China Cracked Down on Big Tech Companies. Now It Needs Them

The regulatory crackdown on Big Tech that started in China in late 2020 sent stocks reeling. Over the past year, tech companies have lost as much as $2 trillion in market value, the equivalent of 11% of China’s gross domestic product, estimates Goldman Sachs Group Inc. Lately, Beijing seems to be relenting a bit. At an April Politburo meeting, the government vowed to support the healthy growth of platform companies. Is it time for investors to give Chinese tech another look?

As the country races to contain the fast-spreading omicron variant with citywide lockdowns, the government is starting to find Big Tech useful. Companies such as Alibaba, JD.com, and Meituan have built efficient distribution systems, sourcing fresh produce from farmers and recruiting armies of migrant workers to make speedy deliveries. When millions of Chinese can no longer go out shopping, Big Tech comes in handy. According to the Shanghai government, internet companies have dispatched about 20,000 riders to fill 2.5 million grocery orders a day, on average, for its 25 million residents, who’ve been in a full lockdown since April 1.