The party wants to be the sole supplier or guarantor of the necessities of life. And it causes unspeakable misery to capitalists and entrepreneurs who want to make money while improving people’s lives. They truly believed that China had given up on socialism and that the party would never sacrifice China’s vibrant internet ecosystem. Sadly, the pandemic has given tech companies more power than they ever wanted.
Last fall, just days after Jack Ma slammed the public banking system, the IPO of Ant Financial, which offered easy loans to unbanked people, was called off at the last minute. A few months earlier, for the first time in Chinese history, banks had been ordered to open dedicated lines of credit to small businesses and individuals in order to mitigate the effects of the pandemic. Affordable loans had become a form of public good, and it was important that the party be seen as putting the needs of ordinary people first.
Winter brought new challenges. The Biden administration, which was to reduce Trump’s rhetoric and be lenient on China, has disappointed. US-China tensions have been promoted in the institutional realm, and long blacklists of Chinese companies have been published to shame the Chinese Communist Party. Trade between the world’s two largest economies is worth over $ 600 billion, so a trade embargo as retaliation was not possible.
The only option to inflict economic suffering was to prevent the flow of capital. In a move akin to cutting his finger to spill blood on a neighbor’s doorstep, the party decided to order the DiDi rideshare app to be removed from app stores immediately after signing up for Wall Street. Socialism had struck the sanctuary of capitalism. The alleged crime of monopolist Didi was to have surpassed the party by accumulating data on the movements of the Chinese people.
The pandemic has amply demonstrated the unchecked power of data, an area where the party had a major advantage. He had already started experiments on social credit, digital currency, and monitored people on a scale unmatched by any government in the world. No tech company could be allowed to violate such a benefit. The party’s stranglehold on the media made it easy to convince ordinary citizens that the monopoly on data was a public good that could not be handed over to a private tech company that sought to be listed overseas. A Tarantino-style streak that merged domestic and foreign policy in a state-led war on private technology was really underway.
In an effort to alleviate problems caused by China’s rapidly aging population, the party first relaxed its one-child policy in 2015. Then, shocked by the results of the Seventh National Census, it announced a three-child policy in May 2021. In others In other words, a single child born in the 1990s could now dream of having up to nine grandchildren. It certainly made the Chinese dream more appealing but there was a little wrinkle. Raising three children in today’s China is simply unaffordable, even for upper-middle-class couples with two incomes. While public schools provide patriotic and affordable primary education, they are woefully inadequate for students aspiring to jobs in multinational companies or a life abroad.
A few nimble tech entrepreneurs from Zhong Guan Cun in China’s Silicon Valley had sought to bridge the gap by operating virtual classrooms that allowed a single teacher to simultaneously engage with more than a thousand students.
This edtech business model brought them untold wealth on Wall Street, but also increased inequality at home, where rising costs of online courses had made a three-child policy untenable.
Last week, the edtech giants lost their superpowers and market capitalization when the party banned the core curriculum, reducing them to mere providers of hobby classes. The Chinese premier himself intervened via video conference to collect brownie points from parents who carried three burdens: motherhood, parenthood and education. One of his deputies intervened with words that translate to predictions of greater state oversight over the health, education and housing sectors to cut costs and encourage larger families. .
Indian tech entrepreneurs and venture capital influencers were quick to assert that China’s crusade against tech giants would boost the reputation and valuation of local startups. There might be some truth to this prophecy, due to the scarcity of large untapped markets in the world.
However, foreign investors looking at India will need more than Zomato’s list to be convinced. They are still concerned about the lack of a comprehensive data protection law, an ad hoc national security screening process, the unpredictable results of the Atmanirbhar Bharat initiative that could promote crony capitalism, government clashes with Twitter, etc. When manufacturing investment began to drift away from China, it was Vietnam, Bangladesh and others that immediately benefited. If the Indian tech ecosystem is to consolidate the gains from China’s loss, much more soul-searching is needed. Simply opposing a takeover of power in a one-party system will not be enough.
Santosh Pai is an honorary member of the Institute of Chinese Studies.