Recently, during a business leaders’ forum, Chinese Communist Party leader Xi Jinping raised questions about the sharp decline in the number of “unicorn” companies in China. Netizens mockingly commented that the root cause is Xi himself.
According to a report by the official Communist Party’s website on May 28th, Xi Jinping convened a forum with entrepreneurs and experts during his inspection tour in Shandong on the 23rd. Xi Jinping asked at the meeting: “What is the main reason for the decrease in the number of new unicorn companies in our country?”
Unicorns refer to tech startups established for less than 10 years with a valuation exceeding $1 billion and not yet listed on the stock market, known for their high growth potential.
Data from the Hurun Research Institute’s “2024 Global Unicorn List” released in April this year showed that there are 1453 unicorn companies globally, with over 700 in the United States and 340 in China. Last year, the number of new unicorn companies in China dropped to 56 from the previous year’s 74.
Reports indicate that from 2015 to 2018, unicorn companies in China experienced rapid growth, but after 2018, the situation took a drastic turn with a significant decrease in new unicorn companies. Factors affecting this decline include the US-China trade war, tech war, intensified geopolitical competition, risk aversion, decoupling strategies, and the Chinese Communist authorities’ crackdown on private tech companies.
The Communist Party’s website did not mention in the aforementioned report whether there were any responses to Xi Jinping’s questions at the forum, vaguely stating, “Questions are voices of the times, and the ‘question list’ is also the ‘reform list’.”
However, many netizens bluntly expressed that Xi Jinping himself is the answer to the problem. This is due to the lack of rule of law, openness, and fair competition in China under Xi Jinping’s policies of “state advancement and private retreat” in recent years, leading to a deteriorating business environment, the gradual downturn of the real economy, and serious capital flight.
On social media platforms, netizens responded to Xi Jinping’s questions, with one saying, “The main reason is that no one dares to invest anymore, afraid of growing big only to be taken over by state-owned enterprises.”
Another commented, “Xi Jinping asking about the decline in China’s unicorn companies, netizens: Xi Jinping himself is the answer to the problem! Xi speeds up himself, points the direction himself, where is there room for Chinese companies to develop! Without any self-awareness, he shamelessly asks on.”
Some netizens also remarked, “What a contemporary case of the thief crying ‘stop the thief’.” “Isn’t it Chairman, you who have set the direction for various industries?” “Is he truly foolish or just pretending to be? The real reason is Your Majesty yourself, everyone on Earth knows!”
As early as March 5th this year, Lu Ming, a member of the Chinese People’s Political Consultative Conference (CPPCC) and executive director of the China Institute for Contemporary International Relations at Shanghai Jiao Tong University, said in an interview with Economic Observer, “The number of new unicorn companies in China is sharply decreasing.”
Lu Ming submitted a proposal during the CPPCC meetings, emphasizing that unicorn companies represent the innovative capabilities of digital economy and future development directions. However, the current innovation and investment activities of digital enterprises are decreasing. The reasons for the sharp decrease in the number of new unicorn companies in China are complex, including inappropriate policies that sometimes create a climate of fear where companies dare not expand.
At that time, many Weibo users left comments following the news:
– 19 degrees Bo Bao: “With the collective communist mindset, how can unicorns emerge?”
– Heading towards the Sunshine: “At this rate, there will be no unicorn companies left.”
– Weird Uncle Kenrich: “Now no one dares to speak; who dares to innovate? I miss the days of universal entrepreneurship and innovation… now each industry is restricted… afraid.”
– Archangel Tyrell: “All businesses need to register; small businesses and individual developers find it difficult to grow.”
Citing analysis from James Zimmerman, a partner at the Beijing office of the American law firm Perkins Coie, the South China Morning Post reported that Beijing’s recent policies have turned one tech company after another into tools for state-owned enterprises, making China’s tech environment no longer a sanctuary for innovation talent. In addition, deteriorating relations between China and Western countries will inevitably hinder future cross-border cooperation, while the tense geopolitical situation isolates Chinese companies internationally, making it difficult for them to integrate into the global system.
The latest data from the Chinese Ministry of Commerce shows that in the first four months of this year, foreign direct investment (FDI) into China decreased by 27.9% compared to the same period last year.