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On the eve of every Lunar New Year, hundreds of millions of Chinese all tune in to watch one live show, the Spring Festival Gallup. The Gala is an extravaganza. It often features the biggest celebrities in China and internationally. Stars like Jackie Chan and Celine Dion have taken the stage in previous years, but this year one performance stood out for a very different reason.
All of a sudden, you have these sort of six feet tall, black dancey robots dressed in bright red traditional Chinese vest, spinning handkerchiefs with both armed.
Lucille lu is a Bloomberg reporter covering China's economy and politics based in Beijing.
The way they moved, of course, just felt bizarre or it was just weird, but it was definitely a very memorable performance.
The humanoid robots are made by a Chinese startup called Unitary Robotics, and the performance was directed by one of the best in China, jug Yimo, who is behind the opening and closing ceremonies of the two thousand and eight Beijing Olympics. And Lucille says this performance seemed to be more than just a festive celebration.
The New Year's Gala is supposed to reflect social trends, but it's also a way to show some guesses at the government agenda or priorities, and this performance I think was the first time, of course, for the Year of the Snake, that showed that the Chinese government is perhaps warming to its tech giants.
It seems significant because China's tech giants have been sidelined since twenty twenty when China's President Shijinping cracked down on the tech industry, and putting the robots center stage felt like the beginning of a reconciliation of sorts. And then last week she did something that made a lot of China watchers think that the tech comeback is.
Real, thinking she'd see Hotel.
President c basically sat down with many of the biggest names in Chinese business over the past decade. So there was Jack Ma from Ali Baba, Huawei founder Jin Jim Fei byd but also newcomers to the scene like the founder of Unitree Robotics that made those robots in the Spring Gala, and also Deep Seek and I think in many ways you know it looked like he was assembling the Avengers team on stage.
Welcome to the Big Take Asia from Bloomberg News. I'm wanh. Every week we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever shifting region. Today on the show China's Big Tech Coming Back in from the Cold? What does it mean for China's tech industry and its rivals in the US. To understand how big a deal it is to see China's president cozying up with tech company CEOs, we have to go back to November twenty twenty.
That's when Beijing pulled the plug on the initial public offering of ant Group, just two days before what would have been the biggest IPO of all time.
I just remember those days in the newsroom because there was so much disbelief over this eleventh hour hauld of the world's biggest IPO. Jack Maa's ANT Group was set to raise thirty five billion dollars in Shanghai in Hong Kong and really cement his status as the richest man in China. Before this IPO, Jack Maa gives a speech accusing regulators of focusing too much on risk and stifling innovation.
And shortly after we know he's called Beijing, and before you know it, this IPO is suspended and authorities are saying that they have belatedly discovered all these shortcomings that basically required and overhauled the company.
I mean that was shocking to both the world but also to all of these Chinese internet companies too, right.
Yeah, absolutely, I mean looking back, that really marked the start of the series of crackdowns on the tech sector, primarily in the name of reigning and monopolies. And when it was all over, it had wiped something over a trillion dollars from the market value of some of China's
biggest tech firms. You know, we saw these very large finds being handed to the likes of and ten Cent DD and meanwhile state media is writing these editorials slamming these internet companies for their preoccupation with growing traffic, you know, at the expense of real scientific innovation. So it was a tough time to be a tech company, especially in the internet sector.
Lucille, what was behind the tech crackdown in the first place.
Yeah, there was certainly a sense that these companies had grown too powerful, too influential. They had amassed millions of users, and they gained influence over you know, every aspect of
daily life in China. So the outside powers of these tech mocuals was being increasingly perceived as this threat to political and also financial stability, so as being perceived by investors as a message from the top that money needed to align with China's national strategies, rather than the tech companies doing what was most financially beneficial to them.
Lucille says Beijing's crackdown on the excesses of the tech sector and private business also brought about a cultural shift in China. It was no longer glorious to be rich, and with that sentiment running high, business moguls like jackmw retreated from the public. GUYE.
