In-Depth

by Malcolm Riddell

China's Tech Crackdown
2

'Why China Is Cracking Down on Its Technology Giants'

Bloomberg

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Andrew Browne | Bloomberg
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August 1, 2021
'Why China Is Cracking Down on Its Technology Giants'
'Why China Is Cracking Down on Its Technology Giants'
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Couldn't agree less with the assertion that 'rectification' is driven by politics - but that doesn't mean it isn't a factor. Mao-like 'political struggle'? No way. No struggle needed.

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Andrew Browne | Bloomberg

China's Tech Crackdown

2

BIG IDEA | ‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’

‘This week a regulatory crackdown that has all but wiped out China’s $100 billion-a-year private tutoring industry.’

  • ‘First it was Chinese fintech firms found themselves in the crosshairs of Beijing regulators. Then ride-hailing and food-delivery apps. Now edtech.’
  • ‘It looks to much of the world like Beijing is engaged in a strategy of economic self-harm.’

‘Why, you may ask, is China crushing some of its most innovative unicorns?’

  • ‘We’re in a new era led by President Xi Jinping, and politics are in command.’

‘ “China’s leadership has embarked on a new and risky path in economic policy making,” writes Dexter Tiff Roberts, the author of “The Myth of Chinese Capitalism: The Worker, the Factory, and the Future of the World.” ’

  • ‘Beijing, Roberts writes, “is intent on strengthening control over private companies and foreign investment, reserving set shares of its market for indigenously produced technologies like semiconductor chips and electric vehicle batteries, and boosting the role of state-owned firms.” ’

‘Chinese entrepreneurs are expected to get with the program or get out of the way.

  • ‘That means focusing on the next wave of growth—to be led by industrial automation, smart cities and the “Internet of Things—rather than extracting oversized profits from consumers.’

‘Nothing is safe anymore.’

  • ‘China is in the throes of a “rectification” campaign, a throwback to the kind of political struggle that periodically convulsed the country in Mao Zedong’s day.

‘Like Mao, Xi is appealing directly to the public.’

  • ‘The humbling of China’s Internet moguls plays well with those on the lower rungs of society who welcome Xi’s call for “common prosperity.” ’
  • ‘Meituan, the food delivery app, stands accused of underpaying its gig-worker drivers.’
  • ‘Didi Chuxing, the ride-hailing giant, is charged with abusing customer data.

‘When politics are in command, the markets-based models Western financiers use to calculate China risk aren’t much use.’

  • ‘This both explains why the U.S. Securities and Exchange Commission just stopped accepting initial public offerings from China, and why some of China’s savviest investors spend their time studying Xi’s speeches on the economy.’

‘Eric X. Li, a Shanghai-based venture capitalist, says he adopted his entire investment thesis from recent copies of Qiu Shi—literally “Seeking Truth”—the Chinese Communist Party’s leading theoretical journal.’

  • Li’s advice: “We should read ‘Qiu Shi’ seriously, roll up our sleeves and work hard.” ’
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China's Tech Crackdown: 'Nobody Saw It Coming.' — Huh?

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders, and regulatory changes rip apart the old playbook,’ writes Reuters’ Tom Westbrook.
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Bloomberg

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Andrew Browne | Bloomberg
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&
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China's Tech Crackdown
2

'Why China Is Cracking Down on Its Technology Giants'

‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’
8/1/2021

Bloomberg

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Shuli Ren | Bloomberg
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China's Tech Crackdown
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'Xi's Four Pillars of Regulation'

‘Broadly, Beijing is concerned about four pillars of stability: banking, anti-trust regulation, data security and social equality. All of Beijing’s major interventions reflect these concerns.’
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Shuli Ren | Bloomberg
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China's Tech Crackdown
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'Stock Market: China Doesn’t Care How Much Money Investors Lose'

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Reuters

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Tom Westbrook | Reuters
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China's Tech Crackdown
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'The most significant philosophical shift since Deng'

‘Carnage in China's financial markets signals the beginning of a new era as the government puts socialism before shareholders and regulatory changes rip apart the old playbook. According to some analysts, it is the most significant philosophical shift since former leader Deng Xiaoping set development as the ultimate priority 40 years ago.’
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Beijing shocked the financial world when it pulled the rug out from under Didi days after its IPO on the New York Stock Exchange and also announced new regulations reigning in overseas IPOs and Chinese companies already listed.
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0

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Rana Mitter | Oxford
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What the West Gets Wrong About China
1

Part 1 | ‘Why do business and political leaders in the West persist in getting China so wrong?’

‘Why do business and political leaders in the West persist in getting China so wrong?’
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Harvard Business Review

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What the West Gets Wrong About China
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Part 2 | ‘Myth 1: Economics and Democracy Are Two Sides of the Same Coin'

‘The truth, then, is that China is not an authoritarian state seeking to become more liberal but an authoritarian state seeking to become more successful—politically as well as economically.’
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What the West Gets Wrong About China
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Part 3 | ‘Myth 2: Authoritarian Political Systems Can’t Be Legitimate’

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What the West Gets Wrong About China
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Part 4 | ‘Myth 3: The Chinese Live, Work, and Invest Like Westerners’

‘For much of its turbulent modern history, China has been under threat from foreign powers, both within Asia (notably Japan) and outside it (the UK and France in the mid 19th century).’ ‘China’s rulers, therefore, see foreign engagement as a source less of opportunity than of threat, uncertainty, and even humiliation.’
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“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
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“This business model only really fits and works in China. But then you’re married to China.” ‘The Chinese government was starting to pass laws that gave the country greater leverage over Apple, and Mr. Xi would soon start seeking concessions. Apple had no Plan B.’
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