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China’s tech firms growing influence

Big tech competition heats up

Chinese big tech companies have emerged as some of the most influential players in the global technology landscape, driving innovation and shaping industries across the board. These companies are deeply entrenched in everyday life in C h ina, offering a wide range of services and products that span e-commerce, social media, gaming, cloud computing, ΑΙ, and telecommunications. Their influence is not confined to China, they also play a significant role in global markets, often competing directly with US tech giants.

The rivalry between China and the US has become one of the defining geopolitical struggles of the 21st century. This competition oscillates between cooperation, fierce competition, and confrontation, influenced by regulatory policies, national security concerns, and shifting political priorities. The geopolitical pendulum of China-US tech firms, totally independent from the US election outcome, reflects the broader tensions between the two powers, with profound implications for global tech industries, innovation, and market dynamics.

China’s access to US technology will face further restrictions after the election.

The Golden Shield Project

In 2000, under Chairman Jiang Zemin’s leadership, China launched the Golden Shield Project to control media and information flow within the country. The initiative aimed to safeguard national security and restrict the influence of Western propaganda. As part of the Golden Shield, many American tech giants such as Google, Facebook, and Netflix were blocked by the Great Firewall for not complying with China’s data regulations, while companies like Microsoft and LinkedIn were allowed to operate.

At the same time, China’s internet user base grew dramatically, reaching 800 million netizens by 2018, with 98% using mobile devices. This rapid expansion provided a fertile ground for Chinese tech firms, which thrived without significant competition from foreign players. Among the earliest beneficiaries of this system were the BATX companies, which capitalised on China’s evolving internet landscape and rapidly established a dominant presence in the market.

The powerhouses of Chinese tech

The major Chinese tech companies, often referred to as the Big Tech of China, include Alibaba Group, Tencent, Baidu, ByteDance, Huawei, Xiaomi, JD.com, Meituan, Pinduoduo, and Didi Chuxing.

Alibaba Group is a global e-commerce and technology conglomerate, operating platforms such as Taobao and Tmall for e-commerce, AliExpress for international retail, and Alipay for digital payments. The company also has significant investments in cloud computing with Alibaba Cloud and logistics.

Tencent, a massive tech conglomerate, is known for its social media and entertainment services. It owns WeChat, a widely used messaging app that offers payment services, social media features, and more. Tencent also has investments in gaming, owning major stakes in Riot Games, Epic Games, and Activision Blizzard, as well as interests in financial services and cloud computing.

Baidu, often called China’s Google, is a leading search engine provider. In addition to its search services, Baidu has a strong presence in AI development, autonomous driving, and cloud computing, particularly focusing on natural language processing and autonomous vehicles.

ByteDance, the company behind TikTok, has made a name for itself in short-form video content and AI-driven platforms. It also operates Douyin, the Chinese version of TikTok, along with Toutiao, a popular news aggregation platform. ByteDance has expanded into gaming, e-commerce, and other AI technologies.

Huawei is a global leader in telecommunications equipment and consumer electronics, particularly smartphones and 5G infrastructure. The company is deeply involved in cloud computing and AI, despite facing significant geopolitical challenges.

Xiaomi is a leading smartphone manufacturer that also produces smart home devices, wearables, and a wide range of consumer electronics. The company is growing rapidly in the Internet of Things (IoT) space and AI-driven products.

JD.com, one of China’s largest e-commerce platforms, operates similarly to Alibaba, focusing on direct sales, logistics, and tech solutions. JD.com has also made significant strides in robotics, AI, and logistics technology.

Meituan is best known for its food delivery and local services platform, offering everything from restaurant reservations to hotel bookings. The company also operates in sectors like bike-sharing, travel, and ride-hailing.

Pinduoduo has rapidly grown in e-commerce by focusing on group buying and social commerce, particularly targeting lower-tier cities and rural markets in China. The platform offers discounted products to users who buy in groups.

Didi Chuxing is China’s dominant ride-hailing service, offering various transportation services such as ride-hailing, car rentals, and autonomous driving technology.

But what are the BATX companies we mentioned earlier?

BAXT

The term BATX refers to a group of the four dominant Chinese tech companies: Baidu, Alibaba, Tencent, and Xiaomi. These companies are central to China’s technology landscape and are often compared to the US “FAANG” group (Facebook, Apple, Amazon, Netflix, Google) because of their major influence across a range of industries, including e-commerce, search engines, social media, gaming, ΑΙ and telecommunications. Together, BATX companies are key players in shaping China’s tech ecosystem and have a significant impact on global markets.

China’s strategy for tech growth

China’s technology development strategy has proven effective in propelling the country to the forefront of several high-tech industries. This ambitious approach, which involves broad investments across both large state-owned enterprises and smaller private startups, has fostered significant innovation and created a competitive business environment. As a result, it has the potential to serve as a model for other countries looking to stimulate tech growth.

