Beautiful Virgin Islands

Wednesday, Aug 27, 2025

Will Beijing’s Big Tech crackdown kill the golden goose?

Will Beijing’s Big Tech crackdown kill the golden goose?

Investors ranging from venture capitalists to secondary market investors are all trying to second-guess what is coming next from Chinese regulators.

Beijing’s campaign to rein in the power and influence of Big Tech in the country is reaching new heights, pummeling tech stocks and leading many analysts to question if the tougher scrutiny could end up emasculating the most vibrant sector of China’s economy.

China’s full complement of regulators have let loose on Big Tech after receiving Beijing’s blessing last winter to curb the “irrational expansion of capital” and formation of monopolies that may threaten social stability. That escalating effort has now resulted in a market rout amid a rising perception that the country’s leadership does not care if investors are burned.

“There has been strong competition among different government bodies in the recent crackdown on the tech sector,” said Sun Xin, lecturer in Chinese and East Asian Business at King’s College London. “They’re all seeking to take advantage of the Chinese Communist Party’s elevated concerns about Big Tech to strengthen their own authority and advance their own bureaucratic interests.”

Big Tech, including the likes of Alibaba Group Holding, Tencent Holdings, services giant Meituan and rising stars such as ByteDance, was until recently regarded as a poster child for China’s new innovation economy – creating millions of jobs and modernising the country. Now the tech sector is on the back foot, accused by Beijing of abusing market dominance, mistreating gig workers and showing an arrogant disdain for the Party’s leadership and wider socialist principles.

Now many of the innovations China has driven in recent years such as internet shopping, online payments and big data-driven efficiencies – hailed as contributions to civilisation on a par with the invention of the compass and gunpowder – are under regulatory scrutiny.

China’s antitrust regulator has issued penalty tickets for merger deals going as far back as a decade. China’s Industry Ministry is naming and shaming problematic apps in bulk, threatening to shut them down if apps fail to reach certain standards. The Cyberspace Administration of China is putting new restrictions on overseas initial public offerings by Chinese start-ups. The Ministry of Education, once detached from tech regulation, has weighed in on online tutoring services and the Chinese Labour Ministry has now urged internet platforms to treat gig workers fairly and pay for their social insurance.

And it does not stop there.

The Cyberspace Administration of China’s probe into ride-hailing giant Didi Chuxing on cybersecurity and national security grounds, just two days after its initial public offering in New York, has sown chaos among international investors. Last Saturday’s ban by the central government on making profits from off-campus tutoring has blown away the business model of a number of Chinese education firms listed in New York and Hong Kong.

The Cyberspace Administration of China’s probe into ride-hailing giant Didi Chuxing on cybersecurity and national security grounds came just two days after its IPO.


Meanwhile, the official introduction of a cybersecurity review requirement for virtually all foreign listings by tech firms has raised serious questions over whether Beijing is actually trying to halt New York listings for good.

“Policy uncertainties have changed investor expectations, making them question the original logic for tech stock valuations,” said Hong Hao, managing director at Bocom International Holdings in Hong Kong.

Investors ranging from venture capitalists to secondary market investors are all trying to second-guess what is coming next from regulators. The Ministry of Industry and Information Technology, for example, this week announced it would launch a new six-month long campaign to crack down on a wide range of “tough problems” in the internet industry. Meanwhile, the market is still waiting to see the scale of Didi’s punishment and how big a fine Meituan will have to pay when an antitrust investigation into the online services giant wraps up.

There is also investor uncertainty over how China’s new data laws, particularly the Data Security Law and Personal Information Protection Law, will affect how tech firms access and use data, leading to concerns that valuations of Chinese tech firms, including already listed and unlisted unicorns such as Tik-Tok operator ByteDance, will be affected dramatically – as happened to Ant Group when fintech regulations changed.

An investor at a US private equity firm in Beijing, who declined to be named as he is not authorised to speak to the media, said that they have paused the valuation process as the industry is desperately looking for a reliable new benchmark in the public listing market. The regulatory environment will “definitely” impact the valuation of unlisted tech giants such as ByteDance, the person said.

The Hang Seng Index lost 5 per cent this week, the biggest weekly fall since February 22, led by China tech stocks from Tencent to Meituan. Tencent’s announcement last week that it had to suspend new user registrations for WeChat in China until early August for a “security upgrade” added to market nerves.

Meanwhile, the US Securities and Exchange Commission said on Friday that Chinese firms would have to disclose the listing of shares through a structure called Variable Interest Entities, or VIEs, a shell company that is outside China. The move is designed to protect domestic investors and comes in the wake of losses sustained by Didi shareholders as a result of the probe launched by Beijing.

The market rout has also prompted the Chinese Securities Regulatory Commission to step in. Fang Xinghai, a vice-chairman at the CSRC, held a video conference with bankers to soothe their concerns on Wednesday while the official Xinhua news agency published a commentary saying that recent regulatory acts were aimed at “fostering healthy growth” and overseas share listings could continue in the future.

However, the disharmony in tone among different Chinese government agencies hints at infighting between hardline and pro-business factions in Beijing – with the former recently gaining the upper hand, said analysts. The CSRC, for example, was not involved in the security review of Didi or any other tech campaigns.

Ling Chen, assistant professor at Johns Hopkins University’s School of Advanced International Studies, said that a scramble for power is taking place in Beijing as regulating business has now become a source of power. “Data regulation is quite a new area and an important one,” Chen said. “So each department is actively searching for ways in which they can insert themselves.”

Henry Gao, an associate Professor of Law at Singapore Management University, said China’s cyberspace administration, which reports directly to the top leadership, will take a leading position in overseeing Chinese tech firms in data and operations. “[But] there is a risk of overkill, as we have already seen in the past few days,” he said.

Sun at King’s College London added that the manner in which Chinese regulators are forcefully implementing vague laws and political instructions has exposed vulnerabilities in China tech’s sector as there is little legislative scrutiny or judicial review – something which Western tech firms can rely on to check regulatory pressure in their sphere of operations.

“It is this nature of policymaking and enforcement that causes the greatest uncertainty in China’s business environment, and it’s deterring investment and innovation,” Sun added.

But the present pain may be short-lived said some analysts, given the sheer scale of opportunities on offer in China.

“These are policies which may cause short-term pain,” said Gordon Ng, a partner and head of corporate finance at law firm Dentons Hong Kong. “Once everything settles down, the money will come back.”

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
×