Why is China eliminating its technology organizations, and how is this a great plan?

Consider what would happen if a country suddenly eliminated its IT industry. Most of the time, this would result in economic collapse and societal turmoil. China, however, is doing precisely that as read through this narrative. The most bizarre aspect is that the Chinese government's dramatic steps to undermine their own IT industry may possibly rescue the country in the future. 😤🤐😎

• Think about the consequences if a nation's tech sector disappeared overnight. Most of the time, this would result in societal chaos and economic collapse. However, China is already doing that as you read through this narrative. The most absurd aspect is that China's government's drastic measures to destroy its own technology sector may ultimately prove vital to the survival of the nation. Since the beginning of the 2000s, China has played a significant role in the global tech sector. But it now appears that the Chinese government has made a complete about-face and is attempting to undo all of the advancements and toil that its tech companies have put in over the past two decades.
• This seems crazy, and it very well might be, but many analysts think that by repressing its tech industry, China may be able to not only thrive but also exert significant control over many of the laws and rules that will determine how tech companies operate globally. Be clear about this. In order to compel a significant paradigm shift, China is actively destroying specific sectors of its tech industry in addition to enacting a few regulations. In recent years, tech luminaries like Alibaba founder Jack Ma have vanished, and China has imposed astronomically high fines on some of the world's most successful tech firms. In China, the government is attempting to eviscerate certain businesses in addition to regulating them.
• Let's dissect China's policies and regulations to see if there is any sense in what they are doing. How could a government that is waging war on one of its largest economic sectors be good for it? That President Xi Jinping is using regulations to take control away from the biggest tech companies shouldn't come as a surprise. Additionally, he is using this methodical reorganization to direct the industry toward what he sees as China's ideal future. Prior to the crackdown, the majority of China's largest tech firms focused on developing programs, platforms, and applications that gathered user data. Since the beginning of the millennium, Alibaba—basically the Amazon of China—has been using this data for advertising and selling products to consumers.
• Chinese businesses were also devoting a significant amount of time and money to crypto currencies and different social media platforms. Xi and his allies want China's tech sector to shift away from these flimsy industries and concentrate more on tangible hardware like microprocessors, robotics, semiconductors, and electric vehicles. In order to get things moving, China passed a number of laws that would safeguard user data, improve cyber security, and stop anti-competitive behavior. Although this may have harmed China's larger tech firms, it also harmed foreign businesses operating there that were unable to follow the new regulations. This gave small and medium-sized Chinese tech companies a competitive edge in the hope of spurring more innovation.
• Large tech companies cannot buy out all of their rivals or drive them out of business thanks to China's anti-monopoly regulations. Smaller businesses have benefited from this, and it has also forced tech titans to concentrate on international expansion. While the company itself may benefit from this, China's power of influence is also expanded. In the end, many of the actions taken by Xi to undermine the tech sector are done so that it can be rebuilt in a way that will give China greater power. Despite the Chinese government's apparent good intentions in demolishing the tech industry, analysts around the world are concerned about the potential consequences. China's economy suffers as a result of its "no COVID" policy, which slows production and sparks more and more protests and unrest.
• These aspects, in addition to the sweeping changes being made in the tech sector, which accounts for over 30% of the nation's GDP, should undoubtedly sound some internal alarms. But because it has such a sizable market, China has influence over international and domestic affairs. The majority of businesses must cooperate with the government in China because the country has a sizable consumer base. This means that foreign companies must spend a lot of money to restructure their business models to comply with the new Chinese laws, even though the new tech laws and regulations may be onerous and restrictive. The General Data Protection Regulation of the European Union served as the inspiration for the new Personal Information Protection Law, Data Security Law, and anti-monopoly regulations aimed at the tech sector.
• This implies that tech firms with operations in Europe ought to be able to modify their methods in China, and the opposite should be true. China has been very clear in saying that any business that doesn't adhere to their rules will face severe fines or, in the worst cases, won't be permitted to operate in China. For the majority of tech companies, which derive a sizeable portion of their profits from the Chinese market, this is not an option. Companies both inside and outside of China are currently changing their practices to ensure they don't lose access to this crucial market. The fact that everyone is following the same rules is good news for Chinese technology companies.