A key driver of China’s success is its diverse investment strategy, supported by government-led initiatives like the “Made in China 2025” and the “Thousand Talents Plan“. These programs offer financial backing and attract top talent from around the globe. This inclusive approach has helped China rapidly emerge as a global leader in fields like AI, robotics, and semiconductors. However, critics argue that the strategy may be overly aggressive, potentially stifling competition and innovation.

Some have raised concerns that China’s government support unfairly favours domestic companies, providing subsidies and other advantages that foreign competitors do not receive. Yet, this type of protectionist approach is not unique to China; other countries have implemented similar strategies to foster the growth of their own industries.

Another critique is that China’s broad investment model may encourage risky ventures and the subsidising of failures, potentially leading to a market that is oversaturated with unprofitable businesses. While this criticism holds merit in some cases, the overall success of China’s strategy in cultivating a dynamic and competitive tech landscape remains evident.

Looking ahead, China’s technology development strategy is likely to continue evolving. As the country strengthens its position on the global stage, it may become more selective in its investments, focusing on firms with the potential for global leadership.

In any case, China’s strategy has shown it can drive innovation and foster growth. Other nations hoping to advance their technological sectors should take note of this model and consider implementing similar policies to enhance their own competitive and innovative business environments.

But under what regulatory framework does Chinese tech policy ultimately operate? How does it affect the whole project? Are there some negative effects of the tight state grip?

China’s regulatory pyramid: Balancing control and consequences

China’s regulatory approach to its booming tech sector is defined by a precarious balance of authority, enforcement, and market response. Angela Zhang, author of High Wire: How China Regulates Big Tech and Governs Its Economy, proposes a “dynamic pyramid model” to explain the system’s intricate dynamics. This model highlights three key features: hierarchy, volatility, and fragility.

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The top-down structure of China’s regulatory system is a hallmark of its hierarchy. Regulatory agencies act based on directives from centralised leadership, creating a paradox. In the absence of clear signals, agencies exhibit inaction, allowing industries to flourish unchecked. Conversely, when leadership calls for stricter oversight, regulators often overreach. A prime example of this is the drastic shift in 2020 when China moved from years of leniency toward its tech giants to implementing sweeping crackdowns on firms like Alibaba and Tencent.

This erratic enforcement underscores the volatility of the system. Chinese tech regulation is characterised by cycles of lax oversight followed by abrupt crackdowns, driven by shifts in political priorities. The 2020 – 2022 crackdown, which involved antitrust investigations and record-breaking fines, sent shockwaves through markets, wiping out billions in market value. While the government eased its stance in 2022, the uncertainty created by such pendulum swings has left investors wary, with many viewing the Chinese market as unpredictable and risky.

Despite its intentions to address pressing issues like antitrust violations and data security, China’s heavy-handed regulatory approach often results in fragility. Rapid interventions can undermine confidence, stifle innovation, and damage the very sectors the government seeks to strengthen. Years of lax oversight exacerbate challenges, leaving regulators with steep issues to address and markets vulnerable to overcorrection.

This model offers a lens into the broader governance dynamics in China. The system’s centralised control and reactive policies aim to maintain stability but often generate unintended economic consequences. As Chinese tech firms look to expand overseas amid domestic challenges, the long-term impact of these regulatory cycles remains uncertain, potentially influencing China’s ability to compete on the global stage.

The battle for tech supremacy between the USA and China

The incoming US President Donald Trump is expected to adopt a more aggressive, unilateral approach to counter China’s technological growth, drawing on his history of quick, broad measures such as tariffs. Under his leadership, the USA is likely to expand export controls and impose tougher sanctions on Chinese tech firms. Trump’s advisors predict a significant push to add more companies to the US Entity List, which restricts US firms from selling to blacklisted companies. His administration might focus on using tariffs (potentially up to 60% on Chinese imports) and export controls to pressure China, even if it strains relations with international allies.

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The escalating tensions have been further complicated by China’s retaliatory actions. In response to US export controls, China has targeted American companies like Micron Technology and imposed its own restrictions on essential materials for chipmaking and electric vehicle production. These moves highlight the interconnectedness of both economies, with the US still reliant on China for critical resources such as rare earth elements, which are vital for both technology and defence.

This intensifying technological conflict reflects broader concerns over data security, military dominance, and leadership in AI and semiconductors. As both nations aim to protect their strategic interests, the tech war is set to continue evolving, with major consequences for global supply chains, innovation, and the international balance of power in technology.

