Digital economy isn’t out of Beijing’s favor

Chinese regulators spent 2021 cracking down on major internet platforms like Alibaba, Tencent, DiDi and Meituan over antitrust and cybersecurity concerns, and the entire online learning sector is now pretty much gone. But these regulatory blows didn’t paint the full picture of Beijing’s attitude toward tech, and aren’t going to define the trajectory of China’s tech industry. Despite a year of crackdowns, Chinese tech startups managed stellar growth. ·Together in 2021, they received a record $131.6 billion in VC funding, about 50% higher than the 2020 figure. ·Particularly, they focused on key tech sectors such as chips, robotics and enterprise software, and steered clear of the consumer internet. Another sign of Chinese tech’s healthy growth: Shenzhen hit record power use in 2021. ·The tech hub is home to tech giants: the U.S.-sanctioned telecom company Huawei and gaming and social media heavyweight Tencent. ·The South China Morning Post reported that companies making computers, communication and other electronic equipment consumed nearly 17% more electricity in 2021 than in 2020. Beijing is actively supporting and encouraging innovation in so-called “hard tech” (硬科技). ·That is, sectors such as high-end manufacturing, AI, biotech, advanced semiconductor chips and climate tech. ·China seeks to build its homegrown technology might and to reduce its reliance on foreign tech. And “little giants” can shape the future of China’s digital economy. ·On Monday, the Chinese Communist Party mouthpiece People’s Daily ran a commentary discussing the big innovation potential of “little giants”: small and medium-sized tech companies that can help digitize traditional industries like manufacturing. Beijing is not disfavoring the digital economy by regulating big internet platforms. ·Quite the contrary: It wants it to grow, diversify and transform traditional sectors. ·Prominent economic policy adviser Liu Shijin echoed the People’s Daily commentary in a Monday op-ed, outlining a plan to grow the tech-empowered real economy. Make no mistake: The consumer internet is here to stay. ·This sector will continue to drive domestic consumption. ·Take Tencent-owned super app WeChat, for example: It enjoyed stunning growth in services in 2021 despite a harsh antitrust crackdown.