The logic driving China’s big tech clampdown

I keep the claim that the explanation is even more simpler: whomever becomes a big man in a country like China eventually goes down, and that's the whole story.

There can only be one "big man" in such system, and he tolerates no competition.

This consistently held true through the whole 40 years of modern China: whomever attains too much of the social, political, economical, cultural, moral, or even genealogical prominence consistently gets taken down. This is why most mainland Chinese have that fear of publicity, and standing out almost bordering on panic disorder. And this is why people attaining any level of prominence there keep leaving the country for the West.

https://danwang.co/2020-letter/

> While promoting the status of science and technology with one hand, the Chinese government has with its other hand reined in the activities of consumer internet companies. I’ve never stopped lamenting the marketing trick that California pulled off to situate consumer internet as the highest form of technology, as if Tencent and Facebook are the surest signs that we live a technologically-accelerating civilization. The “tech” giants are highly-capable companies that print cash. But they’re barely engaged in the creation of intellectual property, excelling instead on business-model innovation and the exploitation of network effects. It’s become apparent in the last few months that the Chinese leadership has moved towards the view that hard tech is more valuable than products that take us more deeply into the digital world. Xi declared this year that while digitization is important, “we must recognize the fundamental importance of the real economy… and never deindustrialize.” This expression preceded the passage of securities and antitrust regulations, thus also pummeling finance, which along with tech make up the most glamorous sectors today. The optimistic scenario is that these actions compress the wage and status premia of the internet and finance sectors, such that we’ll see fewer CVs that read: “BS Microelectronics, Peking; software engineer, Airbnb” or “PhD Applied Mathematics, Princeton; VP, Citibank.”

Read the whole letter, it is very informative, unlike most coverage in the Western business press that leans towards the caricatural. Xi may be evil and ruthless, but that does not mean he is stupid, or insincere in his nationalism. It would be a grave mistake to underestimate him and think of him as just another Putin.

I don't even get it why you bothered to mention Ant, I wouldn't feel sorry for comsumer loan companies in another lifetime. You claim it to have pushed economic growth, that's the same as saying the pre-2008 housing market in the US is a huge pillar of economic growth, and look at where that lead us.

Didi committed the sin of going ahead with a US listing against explicit orders from the government, in the context of an economic cold war with the US. China has plenty of capital, it's not as if we're in the 1970s and the US is the only way to go. You can bet that if JP Morgan Chase wanted to shift its headquarters to Hong Kong, the US would also take swift action. What the Chinese are doing with foreign listings is not all that different from what the US does with CFIUS.

Wanting to preserve privacy from private companies is not at all inconsistent with wanting the government to have total surveillance power. There are many domains where government has a monopoly, from issuing currency to the exercise of violence.

You will note Xi is cracking down in other areas that are not a plausible threat to the CCP, like bitcoin miners or the educational tutoring arms race. Sometimes, the stated agenda is the actual agenda.

He has also done tremendous institutional damage to the PRC by rolling back Deng's reforms and going back to the Mao model of, ahem, governance. That Xi himself is a relatively competent leader does not guarantee his successors will also be, and you have to consider how Mao killed more people than Hitler and Stalin combined through sheer incompetence to understand how dire the consequences could be.

It's interesting given his family history: his father was purged by Mao, rehabilitated by Deng, but eventually also fired by Deng. Xi Jinping had a very hard time after his father's fall from favor, and some have compared his adoption of Maoism as a form of Stockholm Syndrome.

Xi also overreached by challenging the US too soon rather than bide his time and wait another couple of decades by which point China could have weaned itself from dependence on the US for tech like semiconductor fabrication and been much less vulnerable.

Xi's model of governance is essentially the traditional Chinese model of an Emperor aided by a mandarinal bureaucracy, just with engineering substituting for study of the Confucian classics as training mode for the mandarins. Chinese politicians' advancement is conditional on them meeting GDP growth objectives (now also environmental indicators), essentially it's run just like Google with its OKRs.

China became world's 2nd largest economic power because money were almost raining on them from the sky, and not because of any level of sophistication.

Were they actually trying to play a better role beyond basic technocratic guidance, China wouldn't be a 2nd largest economy today, but a 1st one, and by a large extend.

With them seeing that the West was willing to pour money on them even when they were failing as hard as they did, they had not a single incentive to not to blow up the economy "just because", as you said, every few years, and being anything else than this "barbaric government system."

The extend of economic mismanagement during the so called "China's golden decade" was just that bonkers. 10, 11 digits sums were going up in flames, or vanishing in Swiss bank accounts almost monthly back then.

It's only when it got so bad as it is now economically, did the CPC turn on the current crisis mode. It is now slowly reverting to its pre-199x state — the perpetual crisis. It will be becoming increasingly more paranoid as the situation deteriorates, and increasingly more panic prone. The history shows that's how it was with every marxist, communist, or hardcore socialist regime in the past.