Xi courts private sector

Plus, Trump imposes new restrictions on Chinese investments

Welcome back to What’s Happening in China, your weekly China brief.

I hope you’ve had a great week.

Ren Zhengfei (Huawei), Wang Chuanfu (BYD), Pony Ma (Tencent), Lei Jun (Xiaomi), Wang Xing (Meituan), Jack Ma (Alibaba), Liang Wenfeng (DeepSeek), and other prominent business leaders and entrepreneurs gathered at the Great Hall of the People in Beijing this week to receive a public show of support from the PRC’s top leader Xi Jinping.

Beijing launched a crackdown on the tech sector in 2020, fearing some firms had grown too large and powerful. The move wiped out billions of U.S. dollars in market value from Chinese tech companies, with Alibaba and its co-founder Jack Ma among the most publicized casualties. At the Bund Finance Summit in Shanghai that year, Ma accused the country of having a “pawnshop mentality” that stifled innovation. His remarks, delivered just after Wang Qishan spoke, inevitably angered officials and triggered an antitrust probe that cost the company a record 18 billion yuan ($2.75 billion) fine.

Facing economic headwinds, Beijing is now looking to the private sector for help. On Monday, state media quoted Xi as saying, “It is a prime time for private enterprises and entrepreneurs to give full play to their capabilities,” adding that the government would “sincerely protect the legal rights of private businesses and entrepreneurs, according to the law.”

Xi’s words have already been followed by new measures announced by the National Development and Reform Commission, the country’s top economic planning agency. Almost five years after the crackdown began, investors seem convinced the worst is over. And that seems to be the case. At least for now—in the same symposium this week, Xi cautioned, “we must realize that our country is a socialist country ruled by law, and any type of illegal activities by enterprises cannot avoid investigation and punishment.”

Let’s get into it.

— PC

[Edited February 22, 2025: Corrected the name of the founder of DeepSeek.]

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Keywords: Xi summit with business leaders • tech sector • Alibaba • Jack Ma • trade war • Trump 2.0 • South China Sea • Vietnam • Cambodia • Myanmar • live-fire drills near New Zealand • Cook Islands deal with China • WTO • ByteDance • Ukraine war • Chinese embassy in London • FDI • home prices • Luckin Coffee • DeepSeek • OpenAI • Wuhan Institute of Virology

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Through the Lens

Man cycling in central Beijing.

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In Focus

I. “Get rich first, and then promote common prosperity”

China’s President Xi Jinping met with private sector business leaders on Monday, offering them assurances that policies regarding the private sector would not change, state media reported, as government officials work to revive an economy disrupted by a pandemic, regulatory crackdowns and a real estate crisis.

Among those present was Alibaba founder Jack Ma, who was part of a focus on a crackdown on the tech industry in recent years.

Xi told the audience that the Communist Party and the government’s approach towards the private sector has been incorporated into “the socialist system with Chinese characteristics,” which is how the party describes its governance, according to state broadcaster CCTV. “They cannot and will not change,” said Xi.

The president also said the government would “sincerely protect the legal rights of private businesses and entrepreneurs, according to the law.” But, “at the same time, we must realize that our country is a socialist country ruled by law, and any type of illegal activities by enterprises cannot avoid investigation and punishment.”

Read: China's Xi promises policy stability at meeting with business leaders, including Alibaba's Jack Ma (AP)

Related:

• Why China investors finally believe Xi’s tech crackdown is over (The Straits Times)

• What did China’s tech entrepreneurs tell Xi Jinping at the symposium? (SCMP)

II. Bigger, better, stronger

Now back in the Oval Office, President Trump is eyeing the possibility of a new trade deal with China.

More than half a dozen current and former advisers and others familiar with Mr. Trump’s thinking say that, although there would be significant hurdles to reaching any agreement, the president would like to strike a wide-ranging deal with Mr. Xi, one that goes beyond just reworking the trading relationship.

Mr. Trump has expressed interest in a deal that would include substantial investments and commitments from the Chinese to buy more American products (despite China’s failure to buy an additional $200 billion of goods and services under the 2020 agreement). He would like an agreement to also include issues like nuclear weapons security, which he envisions ironing out man to man with Mr. Xi, his advisers say.

Mr. Trump is already following a familiar playbook of tariffs and other threats as he looks to negotiate a deal. On Feb. 1, he hit Beijing with 10 percent tariffs on all Chinese imports — what the president called an “opening salvo” — quickly resulting in retaliation from the Chinese. He has also floated the idea of revoking the permanent normal trading relations the United States extended to China more than 20 years ago.

China is one of the United States’ biggest national security threats, but it is also a major trading partner and a pivotal actor on a range of issues, including nuclear security, technology and pandemic preparedness.

[…]

Chinese officials seem to view Mr. Trump warily, expecting relations to remain contentious. They are aware that Mr. Trump is unafraid of imposing stiff tariffs and other penalties, but think the president’s desire to rework trade relations could bring him back to the negotiating table.

In a recent paper, Zhu Min, a former senior Chinese official and deputy managing director of the International Monetary Fund, and two co-authors argued that Mr. Trump will feel compelled to make good on promises to voters by promoting economic and job growth and expanding exports. On the other hand, they said, Mr. Trump “has an arrogant and self-righteous personality,” and will wield power in a “random, crude fashion.”

“China must understand Trump’s dual character, closely observe his behavior, negotiate with him based on his fundamental political goals as the bottom line, and exploit his erratic and volatile personality to play on that bottom line,” they wrote.

Read: Trump Eyes a Bigger, Better Trade Deal With China (The New York Times)

III. Journalists and China

There are few American journalists reporting from inside China today. But that has not always been the case. In fact, American journalists in China freely reported on one of the biggest stories of recent history: the Chinese army’s massacre of protestors in Tiananmen Square in 1989. In this episode, we talk to Richard Roth, a CBS correspondent who was there during the 1989 protests. We feature Lingling Wei, the distinguished Wall Street Journal correspondent who was kicked out of China, along with other American reporters. How are journalists today reporting on China from afar? At this vital time, how do we get on the ground reporting from China when we can’t be on the ground?

Listen: Journalists in China (Face-Off: The U.S. vs China)