• These new rules have broad ramifications. It follows that global economic norms are changing as a result of tech companies changing their business models to operate in China. Chinese tech companies are given easier access to the global market by being required to comply with Chinese regulations. Through the dismantling of its own tech sector, China is essentially rewriting the rules of global technology. However, this is not all. In actuality, the government has benefited greatly from the destruction of tech companies in China as a result of their strict regulations, in a somewhat sinister way. Even though the government of China is restricting the tech sector in many ways, including through the collection of data, the government is content to keep up these practices for its own ends.
• The new laws prohibit foreign technology companies from disclosing to third parties information gathered about Chinese citizens, while also requiring them to provide more information about their operations in China. For tech companies, this has two sides. On the one hand, they require consumer access in China, but on the other, they are giving the Chinese government access to a vast amount of data that could be used to compel tech companies to comply with their demands. This could lead to situations similar to the 2016 Apple agreement, in which the company promised to increase its spending in China by 275 billion. For the Chinese economy and government, this was undoubtedly a major victory.
• Therefore, while the new laws are hurting Chinese tech companies, the benefits to the Chinese government outweigh these drawbacks by a wide margin. However, the plan doesn't just involve requiring foreign businesses to follow their stringent regulations. The Chinese government wants to promote innovation by dismantling tech monopolies there. China hopes to increase competition between smaller companies by hurting the tech giants that have gotten too big. This frequently results in advancements in a particular industry, which is what China hopes will happen in its technology sector. The industry has recently been dominated by a small number of firms.
• Every time a new business develops an innovative idea or produces superior software to that which already exists, one of these corporations buys the business. Other times, these big tech companies engage in more nefarious activities like intellectual property theft, but because they dominate the market, small businesses have very little power to stop them. To be fair, this issue does not only exist in China. All over the world, these kinds of predatory acts frequently take place. Businesses like Amazon, Apple, and Google frequently acquire rivals while also facing a barrage of lawsuits for allegedly stealing software or other assets. Unfortunately, China's businesses, like those of the rest of the world's tech behemoths, have a team of lawyers and strategists working around the clock to ensure that they get what they want more often than not.
• Large tech companies no longer have access to such strategies in China, though. Although it won't completely stop these practices, it will make established businesses compete with startups to improve their own products. They risk losing customers if they don't. It becomes abundantly clear that the choices made were deliberate and considered when we look more closely at Chains' crackdown on the tech sector. Around 95 percent of the tech companies that have been penalized or destroyed by China's new regulations were software or platform companies, with only five remaining that were hardware companies. The direction in which the Chinese government wants to take its technology sector is made crystal clear by this.
• President Xi has made it abundantly clear that he wants China to become more independent. He has even said that our heavy reliance on imported core technology is like building our house on top of someone else's walls: no matter how big or how beautiful it is, it won't hold up during a storm. He has even said that this is the biggest hidden problem for us. Xi is aware that even if China's software and internet companies are extremely successful, it won't matter if they can't produce cutting-edge machines or keep up with international technological advancements. Therefore, the primary reason that such strict regulations have been implemented to dismantle the Chinese tech industry is so that the entire sector can begin pivoting towards hardware manufacturing and development while relying only on software as a secondary product.
• Microprocessors, robotics, and semiconductors are given a lot of attention. This is what Xi and his advisers believe the future will hold, and they are probably right. If left to its own devices, the Chinese tech sector would keep collecting user data and giving its people ways to use social media and a future metaverse to escape reality. This is due to the fact that large tech companies have been doing this for years and that it has been very profitable. These businesses had no reason to concentrate on hardware given that they could still make money from online sales, social media, and video games. But none of these factors maintains a nation's competitiveness on the world stage.
• It is obvious that China's tech companies are being destroyed in an effort to spur innovation and foster the nation's technological independence. Fascinatingly, some businesses are being driven away by the regulations. Even though they contribute significantly to the country's economy, it may seem strange that China would want to drive foreign companies out of their market. However, just like everything else, it is all part of X's crazy plan.