Jack Law was such an outspoken entrepreneur and suddenly basically he'd gone quiet, And the next thing we heard from him, he was at a golf course, you know, basically taking a backseat to operating the company. So it was a very sudden change for a lot of these tech companies and these tech moguls.
And during the years following the crackdown in twenty twenty, Chinese tech companies found themselves struggling with a challenging regulatory environs, not just at home but also abroad.
They were also facing these blacklist sanctions from the US because there was the trade war, and then the Biden administration continued a lot of those policies. A lot of these companies didn't come out unscathed. We saw DD and really at a fraction of their valuation at their height. So it was very difficult for these companies, but they found a way to grow and survive, and so some of them managed even in this restrictive environment to develop new technology and make new breakthroughs.
Are there any companies that did well during this period that stand out for you?
There were the old national champions, for example, like Huawei. Huawei was blacklisted by the US on security concerns, but it did double down to R and D BYD is definitely an example of a company that's made waves overseas. It's going head to head with Tesla in terms of revenues and sales with its much more affordable evs.
Then there's the AI company deep Seek. It gave the world a real surprise when it showed the event. Is Chinese tech companies can achieve even with US curbs on critical chips.
Deep Seak was an example of what can come out of these restrictions. It was because of that limited number of chips that they had access to that forced the team to find ways to get more used from the chips they had, and that was a defining factor and how they were able to drive down costs.
And then fast forward to last week when President she held a meeting with all of the big names in tech.
We just talked about and more we shall Kwami show faith. This was a tightly choreographed pro business rally. You had ten set sell me Wil, Semi Conductor, Huawei, just the biggest names in China tech. But very importantly Jackmaw was there. So when we asked investors what would it take to regain confidence in the Chinese market, people would literally say President c would need to sit down with Jackmaw. And now it was really happening.
It's interesting why is Jack ma so pivotal for tech and why did people really want to see that kind of meeting between she and Maw.
Yeah, I think because he was such a poster child at the tech crackdown. There's certainly a lot of symbolism in se willing to meet with Jack Ma again and bring him out from the cold, put back in the good graces. And I think that sent a strong message in the Chinese bureaucracy to lower levels that perhaps there is a slightly different attitude now coming out of Beijing towards its private sector.
She's sentiment shift towards China's big tech Is it for real or is it just for show? That's after the break. President Shi Jinping's high profile meeting with China's top entrepreneurs last week wasn't the first ever. In twenty eighteen, at the beginning of Donald Trump's first trade war, she chaired a similar conference with leaders in the private sector, and at that meeting, he expressed unwavering support for the growth of private businesses. But the meeting was largely seen as symbolic.
We asked Katherine Thorbeck, a Bloomberg opinion columnist covering Asia tech, to join our conversation with Lucille Liu. Catherine, this looks like a real U turn by presidence. She he really seems to have it in for Chinese tech companies now they're all friendly. What's different this time around?
I think a lot has changed for the Chinese tech sectors, and most of it hasn't been good. The US has really put in sort of new efforts to hold back Chinese tech sector this time, whether that's export controls, hip restrictions. So chinae tech sectors coming out of those headwinds.
Lucille, you're on the ground there. What changes have you seen?
Yeah, I mean a lot has happened in the intervening years. You know, there was the COVID lockdown of property crisis that's still ongoing. You know, demographic challenge unges, and you know a sluggish economy where consumer sentiment is still weak. So Presidency knows he needs to boost confidence and send the signal for the bureaucracy that China needs to support
its private firms and especially in the tech sector. And by Bloomberg Economic calculations, the high tech industry contributed to fifteen percent of GDP last year and it's set to overtake the housing sector in twenty twenty six.
So very very important to China's success and certainly economic well being, especially as it tries to write the economy.
Yeah, that's absolutely right.
So the Chinese government has been scrutinizing the tech sector in the last couple of years, particularly the tech giants that perhaps are seen is too powerful by the party, But now here it is extending an olive branch. Lucille, do you sense that the tech companies are really buying it this time or are they skeptical? Yeah?
