While the summit signals a softer stance toward the private-sector, years of regulatory whiplash has taught firms their success depends on aligning with Beijing’s priorities

President Xi Jinping’s embrace of Chinese tech bosses in a rare public meeting is fueling hope Beijing is shifting its stance to give the private sector a freer hand as it fights a trade war with Donald Trump. 

Four years after launching a regulatory crackdown that plunged the tech sector into turmoil, China’s top leader sat down publicly on Monday with Alibaba co-founder Jack Ma, whose firm bore the brunt of that campaign. Also on the guest list were rising stars from robotics start-up Unitree, electric car giant BYD Co. and AI newcomer DeepSeek — firms rolling out world-beating innovations despite US export controls. 

While a similar show of support from Xi in 2018 proved fleeting, developing national tech champions is central to his plan for growing the world’s No. 2 economy as he deflates a bubble in the property market that once drove about a quarter of gross domestic product. In a sign that goal is on track, high-tech industries contributed to 15% of GDP last year, and are set to overtake the housing sector’s slice of the pie in 2026, according to analysis from Bloomberg Economics. 

A tariff war with the US is adding urgency to that mission to find new growth drivers, with Trump already imposing a 10% levy on China.

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“Beijing is repositioning the private sector as a pillar of national competitiveness amid economic and geopolitical headwinds,” said Robin Xing, chief China economist at Morgan Stanley. “While there had been hints regulatory tightening would conclude soon, we think the return of a high-profile business leader marks the first definitive sign that regulatory reset has concluded.”

That paves the way for more measured policy support, Xing added, while noting consumption-centric steps were still needed to sustain the return of corporate confidence.  

A gauge of Chinese shares listed in Hong Kong jumped more than 2% as of the mid-day trading break on Tuesday, with technology shares including Alibaba Group Holding and Xiaomi Corp contributing the most to the gains. Investors might be shifting funding into stocks, causing the yield on China’s one-year government bonds to surge eight basis points to 1.5%, a level unseen since August.

China’s top leaders are trying to bolster the economy as it braces for a second trade war with the US more reliant on exports than the first time around, and with sluggish consumption at home. Showing the potential of the tech sector to revive animal spirits, DeepSeek’s breakthrough in artificial intelligence sparked a US$1.3 trillion rally in China’s onshore and offshore equity markets, without any government stimulus.

More signs of how Xi plans to navigate the trade war will come at an annual parliamentary huddle in March, where Beijing is expected to set a growth goal of about 5%. Analysts surveyed by Bloomberg expect the economy to grow at 4.5% this year. Policymakers face challenges from a deflationary spiral on track for its longest spell since the Mao Zedong era and growing hostility to Chinese exports abroad, from friendly partners as well as the US.

“Xi is sending a message to Trump that you may have Elon Musk but I have my own strong line-up of technology leaders in China,” said George Chen, co-chair of digital practice at The Asia Group, a business and policy consulting firm, noting Trump’s inauguration last month was attended by a legion of Silicon Valley luminaries.

In contrast to that event, state media coverage of Monday’s meeting showed Chinese CEOs mostly from behind, keeping the focus on Xi. In a potential sign state intervention isn’t over, Chinese regulators have informally told Xiaohongshu Technology Co., owner of the Rednote app, that bringing in a state-owned investor could help make approvals smoother for any future listing, people familiar with the matter said.

There are other reasons for scepticism. When Xi held a similar private enterprises symposium in 2018, he embraced entrepreneurs, declaring they are “our own people.” Back then, China’s economic backdrop was similar, Macquarie Group analysts led by Larry Hu wrote in a note, highlighting that exports were also on the verge of a sharp slowdown and China was embroiled in the first Trump trade war.

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Two years later, Beijing began a campaign to tighten state control over the world’s second-largest economy and shift resources toward Xi’s priorities including national security. In November 2020, Beijing announced the 11th hour scrapping of the IPO of Ma’s Ant Group Co. wiping over one trillion dollars in market value from the country’s most prominent private firms including Alibaba. 

Since then, Beijing has been trying to revive investor faith in the private sector, after supply chain shocks of the pandemic and China’s Covid Zero policy also dented confidence. The private sector accounts for some 65% of gross domestic product and almost 90% of new urban jobs.

None of Beijing’s efforts have moved the needle. Private fixed-asset investment, a key gauge reflecting businesses’ willingness to expand, has stayed flat since 2022, in contrast to the 6.5% average annual growth recorded in the five years before the pandemic.  

While the summit signals a softer stance toward the private-sector, years of regulatory whiplash has taught firms their success depends on aligning with Beijing’s priorities.

“Xi’s persistent message to firms is that private business needs to sign up to the party’s narratives and implement its programs and directives if it wants to thrive,” according to George Magnus, research associate at the University of Oxford China Centre. “It is, of course, good that private firms can succeed, but in a state where the party leads everything, we are reminded of the limitations that private firms face.”