After years of heavy-handed intervention in China’s private sector, President Xi Jinping is signaling a shift. On February 17th, he convened a rare symposium with leading tech entrepreneurs, including Alibaba’s founder, Jack Ma—who was previously sidelined in Beijing’s sweeping crackdown on private firms. The message was clear: the Communist Party wants the private sector to thrive again, but only within strict political boundaries.
This recalibration comes at a crucial moment for China’s economy. The country is grappling with a prolonged property slump, a lack of consumer confidence, and its longest deflationary stretch in over 25 years. Exports remain under pressure, and foreign investment has waned as geopolitical tensions with the West escalate. In this uncertain environment, Beijing sees private enterprise as an indispensable engine for growth. A rally in tech stocks, fueled by artificial intelligence optimism, offers a much-needed financial reprieve. DeepSeek, an AI startup from Zhejiang province, has captured attention by developing models that rival the world’s best at a fraction of the cost. The firm’s success has lifted sentiment in Hong Kong’s battered stock market, driving a 23% surge in tech shares over the past month.
Yet Beijing’s renewed support for private firms is not a return to laissez-faire capitalism. Five years ago, Chinese tech giants wielded vast troves of consumer data, often surpassing the state’s own insights into citizens’ habits. Some, like ride-hailing giant Didi, prioritized foreign investors and overseas listings, defying Beijing’s growing concerns over data security. Those days are over. Stringent new regulations now control data collection, restrict overseas IPOs, and embed Communist Party oversight within private firms.
Moreover, China’s shifting geopolitical landscape has reinforced this inward turn. U.S. restrictions on high-end semiconductor exports have made technological self-reliance a national priority. As Western investors increasingly view Chinese firms as “uninvestible,” these companies have little choice but to raise capital at home. The result is a private sector more closely tethered to state objectives than ever before.
At the symposium, Xi praised entrepreneurs but reminded them to “remember their roots.” His vision for the private sector is not about maximizing shareholder returns but advancing “Chinese-style modernization.” Companies may benefit from state support, but only if they align with the party’s broader goals. As foreign investors remain wary of China’s unpredictable regulatory landscape, the private sector’s path to resurgence remains constrained—flourishing only as far as Beijing allows.