Can China still lead the world in tech without a new Jack Ma? | CNN
June 8, 2021. Summarized by summa-bot.
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China has cut its global tech champions down to size, cracking down on antitrust abuses and undue risk taking. But the heavy-handed approach could backfire on Beijing by stifling an entrepreneurial spirit that has proven vital to the country's rapid economic rise.
(BABA) co-founder Jack Ma — China’s most famous tech entrepreneur — has largely dropped out of public view.
“The atmosphere hovering over China’s tech landscape has grown increasingly toxic,” said Alex Capri, a research fellow at Hinrich Foundation and a visiting senior fellow at National University of Singapore.
But challenging the system is essential to the private enterprise that played a key role in China’s transition from a poor country to one of the world’s greatest economic and tech forces over the past few decades.
Wary tech executives need look no further than Beijing’s public humiliation of Ma. The flamboyant and outspoken entrepreneur all but disappeared after he criticized China’s state-controlled banking system last fall for having a “pawn shop mentality,” and accused the government of using stodgy and outdated means to regulate a modern financial system.
“Part of the crackdown on internet tech companies is motivated by the desire to reduce financial risk, as in curtailing the lending activities of Ant,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics (PIIE) who studies China’s economy.
“The leaders of the tech firms that have become too powerful for the comfort of Xi and the Communist Party are put under pressure, as the monopoly of power across the board by the Party cannot be allowed to be challenged,” said Steve Tsang, director of the SOAS China Institute at SOAS University of London.
“All of the big Chinese tech giants — in spite of their private nature — have cultivated a proximity to the government that presumably created the idea of balanced power relations,” said Sonja Opper, a professor at Bocconi University in Italy who studies China’s economy and its institutional transition to the private sector.
“The Party groomed rock-star like celebrities, [and] they were co-opted by making them members of the National People’s Congress,” Opper said, adding that tech entrepreneurs “certainly began to feel safe, because of their economic power and global visibility. ”
China’s long economic miracle and rapid ascent as a leader in tech has its roots in Beijing’s farsighted decision in the late 1970s to give up some control over the economy and adopt a free market approach in many sectors.
Investors may lose the incentive to pour money into private Chinese firms if they are worried about “unwanted government interference,” Opper said, especially since some tech projects often take a long time to develop.
But for Xi to achieve his ambitions of turning China into an innovation leader by 2035 and a global tech superpower by 2050, he’ll need to rely more on private firms than he expects.
Rather, private firms are leading the way: Huawei and Alibaba, for example, accounted for more spending on research and development than any other Chinese company last year, according to the China Enterprise Confederation.
“Looking back, there is a reason why China’s tech giants were able to develop,” Opper said.
The editorial cited China’s alleged victory in its years-long campaign of “eliminating extreme poverty” in 2020 — by lifting all of its people above its set poverty line of 4,000 yuan, or $626, per year — as an example, writing: “Our Party and our country are the only ones in the world who can accomplish this, which fully demonstrates our political system’s and institutional advantages. ”