China's tech crackdown cost over $1 trillion. But the economy is in such deep trouble that the country's cozying up to its tech firms again.
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- China's tech crackdown wiped $1.1 trillion off the valuation of its Big Tech firms.
- But authorities in China are easing up and clamoring for tech investments recently.
- China's economy is struggling to recover after three years of on-off COVID-19 lockdowns.
China cracked down on the country's tech sector in 2020, taking down its Big Tech, whose market value has been wiped by $1.1 trillion.
But now, authorities are laying out the red carpet for the same firms because the economy is in deep trouble.
Local governments in China are wooing tech giants with at least five recent deals to build on the so-called "platform economy," the South China Morning Post reported on Sunday.
Beijing-based Qihoo 360 recently signed an agreement with the government of Hangzhou — home to Alibaba — to boost cybersecurity, according to a local government notice on Friday.
And gaming giant NetEase signed an AI and esports partnership with the Hangzhou government earlier in July.
Meanwhile, Yin Li, Beijing's Chinese Communist Party chief pledged to support the consumer tech sector in a Thursday meeting with e-commerce giant JD.com, consumer giant Xiaomi, and Kuaishou — a key short-video competitor to ByteDance.
And just a few days earlier, Beijing mayor Yin Yong assured outgoing Alibaba chairman and CEO Daniel Zhang and Lei Jun, Xiaomi founder, and CEO, that the "private economy plays an important role in boosting the high-quality development of the capital city."
Other cities like the northern port city of Tianjin and southern tech hub Shenzhen have also scrambled to ink deals with tech giants in a flurry of recent deals, per the SCMP.
The country's state planner even praised Alibaba on July 12, saying the e-commerce giant had become a key contributor to key priority sectors, such as autonomous driving and chip development. That's a big U-turn from China's crackdown on Alibaba founder Jack Ma and his companies after he criticized Beijing in an October 2020 speech.
The Chinese government's opportune interest in its homegrown tech companies comes just as its economy — the world's second-largest — struggles to recover from three years of on-off COVID-19 lockdowns.
China may even be on the edge of deflation, Insider reported.
Recent economic indicators from China have been disappointing, with manufacturing activity contracting for a fourth straight month in July, according to official statistics released on Monday.
It so desperately wants to revive the economy that Beijing has been reversing major policies it pushed during the COVID-19 pandemic, hinting that it could relax regulatory curbs on the property sector too, Insider reported.
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