After a more than $1 trillion rout, Beijing appears to be warming to Chinese tech giants
Beijing’s regulatory crackdown on the Chinese tech sector began in late 2020, wiping off more than a combined $1 trillion from the country’s biggest companies.
There are now signs that the central government is softening its stance towards internet titans like Alibaba, in a move that could prove positive for Chinese tech stocks.
“The regulatory headwinds that we had in the past two years … that’s now becoming from a headwind to a tailwind,” George Efstathopoulos, portfolio manager at Fidelity International, told CNBC’s “Street Signs Asia” on Wednesday.
On Tuesday, Alibaba announced a major reorganization, looking to split its company into six business units, in an initiative “designed to unlock shareholder value and foster market competitiveness.”
Over the past two years, China’s government has often railed against the “disorderly expansion of capital” of tech firms that have grown into large conglomerates. Part of Alibaba’s announcement noted that these splintered businesses could raise outside capital and even go public, seemingly heading in a contrary direction to Beijing’s concerns.
Efstathopoulos said that the move could indicate a green light from the upper echelons of the Chinese government.
“You have senior leadership blessing for unlocking value, and, to me, that is a fantastic indication where we are now essentially moving from regulation not being the issue that it was,” Efstathopoulos said.
Jack Ma’s return
Alibaba’s restructure isn’t the only sign that Beijing could be easing up its scrutiny of the tech sector. Jack Ma, the founder of Alibaba, returned to public view in China for the first time in months.
Some credit Ma with sparking the start of the tech crackdown in October 2020, when the billionaire made comments that appeared critical of China’s financial regulator. A few days later, Ant Group, the financial technology affiliate of Alibaba that was controlled by Ma, was forced to scrap its massive Hong Kong and Shanghai dual listing, after regulators said it did not meet the requirements to go public.
Following this, the Chinese government doled out huge antitrust fines to Alibaba and food delivery giant Meituan, introducing a slew of regulation in areas from data protection to the way in which companies can use algorithms.
Ma’s reappearance in Hangzhou, where Alibaba is headquartered, has been read as another sign of Beijing’s more positive view toward the tech sector and entrepreneurs.
“Jack just didn’t show up in Hangzhou because he was tired of traveling around. I think it was well orchestrated and fits with the government’s campaign to demonstrate that, you know, they are relaxing pressures on their private sectors and are welcoming the rest of the world,” Stephen Roach, a senior fellow at Yale University, told CNBC’s “Squawk Box Asia” on Tuesday.
Economic growth in focus
There have been further signs of regulatory easing over the past few weeks.
The gaming sector was hard hit in 2021, as authorities grew concerned about addiction among young people in China. Chinese regulators froze the approval of new game releases for several months. Last April, authorities began to green light new games, mainly from domestic firms. This month, the video game licensing regulator gave its stamp of approval to a batch of foreign titles for release in China.
Meanwhile, Chinese ride-hailing giant Didi — one of the companies caught up in the regulatory overhaul — announced plans to expand its business. Didi went public in the U.S. in June 2021, but found itself subjected to a cybersecurity review by Chinese regulators within days of listing. It eventually delisted from the New York Stock Exchange and plans to float in Hong Kong.
Over the last few days, foreign technology executives including Apple CEO Tim Cook and Qualcomm CEO Cristiano Amon visited China and met with government officials.
Jack Ma, founder of Alibaba, reappeared in the public view in China for the first time in months. Alibaba then announced a huge reorganization of its business. Experts see the move as a signal that the Chinese government is softening its stance toward tech giants after a crackdown that began in late 2020.
Jean Chung | Bloomberg | Getty Images
In addition to warming to the domestic tech sector, China is also courting foreign business. Its economy has been battered over the past two years, thanks in part to the country’s strict Covid policies and regulatory tightening. The government now aims for around 5% economic growth this year.
To achieve that, it will need the help of private businesses — including the tech sector.
“China is facing both weak economic growth and rising tech competition from the U.S. It’s a pretty tough position to be in. So they need the economy to fire on all cylinders. Tough regulations on big tech platforms just doesn’t make sense at this juncture,” Linghao Bao, tech analyst at Trivium China, told CNBC via email.
Is China tech out of the woods yet?
While there are promising signs for investors, there is also reason to be cautious, warned Xin Sun, senior lecturer in Chinese and east Asian business at King’s College London.
Sun describes the Alibaba reorganization as a move to “break up Alibaba’s business empire and to reduce its huge influence that could potentially pose a threat” to the Chinese Communist Party’s rule.
“After restructuring, the organizational structure of Alibaba will become more decentralized, and the control over its assets, data and resources will be less concentrated. The Party could then impose stronger political control over each of the new entity more easily,” Sun added.
He cautions against too much optimism around the Chinese technology sector. While the latest moves bring some regulatory certainty, many questions remain about how other tech giants might fare.
“In the short run, Alibaba’s restructuring might be perceived as the routinization of the government regulatory actions and provide some regulatory certainty for the sector,” Sun said.
“In the long run, however, it raises more questions about the fate of other tech giants. Will Tencent, Meituan, and ByteDance be broken up too? If so, do they make their own decisions or do they just wait for the order from the government? Such uncertainty will keep weighing on entrepreneurs and investors, undermining their confidence.”
A Xiaomi store in Shanghai, China, on March 16, 2025.
Qilai Shen/Bloomberg | Bloomberg | Getty Images
Chinese electric carmakers Xiaomi, Xpeng and Leapmotor each delivered nearly 30,000 or more cars in March, roughly twice several of their fellow startup competitors.