White House discusses China-linked telecom hack

The White House has engaged leading United States telecommunications executives in a high-level meeting to address a significant cyber-espionage campaign allegedly linked to China. National Security Adviser Jake Sullivan and Deputy Adviser Anne Neuberger hosted the meeting, seeking industry insights and strengthening government-private sector partnerships to counteract future cyber threats.

Earlier this month, US authorities disclosed that hackers, purportedly linked to China, accessed surveillance data meant for law enforcement by breaching multiple telecom companies. Senator Mark Warner described the breach as the ‘worst telecom hack in our nation’s history.’

Though the identities of the companies and executives involved remain undisclosed, the meeting underscores the urgency of cybersecurity improvements amid escalating threats from state-sponsored actors. While China has categorically denied involvement, the incident amplifies concerns over Beijing’s alleged cyber activities targeting critical US infrastructure.

The discussions aim to establish better safeguards against sophisticated attacks, reinforcing collaboration between federal agencies and the telecom sector to bolster national cyber resilience.

Huawei unveils Mate 70 Series in China

Huawei has launched its Mate 70 smartphone series, signalling a major step in its comeback to premium devices while showcasing HarmonyOS NEXT, its Android-free operating system. Priced from 5,499 yuan ($758), the Mate 70 challenges Apple’s iPhone 16 in China, boasting features like satellite paging, an advanced processor, and a 40% performance boost over previous models.

HarmonyOS NEXT represents Huawei’s bid for software independence after US export restrictions cut off access to Google services. The company announced that all new devices starting in 2025 will run the new system, while current Mate 70 users can choose between HarmonyOS 4.3 (Android-compatible) and the new HarmonyOS NEXT 5.0. Despite this shift, Huawei has retained Android compatibility as a backup while growing its app ecosystem, which already includes 15,000 applications.

The Mate 70 also highlights China’s advancing chipmaking capabilities, reportedly featuring SMIC-produced Kirin 9100 processors in higher-end models. This achievement underscores Huawei’s resilience despite ongoing US export controls and the addition of Chinese firms to trade blacklists. Huawei’s rebound is reflected in its rising market share, now ranked as China’s second-largest smartphone vendor with over 10 million units shipped in recent quarters.

The launch of the Mate 70 marks Huawei’s increasing competition with Apple and other global players in the world’s largest smartphone market, fueled by patriotic support for its technological breakthroughs.

US official warns that Chinese hackers target US critical infrastructure

According to Morgan Adamski, executive director of US Cyber Command, Chinese hackers are embedding themselves in US critical infrastructure IT networks to prepare for a potential conflict with the United States. He announced that China-linked cyber operations aim to secure strategic advantages in the event of a major clash.

These operations involve compromising key networks and positioning themselves to execute disruptive attacks. Examples include manipulating heating, ventilation, and air conditioning (HVAC) systems in server rooms or disrupting vital energy and water controls, officials said earlier this year.

Speaking at the Cyberwarcon security conference in Arlington, Virginia, Adamski emphasised the scale of the threat, noting that the US government has launched globally coordinated efforts to counter these operations. These efforts include offensive and defensive measures designed to degrade and disrupt China’s cyber activities worldwide. Actions range from exposing cyber campaigns to imposing sanctions and issuing cybersecurity advisories, with support from allied nations.

Earlier, US Senator Mark Warner described a suspected China-linked cyberespionage campaign, dubbed ‘Salt Typhoon,’ as the worst telecommunications hack in US history. Beijing has repeatedly denied conducting cyberattacks on US entities.

China’s vice commerce minister meets Nvidia executive

Wang Shouwen, C h ina‘s vice commerce minister, held discussions with Jay Puri, Nvidia‘s executive vice president for worldwide field operations, in Beijing on Monday, according to China’s Ministry of Commerce.

Details of the meeting were not disclosed, but the talks underscore Nvidia’s growing significance in the global tech landscape and its potential role in China’s semiconductor sector.

The meeting comes amid heightened tensions over technology trade between China and the United States, where Nvidia is a leading player in advanced chip production. Both sides may seek to address mutual interests while navigating ongoing restrictions and competition in the semiconductor industry.

China’s SpaceSail takes on Starlink in Latin America

China‘s low Earth orbit satellite firm, SpaceSail, has signed an agreement with Brazilian state telecom Telebras to provide satellite broadband services. The deal was announced during President Xi Jinping’s state visit to Brazil, following the G20 summit in Rio de Janeiro.

SpaceSail’s entry into Brazil marks its first international venture, challenging Elon Musk’s Starlink, which has over 6,000 satellites globally and serves various sectors in Brazil. The Thousand Sails Constellation will power SpaceSail’s services, offering connectivity in remote areas.

Brazil’s government aims to diversify satellite service providers amid recent tensions involving Starlink and Musk’s social media platform X. China’s growing satellite presence includes 1,059 satellites, with plans for massive constellations to rival Starlink’s dominance.

