As per a report by Kleiner Perkins, China has 9 companies in the world’s top 20 technology companies by market valuation. Alibaba, Tencent, Ant Financials, Baidu, Xiaomi, Didi Chuxing, and JD.com are some of the largest Chinese tech companies with market valuation and revenue ranging in billions of dollars.
In the last few years, the Chinese tech sector has grown exponentially, with active support and subsidies by the Communist government of China. The old sectors like steel and aluminum, which fuelled China’s rise in the last four decades since economic liberalization, have slowed down.
This is reflected in China’s GDP growth figures, which have come down to 6 percent, as per official estimates, from double-digits. But, the Chinese government is trying to offset the slowdown in the old sector by supporting the rapidly rising tech sector.
As per an article by ace investor and writer Ruchir Sharma, the digital economy now accounts for a third of the country’s national output and it is helping China manage debts in the old economy and keep growth alive. The total digital output of China is around 4 trillion dollars, or more than India’s national output. According to Sharma, “the digital economy is helping China manage debts in the old economy and keep growth alive.”
When the old economy started showing signs of decline, the Communist government heavily invested in technological research and development, and now yearly spending is above 400 billion dollars, more than that of the European Union.
The investment in the technology sector was reaping benefits for the Chinese companies as well as the Chinese state, as countries around the world started using its hardware and software products.
But, in the last few months, India and United States have undone the gains made by Chinese companies in years. The successive bans on Chinese companies in countries around the world are weakening China’s tech hegemony, through which its dream of being the next superpower. The sophisticated surveillance system Chinese companies were building in many countries to make them vulnerable to Chinese cyberattacks, was destroyed by designating these companies as a “threat to national security.”
Huawei, the de facto leader of the Chinese tech sector with annual revenue of 124 billion dollars, was banned in many countries in the last few weeks. After the United States imposed semiconductor (chip) export restrictions on Huawei, the company said its “Survival” is at stake. “We will now work hard to figure out how to survive,” said Guo Ping, rotating chairman, at Huawei’s annual analyst conference. “Survival is the keyword for us now.”
After that, the US Senate passed the bill to restrict enlisting of Chinese companies at American stock exchange if they are directly or indirectly related to the People’s Liberation Army or Chinese Communist Party. The companies which do not get their audits done with the audit bureau of the United States, will also not be allowed to raise capital from the American market.
Moreover, the Indian government banned 59 Chinese apps including some very popular ones like TikTok, Wechat, ShareIt, and Camscanner given the threat to national security from them as PLA can use the user data to influence them, as already was being witnessed as reported.
Although, revenues from India were low, but it has the largest user base outside China, and therefore, the biggest potential market in terms of revenue, too.
As Chinese technology companies lose the United States- the biggest market in terms of revenue- and India- the biggest market in terms of user base, their global ambitions are set to be curbed. All the gains made by China over the years were crushed by India and the United States in few moves, thanks to Xi Jinping’s expansionist policies and irresponsible strategic positioning.