Why is China cracking down on its own tech companies?

Beijing’s regulatory assault on China’s technology industry has lopped $87bn off the net worth of the sector’s wealthiest tycoons since the start of July, hitting the fortunes of magnates such as Tencent’s Pony Ma and Pinduoduo’s Colin Huang.

The combined net worth of the two dozen Chinese billionaires in tech and biotechnology whose holdings are tracked by Bloomberg has dropped 16 per cent since ride-hailing platform Didi Chuxing went public in the US at the end of June, according to Financial Times calculations.


A lot of people said tech monopolies are good because they help the U.S. fend off against international competition, so it seems like it's partly the reason why the U.S. stopped cracking down on big tech.

The meaning was clear, and echoed points Zuckerberg made during one of his previous appearances before Congress: Big Tech is essential to fight Chinese platforms like TikTok that can spy on Americans and whose opaque algorithms could be used to conduct malicious activities like censoring political content and potentially impacting an election.


The question now is why China is doing the exact opposite of what the U.S. is doing and killing its own stock market in the process?

  • 4
    The influences of the big-tech are too broad and far-reaching that threaten the usual practice of mind/behavior control of the Chinese people by the communist government.
    – r13
    Commented Aug 20, 2021 at 1:40

2 Answers 2


This may sound like circular logic - but a big reason why China wants to limit the power of tech companies is...they want to limit their power.

Major Chinese tech companies are a benefit to China - but if they are strong enough, they can become too big to be governed.

"A key question is what are policymakers in China trying to achieve?" Russell said. One thing was clear, he said: Beijing wanted to prevent companies becoming too dominant. - International investor concerns mount over China's tech rout

China doesn't want their own tech companies to get so powerful that they can influence the country more than they do. This is reasonable, and is a concern in the United States as well.

Eight in 10 Americans now say those mergers and acquisitions unfairly undermine competition and consumer choice. Three in 10 favor breaking such platforms up into smaller platforms to remedy the situation. - Americans Say Nation's Big Tech Companies Have Too Much Power

  • You talk as if the power and the influence of those companies and the power of the leaders of the ruling party were separate, but since they grew with the support of the party in a sector that has always been vital for the control of the people this is very unlikely.
    – FluidCode
    Commented Aug 20, 2021 at 17:20
  • 1
    @FluidCode For now. Just because they grow with the government, doesn't mean they are tied to them directly.
    – Zibbobz
    Commented Aug 20, 2021 at 19:40
  • Have you ever seen an authoritarian country that allows the growth of an independent media machine? People in power are not so stupid, it is obvious that those companies are strongly connected to them.
    – FluidCode
    Commented Aug 23, 2021 at 12:40
  • @FluidCode Yes, I have. It's called China. And as you said, they aren't stupid. They know that they need large industries to maintain global economic power. But they're also smart enough to carefully prune the branches before the tree becomes overgrown.
    – Zibbobz
    Commented Aug 23, 2021 at 12:44

Because those companies are now trying to expand abroad and a lot of countries are wary to let companies sponsored by the Chinese government to control so much information concerning their citizens, information is power.

So they decided that it is better to pay a price in terms of company value (permanent or temporary we don't know) in exchange for a public image that lets the relationship with the ruling party appear less cosy.

  • 7
    Interesting theory, but some evidence of this would be nice. For instance, does foreign opinion of Chinese corporations rise when the Chinese government clamps down, and are foreign companies keener to do business with them, or less keen, following a clampdown?
    – Stuart F
    Commented Aug 20, 2021 at 12:47

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