President Xi Jinping’s recent meeting with prominent Chinese tech leaders has sparked optimism that Beijing may be adjusting its approach to offer the private sector more freedom amid its trade conflict with Donald Trump. Four years after initiating a regulatory crackdown that severely impacted the tech industry, Xi publicly met for the first time with Alibaba co-founder Jack Ma, whose company faced significant challenges from the campaign. Also attending the meeting were notable figures from the robotics startup Unitree, electric vehicle manufacturer BYD Co., and AI newcomer DeepSeek—companies that are launching innovative products despite US export restrictions.
While a similar display of support from Xi in 2018 was short-lived, fostering national tech champions remains a key component of Beijing’s strategy to revitalize the economy, especially as it addresses a property market bubble that previously accounted for about 25% of growth. Highlighting the importance of innovation, high-tech sectors contributed 15% to the gross domestic product last year and are expected to surpass the housing industry by 2026, according to Bloomberg Economics.
The ongoing tariff conflict with the US has intensified the urgency to identify new sources of economic growth, with Trump already implementing a 10% tariff on China. “Beijing is reframing the private sector as a cornerstone of national competitiveness in the face of economic and geopolitical challenges,” stated Robin Xing, chief China economist at Morgan Stanley. He noted that while there have been indications that regulatory tightening may soon cease, the return of a prominent business figure like Ma signals the first clear indication that this regulatory shift has come to an end. This development paves the way for more balanced policy support, Xing added, while also emphasizing the need for consumption-driven measures to maintain the resurgence of corporate confidence. Chinese stocks listed in Hong Kong continued their upward trend, with the Hang Seng China Enterprises Index rising over 2% during Tuesday’s trading, led by gains in technology companies such as Alibaba Group Holding Ltd. and Xiaomi Corp. Additionally, the yield on China’s one-year government bonds increased by eight basis points to 1.5%, a level not seen since August, indicating that investors might be reallocating funds from bonds to stocks as the market rally continues.
