In the worlds of technology and investment, startups that have been established for less than 10 years but have a valuation of over $1 billion are commonly referred to as “unicorns”. These companies are known for their high growth potential and serve as a barometer for the development of the new economy.
From 2015 to 2018, China was considered a fertile ground for unicorns. However, the growth of Chinese unicorns has significantly slowed down since 2018.
According to the Hurun Research Institute’s “2024 Global Unicorn List” released in April, there are a total of 1453 unicorn companies worldwide, with over 700 in the United States and 340 in China. China not only lags far behind the United States but the number of new companies has decreased from 74 in 2022 to 56 last year.
On May 23, Chinese Communist Party leader Xi Jinping presided over a symposium with business leaders and experts in Jinan, Shandong province. On May 28, the party’s official newspaper People’s Daily mentioned in an article titled “Firmly Grasp Opportunities Once Identified” that during the symposium, there were discussions around the issues of innovation and investment. Xi Jinping then asked, “What is the main reason for the decrease in the number of new unicorn companies in China?” The article did not mention if anyone responded to this question but rather vaguely commented that, “The issue reflects the voice of the times. The ‘list of problems’ is also the ‘list of reforms’.”
After reading the People’s Daily article, many might raise a question – does Xi Jinping really not know the main reason for the decrease in the number of new unicorn companies in China, or is he pretending not to know? Is he genuinely ignorant or feigning ignorance?
I believe Xi Jinping is truly unaware.
The reason for my judgement is that no one dares to inform Xi Jinping of the real reasons behind the decline in the number of new unicorn companies in China, and he himself is unable to understand the true causes.
What are the real reasons behind the decrease in the number of new unicorn companies in China, including the US-China trade war, escalating geopolitical competition, technological containment by the West, and risk aversion policies?
During this year’s Two Sessions, National Committee of the Chinese People’s Political Consultative Conference member and Executive Dean of the China Development Institute at Shanghai Jiao Tong University, Lu Ming, submitted a proposal on “Promoting High-Quality Development of the Digital Economy.” He stated in the document that the reasons for the sharp decrease in the number of new unicorn companies in China are very complex, including policy reasons, “Sometimes we will introduce some restrictive policies that lead to companies being afraid to develop,” ultimately resulting in everyone opting for safer options and refraining from investing in risky sectors.
Lu Ming mentioned government “introducing some restrictive policies that lead to companies being afraid to develop,” but he did not specify the details of these policies or why they were implemented, perhaps out of fear.
American lawyer Zimmerman, partner at the Beijing office of Borquin Law Firm, has a more pointed viewpoint than Lu Ming. According to Radio France Internationale reports, he stated that Beijing authorities have changed policies in recent years, suppressing technology companies and turning them into tools of state-owned enterprises. The technological environment in China is no longer a safe haven for innovative talents. He pointed out that the weakening relationship between China and Western countries will hinder future cross-border cooperation. Due to tense geopolitical situations, Chinese companies will continue to be isolated and find it difficult to integrate into the global market. To establish a competitive landscape in China, startups need to see a vibrant ecosystem that promotes innovation and information sharing.
Zimmerman not only revealed the details behind Lu Ming’s “restrictive policies,” but also attributed the introduction of these policies to the “Beijing authorities.”
However, whether it is Lu Ming or Zimmerman, their opinions don’t cut as deep as those of netizens who point out, “It’s you, Chairman”, some say, “The root cause is the Emperor”, and some say, “An answer lies within the question.” In their view, Xi Jinping himself is the main reason for the decrease in the number of new unicorn companies. Indeed, this seems to be the case.
Why is Xi Jinping considered the main reason for the decrease in the number of new unicorn companies? Whether it is Lu Ming’s “restrictive policies” or Zimmerman’s unveiling of the specifics of these policies, ultimately, it is the result of the erroneous policies implemented by Xi Jinping since taking office. Even if those around him are aware, who would dare to tell him? Who would dare to criticize him? Arrogant as he is, how could he possibly recognize his own mistakes?
Xi Jinping is unaware that he is the main reason for the decrease in the number of new unicorn companies, demonstrating that the leader of the Chinese Communist Party is trapped in an “information bubble.”
This phenomenon is not difficult to understand. The CCP system is an authoritarian one, and Xi Jinping, like all dictators, relies on limited and singular sources of information. Due to the isolation of power, his fascination and fear of power, and the lack of effective information verification mechanisms, he finds it difficult to access comprehensive and diverse viewpoints and facts, thereby being misled and deceived by his own sources of information.
In simpler terms, those around him and his subordinates are trapped in the dogma of “two consolidations” and “two protections”, where no one dares to inform him of the true situation, let alone criticize him. Considering himself as an embodiment of truth, he is unlikely to see his own errors or grasp the reality of the situation. This is not only evident in the issue of the decrease in the number of new unicorn companies but in various aspects.
While the “list of problems” is also the “list of reforms”, these words are undoubtedly true. However, as the top decision-maker of the CCP, Xi Jinping is trapped in an information bubble, not knowing or being able to understand the real reasons behind the decrease in the number of new unicorn companies. In such a scenario, can the prescriptions he provides and the reform lists he formulates solve the problems?
History repeatedly demonstrates that the information bubble phenomenon not only exacerbates dictators’ misunderstandings and biases towards the outside world but also affects the quality of their decision-making. Over his decade-long rule, why has Xi Jinping squandered his strong hand? This can be closely linked to the situation. As Xi Jinping continuously consolidates power and personal worship, he is sinking deeper into the information bubble. Under his guidance, the future direction of China is not difficult to imagine.