60 The Economist May 7th 2022
Business
TechnologyinChinaAlibaba and the 40 officials
J
ack ma,china’smost famous entrepre
neur, has not been one to mince his
words about the role of government and
business. At a meeting with corporate lead
ers in Bali in 2018 he told the audience that
it is not the government that makes busi
ness and innovation happen. That is the
work of entrepreneurs, he insisted: “They
have the ideas and dreams.”
A crackdown that began in late 2020 on
China’s consumerinternet champions has
made such inspiring sentiments harder to
sustain. For the first time the leading firms’
sales growth is slowing. Alibaba’s revenues
rose by just 10% in the final three months
of 2021, the slowest quarterly expansion
since going public in 2014. Tencent, an in
ternetservices and videogame Goliath,
notched up 8% revenue growth in the same
period, its slowest rate as a public compa
ny (see chart 1 on next page). jd.com, an
other ecommerce group, announced solid
revenues but Richard Liu, its founder and
chairman, resigned in April, one of many
highprofile entrepreneurs to do so in the
past few years. Local media reported that
Meituan, a delivery giant, plans to axe upto 20% of its employees in its core business
units despite its sales rising by 30%. Shares
in those four companies, along with Pin
duoduo, one more ecommerce group,
have shed about $1.5trn in value since Feb
ruary last year (see chart 2).
The techlash is moving into a new
phase. The sorry state of the Chinese econ
omy has forced regulators to delay further
planned corporate punishment in the
hope that the industry can help recharge
growth. In the most positive signal for tech
in over a year, the central government said
on April 29th that it planned to normalise
regulation and to “promote the healthy de
velopment of the platform economy”. Theshare prices of several firms, including Ali
baba, soared at the news. But some new
rules have been merely put off rather than
withdrawn, according to the Wall Street
Journal. And much damage has already
been done. The entrepreneurs behind Chi
na's biggest tech successes have come to a
grim reckoning: that because of govern
ment meddling they will be unable to in
novate, and may even become boring.
When Mr Ma celebrated Chinese enter
prise in Bali, Alibaba and Tencent were two
of China’s biggest private investors, push
ing into an array of businesses. Acquisi
tions were giving them an early toehold in
hot new areas. Online education and
health, media and entertainment, banking
and lending services: all were fair game. By
2020 Ant, Alibaba’s financial affiliate, had
swallowed up 15%, or 1.7trn yuan ($257bn),
of the market for total outstanding con
sumer loans in China. As Jeff Bezos, foun
der of Amazon, was buying the Washington
Post, and Jack Dorsey of Twitter, a social
media group, was launching Block, a pay
ments platform, Mr Ma was scooping up
his own media assets and building a fi
nance conglomerate.
American tech bosses are still reshap
ing and expanding their empires. Mark
Zuckerberg, founder of Facebook, is seek
ing to turn his socialmedia group into a
“metaverse company”, bringing virtual
reality to the mainstream. Elon Musk, boss
of Tesla, an electriccar maker, is buying
Twitter. Chinese empirebuilders, by con
trast, are tempering their ambitions. S HANGHAI
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