Xi Jinping Meets with China’s Private Sector Leaders: A Signal for Regulatory Easing?

AI and Stock Market Reactions Under Scrutiny Following High-Level Discussion / AFP

Xi Jinping, President of China, recently held a meeting with leaders from major private enterprises, a move that may signal a shift towards supporting the private sector after several years of stringent government regulations. This meeting could indicate a potential relaxation of the government's regulatory stance, particularly as the country’s economic growth slows.

According to state-run news agency Xinhua, President Xi met with representatives from private enterprises on February 17th (local time) to hear their views before delivering a speech. While the details of the participating companies or executives were not disclosed, it has been suggested by sources such as Bloomberg that Alibaba co-founder Jack Ma and Liang Wenfeng, founder of AI startup DeepSeek, could have been among the invitees. If true, their attendance would be interpreted as a significant signal of the Chinese government's willingness to mend its relationship with the private sector.

Jack Ma became a prominent figure symbolizing the government’s stringent regulatory actions after the Chinese authorities intervened in the planned IPO of Ant Group in 2020. Following this, Beijing imposed stricter regulations on the tech industry and other private sectors, shifting the country’s economic focus toward state-led control. However, as China’s economy has faced challenges in recent years, there has been growing speculation that the government is rethinking its approach to the private business sector.

Recent signs indicate that the government is softening its stance, particularly as companies like Alibaba have aligned with state policies in strategic industries such as artificial intelligence (AI). This shift could mark a gradual change in the government’s overall policy direction.

Yu Chuanman, a senior lecturer at the Singapore University of Social Sciences (SUSS), believes that Xi's direct engagement with business leaders is a strong indication that the government is trying to rebuild trust in the private economy. However, he also noted that this move should be seen not as a drastic reversal but as part of a gradual process aimed at revitalizing the private sector. According to Yu, Beijing is sending a message of "tolerance, improvement, and encouragement" as part of its new economic approach.

The growing expectations around the AI sector have had a noticeable impact on China’s stock market. The Hang Seng China Enterprises Index (HSCEI) has posted the highest increase among major global indices in the past month, with Alibaba’s stock hitting its highest point since 2022. This surge is partly driven by the success of DeepSeek’s affordable AI chatbot, DeepSeek-R1, which has helped to showcase China’s competitive edge in the AI market. Goldman Sachs noted in a report that as China’s AI models gain global competitiveness, optimism surrounding the tech sector is fueling a renewed sense of investment confidence.

However, the true impact of this meeting on China’s regulatory policies remains uncertain. While experts see potential positive effects on business confidence and the stock market, the key will be whether this signals genuine regulatory reforms and follow-up policy actions. Only time will tell if this diplomatic outreach results in real changes that benefit the private sector and foster a more supportive business environment in China.