Crackdown to outreach: Decoding Beijing's shift in tone as Xi Jinping meets Chinese tech honchos

Over the past four years, China’s regulatory environment has been characterised by crackdowns on its tech giants, including Alibaba, Tencent and Didi, which led to declining market valuations and uncertainty in the business community.

The shift in tone at this meeting suggests a recalibration of policy, acknowledging that the country’s private sector is indispensable in its competition with the United States in critical technology fields, such as artificial intelligence (AI) and semiconductors.

Analysts view this meeting as a tacit acknowledgment that China’s technological ambitions cannot be realised without the support of private firms. Christopher Beddor, deputy China research director at Gavekal Dragonomics, told Reuters that the Chinese government has little choice but to back these firms if it wants to compete with the US in cutting-edge technology.

Private sector and Chinese economy

Official estimates highlight the private sector’s vital role in China’s economy, contributing over 60% of economic output, more than 50% of tax revenues and around 70% of technological innovation, according to a Reuters report.

Companies like Huawei, BYD, and AI startups such as DeepSeek have been at the forefront of technological breakthroughs, despite facing US trade restrictions.

The participation of DeepSeek founder Liang Wenfeng at the meeting is particularly noteworthy, given that the startup has emerged as a significant player in AI, competing with American ventures with its cost-effective AI models. This indicates that China is looking to harness the potential of homegrown AI startups to counterbalance restrictions on advanced semiconductor exports from the US.

Economic, geopolitical headwinds

The timing of the meeting is crucial. China’s economy has been grappling with a slowdown exacerbated by weak consumer spending and an ongoing debt crisis in the property sector. At the same time, US tariffs and sanctions on Chinese tech firms pose further challenges.

In this context, Xi’s reassurances to the private sector serve both as a confidence-building measure and as a strategic move to counter external economic pressures.

This, however, is not the first time that the Chinese government has hosted such a meeting. A similar high-profile symposium was chaired by Xi in 2018, during the US-China trade war under the first Trump administration. The recent meeting is also being seen as an attempt by China to once again rally its business elite to navigate an era of economic and geopolitical headwinds.

Formidable obstacle ahead

Xi reinforced his long-standing vision of "common prosperity” at the meeting. He urged private businesses to be "rich and loving" while ensuring a more equitable distribution of wealth.

At the same time, Xi reaffirmed China’s commitment to achieving self-sufficiency in semiconductors and AI-driven economic development.

However, Washington’s export control measures on advanced chips remain a formidable obstacle, given concerns that China could leverage these technologies for military advancements.

What happens next?

While Xi’s remarks indicate a more favorable stance towards tech firms, it remains to be seen whether this translates into concrete policy changes.

Regulatory uncertainties, trade tensions and domestic economic challenges continue to weigh on investor sentiment. Nonetheless, the meeting signals an important shift in Beijing’s approach, acknowledging that China’s technological ambitions hinge on the dynamism and innovation of its private sector.