FCC targets video doorbell maker from China over security flaws

The Federal Communications Commission (FCC) has proposed a $735,000 fine against Chinese video doorbell manufacturer Eken over security issues and false information. Investigations revealed the devices exposed sensitive data, including users’ home IP addresses and WiFi details, while enabling unauthorised access to photos and videos through simple proximity-based actions.

The FCC also flagged that Eken’s registered US agent address was invalid, sparking broader scrutiny. The devices, sold on platforms such as Amazon and Walmart, prompted additional concerns earlier this year when Senator Marco Rubio criticised their lack of adequate security protections. He highlighted the risk of hackers accessing private images and videos from homes.

Eken’s case forms part of wider US efforts to address security risks from Chinese-made technology. FCC Chair Jessica Rosenworcel announced an audit of certifications tied to similar agents, warning about the potential for misuse ranging from domestic abuse risks to state-backed surveillance. Retailers were previously urged to stop selling such insecure Internet of Things (IoT) devices.

The issue comes as US agencies increase scrutiny on Chinese tech firms. A ban on new equipment authorisations for listed Chinese telecom and surveillance firms is already in place, while the Commerce Department has proposed measures to limit Chinese-made vehicle software.

Senator labels reported China-linked hack on US telecoms as historic breach

US authorities have revealed a massive cyberatt a ck on American telecommunications networks, describing it as the ‘worst telecom hack in our nation’s history.’ Linked to Chinese hackers, the breach targeted multiple telecom companies and allowed the interception of surveillance data meant for US law enforcement. According to a joint FBI and CISA statement, the hackers accessed sensitive call records and communications, particularly involving individuals in government and political roles.

The attack also raised alarms after reports suggested telephones belonging to Donald Trump, JD Vance, and other high-profile political figures were compromised. Senator Mark Warner, chairman of the Senate Intelligence Committee, warned that China’s long-term efforts to infiltrate global telecom systems pose a grave security risk. Hackers reportedly managed to listen to phone calls and read text messages, going beyond what the Biden administration has publicly acknowledged.

China has consistently denied allegations of hacking foreign systems, and its embassy in Washington declined to comment on the latest claims. Warner criticised the lack of sufficient safeguards, stating, “The barn door is still wide open,” as concerns over US telecom infrastructure security intensify.

China boosts US chip imports ahead of potential sanctions

As the US prepares for Donald Trump’s second term, China is significantly increasing its semiconductor imports from the US, anticipating potential sanctions. In October, China imported $1.11 billion worth of microchips, a 60% rise from the previous year, and has already imported $9.61 billion in the first ten months of 2024, marking a 42.5% year-on-year increase. This surge reflects China’s growing demand for US semiconductors, particularly CPU-based processors and chips for storage and signal amplification, which align with its AI ambitions.

Despite these imports, China faces hurdles in advancing its chip technology. US sanctions have crippled Huawei’s ability to develop competitive AI chips, with the company’s upcoming processors lagging years behind NVIDIA’s offerings. This setback is largely due to restrictions on access to advanced lithography equipment, such as ASML’s EUV tools, essential for creating cutting-edge chips.

Meanwhile, China has been ramping up its chip manufacturing efforts, investing $25 billion in equipment in the first half of 2024, surpassing spending by Korea, Taiwan, and the US. However, as one-third of global semiconductor demand, China’s position remains critical for the industry. The impact of Trump’s potential tech restrictions, whether broad or selective, will likely influence the global semiconductor market, requiring careful balancing of US production and Chinese demand.

Alibaba combines domestic and global e-commerce units

Alibaba Group is merging its domestic and international e-commerce platforms into a single business unit for the first time, the company announced on Thursday. The new unit, Alibaba E-Commerce Business Group, will combine the Taobao and Tmall Group with the Alibaba International Digital Commerce (AIDC) Group, which oversees platforms like AliExpress and Alibaba.com.

Jiang Fan, who previously headed Tmall, will lead the newly formed unit. Jiang, who faced a demotion in 2020 following an online scandal, will report directly to Alibaba’s CEO, Eddie Wu. Wu emphasised that the future competitive landscape in e-commerce will be shaped by global supply chain capabilities, fulfilment, and consumer service.

This move is part of Alibaba’s larger restructuring, which saw the company split into six business units last year. While Alibaba has faced increased competition from platforms like Pinduoduo, Temu, and TikTok, the company’s international division, under Jiang’s leadership, has posted strong growth, including a 29% increase in the September quarter.

Despite challenging market conditions in China, Alibaba has shown signs of stabilising its position. The company reported strong results during this year’s Singles Day sales, with robust growth in sales and a record number of shoppers, surpassing analyst expectations.