilities, with Alibaba and Tencent each setting aside 100 billion yuan (US$15.6 billion) of funds to support the cause.

In a subtle reference to these efforts, Wednesday’s Xinhua commentary said that Big Tech must “build digital bridges” instead of “digging digital ditches”, so that “more people can enjoy the fruits of the digital wave, and let the digital economy become an accelerator for high-quality development and common prosperity”.

This article appeared in the South China Morning Post print edition as: Tech firms urged to avoid ‘winner takes all’ stance