It’s a sign of how some automakers are pulling ahead, while BYD remains the market leader by far.
Xiaomi delivered a record number of electric vehicles in March, exceeding 29,000 units, the company announced on social media. That topped its prior run of delivering more than 20,000 vehicles in each of the past five months.
The SU7, Xiaomi’s flagship model, was involved in a crash on a highway on Tuesday that left three dead. The automaker on Tuesday afternoon released a statement on Chinese social media that the vehicle was in navigation on autopilot mode before the accident.
Based on preliminary information, the road was obstructed because of construction. The driver took control of the car but collided with construction infrastructure. Xiaomi added in the release that investigations were underway.
That came two weeks after the automaker announced on March 18 its goal to deliver 350,000 vehicles this year. There are also talks of the automaker expanding its second EV factory in Beijing to meet demand, Bloomberg reported on March 18. Xiaomi did not immediately respond to CNBC’s request for comment.
Its competitor Xpeng in March delivered 33,205 vehicles, the fifth consecutive month it has delivered over 30,000 units per month and reflecting a 268% surge in deliveries from the same month last year. March is also the fifth consecutive month the company has delivered over 15,000 units of the Mona M03.
Leapmotor delivered 37,095 vehicles, reflecting a 154% year-over-year growth. The Stellantis-owned automaker last month launched U.K. sales of two electric vehicle models, the T03 and the C10.
Li Auto delivered 36,674 vehicles in March, a 26.5% year-over-year increase, but fewer than every month in the second half of 2024. The company’s cars had gained early traction with Chinese consumers since most come with a fuel tank for charging the vehicle’s battery, reducing anxiety about driving range.
BYD sold 371,419 passenger vehicles in March, reflecting a year-over-year growth of 57.9%. Its overseas sales volume also hit a record high of 72,723 units in March.
In the same month, the automaker unveiled its “Super e-Platform” technology, which boasts 400 kilometers (roughly 249 miles) of range with five minutes of charging. The company in February also announced that it was integrating DeepSeek artificial intelligence to develop “DiPilot,” its advanced driver-assistance system.
Across the board, major companies across China’s electric car industry reported deliveries rose last month, indicating a pick-up in demand from the seasonally soft first two months of the year.
U.S. automaker Tesla sold 78,828 electric vehicles in China in March, marking a 11.5% year-over-year decline in growth.
Other Chinese carmakers saw growth in deliveries but some still struggled to break through the 20,000-unit mark.
Nio delivered 15,039 vehicles, a 26.7% year-over-year growth, but well below the number of cars delivered in the months of May to December last year. Nio-owned Onvo, which markets its electric vehicles as family-oriented, in March recorded 15,039 units in deliveries.
Geely-owned Zeekr delivered 15,422 vehicles in March, increasing by 18.5% year over year. The company last month announced its rollout of free advanced driver-assistance technology to local customers in a bid to compete in the market.
Aito, as of April 2, has not published its delivery numbers for March. The automaker, which uses Huawei tech in its vehicles, on social media had reported monthly deliveries of 34,987 and 21,517 in January and February, respectively.
Quarterly performance
On a first-quarter basis, BYD remained in the lead with 986,098 vehicles sold. The automaker, which overtook Tesla in annual sales last year, surpassed the U.S. EV giant in battery electric vehicles sales this quarter.
Tesla sold 172,754 vehicles in China in the first quarter this year, according to monthly delivery numbers published by the China Passenger Car Association.
Xpeng also reported strong growth, with a total of 94,008 vehicles delivered in the quarter ending in March, reflecting a 331% year-over-year growth.
Leapmotor saw quarterly deliveries more than double to 87,552 units from 33,410 units the same period in 2024, according to publicly available numbers the company published.
However, Li Auto and Nio reported weaker growth than their competitors in the first quarter of the year.
Nio saw 42,094 vehicles delivered in the three months ended March 2025, an increase of 40.1% year over year. Li Auto saw a slower year-over-year growth of 15.5%, with a total of 92,864 vehicles delivered.
A driver for an independent contractor to FedEx delivers packages on Cyber Monday in New York, US, on Monday, Nov. 27, 2023.
Stephanie Keith | Bloomberg | Getty Images
President Donald Trump on Wednesday signed an executive order shutting the de minimis trade loophole, effective May 2.
Trump in February abruptly ended the de minimis trade exemption, which allows shipments worth less than $800 to enter the U.S. duty-free. The order overwhelmed U.S. Customs and Border Protection employees and caused the U.S. Postal Service to temporarily halt packages from China and Hong Kong. Within days of its announcement, Trump reversed course and delayed the cancellation of the provision.
Wednesday’s announcement, which came alongside a set of sweeping new tariffs, gives customs officials, retailers and logistics companies more time to prepare. Goods that qualify under the de minimis exemption will be subject to a duty of either 30% of their value, or $25 per item. That rate will increase to $50 per item on June 1, the White House said.
Use of the de minimis provision has exploded in recent years as shoppers flock to Chinese e-commerce companies Temu and Shein, which offer ultra-low cost apparel, electronics and other items. The U.S. Customs and Border Protection has said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.
Critics of the provision say it provides an unfair advantage to Chinese e-commerce companies and creates an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.
The Trump administration has sought to close the loophole over concerns that it facilitates shipments of fentanyl and other illicit substances on the claims that the packages are less likely to be inspected by customs agents.
Temu and Shein have taken steps to grow their operations in the U.S. as the de minimis loophole has come under greater scrutiny. After onboarding sellers with inventory in U.S. warehouses, Temu recently began steering shoppers to those items on its website, allowing it to speed up deliveries. Shein opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year.
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