Gaotu Techedu Inc. (GOTU) shares surged 5.54% on Monday, riding a wave of optimism surrounding Chinese tech stocks as the government signals support for the private sector.

The rally in Chinese tech companies, including giants like Alibaba and Tencent, has been fueled by several factors:

• Beijing's shift towards embracing the tech sector as a crucial driver of employment and social stability, easing years of regulatory crackdowns.
• Improving economic conditions and government stimulus measures, boosting domestic consumption and benefiting consumer tech stocks.
• Global investors positioning themselves to capitalize on China's growing tech prowess, diversifying away from US exceptionalism.
• Easing geopolitical tensions with the new US administration, reducing fears of further sanctions on Chinese companies.

President Xi Jinping's recent meeting with prominent entrepreneurs, including Alibaba co-founder Jack Ma, further bolstered confidence in the sector. Xi promised to abolish unreasonable fines against private firms and urged entrepreneurs to maintain their competitive spirit.