Journal of Political Risk, Vol. 13, No. 3, March 2025
By Vaibhav Panwar
President Xi Jinping of the People’s Republic of China in Beijing, 5 September 2024. Source: President Paul Kagame via Flickr.
Fresh from the highs of DeepSeek’s ‘Sputnik moment’ in the AI race, Xi Jinping hosted a rare meeting with the titans of industry — notably the tech sector — in Beijing on February 16th. The event was attended by heads of BYD, Huawei, Deepseek, and other stalwarts. However, amidst these giants stood a tiny man with a big pedigree: Jack Ma. The tech baron from Hangzhou, who once pulled the strings of one of China’s largest tech conglomerates, The Alibaba group, is renowned for his influence. The company had its fingers in profitable pies like online wholesaling, e-commerce, and online transactions. Its fintech arm, Alipay, had racked up north of a billion users by the end of 2020. Ma was having a dream run: in October 2014, he found himself on the front page of newspapers around the world when the recently concluded Alibaba IPO breached the $25 billion mark – the biggest ever— leaving the world in awe of his role as the symbol of Chinese entrepreneurial spirit and China’s sprawling economy. Ma’s empire was firing on all cylinders; on single’s day 2019 — China’s answer to Black Friday — Alibaba and its subsidiaries did $38 billion in sales in 24 hours. Now, fast-forward to fall 2020: another Alibaba entity, ANT Group, was about to go public, all set to raise north of $35 billion based on the pre-subscriptions. The largest stock-offering in history was set to take place in Shanghai, creating a landmark moment for the Chinese economy, and cementing Ma’s status as one of the world’s most successful entrepreneurs. Beijing, however, was not so comfortable with the market consolidation of the tech giant from Hangzhou — or for that matter — the public criticism lobbed by Ma against Chinese banks at Shanghai’s Bund Conference. To nobody’s surprise — besides, perhaps his own — Jack Ma was called in for regulatory meetings by the Chinese central bank (PBOC) shortly after his remarks. Soon, the Chinese regulators would go on to pull the plug on the IPO right before the launch day, which was widely believed to be a disciplinary move against Ma over his comments. Ma was subsequently gone from the public eye, until he popped up in Japan a couple of years later.
His reappearance, thus, raised a lot of eyebrows — perhaps even raised some investor confidence. While Ma was the most interesting attendee, equally interesting was an absentee: Minister of Industry and Information Technology Jin Zhuanglong, who one would expect to be seated at the high-table with Xi and Chinese CEOs. Jin’s ministry was responsible for fostering vital industries like artificial intelligence, electric vehicles, aerospace, drones, 5G, 6G, and more. Jin personally dealt and negotiated with many Western tech captains like Elon Musk and Tim Cook; most importantly Jin and his ministry were responsible for maintaining the party’s grip over industry. Jin, a native of Zhejiang province, has a background in aerospace — with his last appointment being the Executive Deputy Director of the Central Office of Military and Civilian Integration, where he reported to Xi Jinping from 2017 to 2022. His appointment as China’s tech czar, however, was cut short. After not being seen for the last two months — an ominous sign in Xi’s China — Jin was removed from his position of Minister of Industry and Information Technology on February 28th for corruption charges — another ominous sign. A similar fate was shared by his predecessor in that position, Xiao Yaqing. Despite its celebration of its tech sector, Beijing (read Xi), seems awfully suspicious of both its tech innovators and its tech regulators — who often walk the tightrope between being embraced or disgraced. While Ma was a prized scalp in Xi’s crackdown on the private sector, he was hardly the only one; his disciplining was symbolic of the larger fate of China’s C-suite, with some estimates revealing that north of 80 executives from companies listed in the Shanghai and Shenzhen exchanges, were detained in 2024.
A chronic paranoia has gripped the throne in the forbidden city, with even Xi’s appointees vanishing for months at a time. Xi’s ‘anti-corruption’ purges target not only his political competition, but anyone theoretically capable of mounting a challenge. To be certain of being one step ahead of the competition, Xi must not only tackle dissent or ambition when they are expressed, he must tackle them before they are born. Tackling dissent and ambition as they appear requires keeping your eyes and ears open. Preemptive tackling, however, requires disciplined ruthlessness: loyalists must be placed, promoted, and monitored rigorously as they fulfil their duties. However, they cannot be allowed to warm their seats for too long; for the longer they stay in their positions, the more likely they are to appoint their own people within the ranks and build factions. Hence, the doors are always revolving in Xi’s court. The same doors now have opened for Liang Wengfeng, a serial entrepreneur based in Hangzhou — now known to the world as the force behind DeepSeek. Liang was one of the attendees of the private sector symposium, where he was spotted shaking Xi’s hand. The handshake, however, is deeper than a photo-op — Xi has put the weight of the Chinese state behind technological innovation, branded as New Quality Productive Forces, which is being increasingly used to describe the state’s fostering of new technologies. The idea has trickled down from Beijing to provincial and city-level administrations, as public offices start to apply DeepSeek. The boardrooms, too, have started to induct DeepSeek where they can. The enthusiasm is matched by people in China and beyond, with DeepSeek reaching the mark of 20 million Daily Active Users (DAUs) within 20 days of its launch — a figure poised to grow with time. As individuals, enterprises, and bureaucracies in China engage with DeepSeek, they will equip DeepSeek with a vast depositary of data, a privilege previously exclusive to the Chinese state. As DeepSeek rakes in more users while collecting their data, its rapid growth might be perceived as consolidation of market power — which lands one on Xi’s radar, and subsequently into house-arrests.
The risk gets particularly magnified for its founder Liang, who also founded Huanfang Quantitative Fund, which currently manages around 10 billion Yuan. Liang’s tryst with quantitative trading goes back to his university days at Zhejiang University in Hangzhou, known for fostering tech startups. Liang and his college classmate Xu Jin founded Hangzhou Huanfang Technology Co., Ltd. in 2015. His background as an investor and a quant trader, is likely to be seen as a potential conflict of interest as DeepSeek grows closer to the Chinese state. Besides his background, Liang’s access to data and insights on its public-sector users is likely to arouse suspicion from Xi. The new-found strategic utility of DeepSeek — and himself — might help Liang sleep peacefully for now, but the purge of Jin Zhuanglong — whose entire career revolved around things strategically important — should make it clear that nobody in Xi’s court is indispensable. As far as the recent symposium with the private sector goes, Xi’s outreach and statements like “It is time for private enterprises and private entrepreneurs to show their talents”, should not be read into too much. A similar symposium was held in 2018 where Xi took feedback from attendees on improving conditions for the private sector. Two years later, however, Xi would go on to initiate crackdowns that shaved off a trillion dollars from the stock market and coerced tech-entrepreneurs to relinquish decision-making roles. That includes Zhang Yiming, the founder of TikTok — a stunning 180, a la Mao’s Hundred Flowers Campaign. Now, again in 2025, Xi invites the barons to The Great Hall of People in Beijing — with warm handshakes and receptive ears — saying let another hundred flowers bloom.
Vaibhav Panwar is a graduate student at Fletcher School of Global Affairs, Tufts University. He has a bachelor’s in business administration from Hult International Business School in Boston.