China fortifies efforts to rein in its biggest internet companies

Xi likely to keep a tight grip even if it leads to economic setbacks.

The ruling Communist Party is tightening political control over China’s internet giants and tapping their wealth to pay for its ambitions to reduce reliance on U.S. and European technology.

Anti-monopoly and data security crackdowns starting in late 2020 have shaken the industry, which flourished for two decades with little regulation. Investor jitters have knocked more than $1.3 trillion off the total market value of e-commerce platform Alibaba, games and social media operator Tencent and other tech giants.

The party says anti-monopoly enforcement will be a priority through 2025. It says competition will help create jobs and raise living standards.

President Xi Jinping’s government seems likely to stay the course even if economic growth suffers, say businesspeople, lawyers and economists. “These companies are world leaders in their sectors in innovation, and yet the leadership is willing to squash them all,” said Mark Williams, chief Asia economist for Capital Economics.

The crackdown reflects Xi’s public emphasis on reviving the party’s “original mission” of leading economic and social development, said Steve Tsang, a Chinese politics specialist at the School of Oriental and African Studies in London. He said it could also help Xi politically if, as expected, he pursues a third five-year term as party leader.

Chinese leaders don’t want to reimpose direct control of the economy but want private sector companies to align with ruling party plans, said Lester Ross, head of the Beijing office of law firm Wilmerhale.

“What they are worried about is companies getting too big and too independent of the party,” said Ross.

Chinese internet companies and their billionaire founders, including Alibaba Group’s Jack Ma and Tencent Holdings’ Pony Ma, are among the biggest global success stories of the past two decades. Alibaba is the biggest e-commerce company, while Tencent operates the popular Wechat messaging service.

But party plans emphasize robots, chips and other hardware, so these companies are rushing to show their loyalty by shifting billions of dollars into those.

AP FILE As China’s ruling party aims to lead economic development, internet giants like Alibaba try to keep in line by backing what the government wants, things like robotics, chips and hardware.