I think that that moment the meeting, it seems to really capture this moment where it's private or tech interests and maybe the party's own interests align and where See thinks the tech sector do something for them, and of course the tech sector is more than happy to benefit from state support. It's a point in the relationship where I think there are some common interests, but of course we've seen in the past the interests often diverge.
Yeah, I would agree. I think it's going to be really hard for people to not see this as a bit of a publicity stunt. If this isn't followed up by actual sort of policy changes, it's hard to tell if this gesture of goodwill will be sustainable or if it's more ephemeral, and I have a feeling it might not last. You know, I don't see she ultimately being okay with these private sector leaders having so much power
and threatening his political grip. So I think we will have to see if this is followed up by actual policy changes. At the same time, there though, I think she would be wise to sort of recognize that most of the best innovations that have come out of China have really come from the private sector. They haven't really come from his sort of state owned in state enterprises.
And you've got innovations like Deepseek's ai chatbot that recently caught global investors by surprise. Let me change the perspective a little here and ask you why do you think the US keeps getting surprised by Chinese tech.
I think some of it is language barriers and cultural barriers and few foreign reporters actually in China, and separate social media ecosystems. But I also think that there's some entrenched biases in the US and in Silicon Valley when it comes to China, and there's definitely a bit of sort of sinophobia. And I think, you know, US tech leaders paint themselves as the only people that can really
predict future trends and see the future. They've always had this presumed lead over Chinese tech, and so I think that there's a lot of barriers that the US has to really understand in China, and I think that it's important for Silicon Valley to sort of break those down, otherwise they will keep being surprised.
You called them the US tech rolagarchy in a recent column. Can you explain that to us? So?
I do have to give credit to my editor for adding that in, but it is it's just so applicable to this moment we're seeing in US tech right now, where these tech billionaires, these very powerful business leaders have just been positioning themselves and trying to get very close to the Trump administration, and that's just been giving them even more power and more influence.
And at Donald Trump's inauguration in January, he was surrounded by all of these tech titans. You had Mark Zuckerberg, Jeff Bezos, Tim Cook, and of course Elon Musk. Do you see any similarities between this US tech roly garchy and what happened with the recent meeting in China.
It does seem like she responded to Trump showing up with his tech leaders to show that he also has this sort of the port and he also has some very powerful tech players in his ecosystem. But at the same time, I don't think that he would allow them to have the same kind of power and political influence that they're having in the US right now.
Right and certainly Silicon Valley and Washington d C. Are worried about China's tech over national security and other issues. So now you've got these Chinese tech companies appearing to be back in the good graces with President Shi Jinping and on the rise in China, but there's still somewhat second string to American firms.
Right What are the.
Biggest challenges for Chinese tech companies as they try to close that gap.
I think that we've learned from the TikTok saga, which has just raged on for years, that at this point Washington and US lawmakers really see any sort of consumer facing tech product coming out of China as a potential national security threat. They see any Chinese tech company is potentially connected to the government, their success is a vouch for their political system, and you know, threat to democracy everywhere.
And I think whether or not that's true, I think we'll still see these Chinese tech companies producing these innovations, and I do think, you know, if they want to find a way to grow in the US market. That's going to be a real challenge ahead, and I don't think any of them, as we've seen from TikTok, have really figured that out yet.
I think the political wines in daging are always a factor. We've seen them swing. There's been a lot of whiplash in the industry where things have gone one way and then the other. So I think very reasonably for a lot of these tech firms, there is still questions over sort of Beijing's commitment to continue to to support them.
This is The Big Take Asia from Bloomberg News. I'm wan Ha. This episode was produced by Young Young, Naomi and Jessica Beck. It was edited by Patty Hirsch, Daniel ten Kate, and Jenny Marsh. It was fact checked by Naomi and Young, mixed by Amer Salton, and sound designed by Jessica. Our senior producer is Naomi Shaven. Our senior editor is Elizabeth Ponzo. Our executive producer is Nicole Beemster Bower.
Sage Bowman is Bloomberg's head of Podcasts. If you like this episode, make sure to subscribe and review The Big Take Asia wherever you listen to podcasts, It really helps people find the show. Thanks for listening, See you next time.