BIG IDEA | ‘Why, you may ask, is China crushing some of its most innovative unicorns? We’re in a new era led by President Xi Jinping, and politics are in command.’

‘This week a regulatory crackdown that has all but wiped out China’s $100 billion-a-year private tutoring industry.’

• ‘First it was Chinese fintech firms found themselves in the crosshairs of Beijing regulators. Then ride-hailing and food-delivery apps. Now edtech.’
• ‘It looks to much of the world like Beijing is engaged in a strategy of economic self-harm.’

‘Why, you may ask, is China crushing some of its most innovative unicorns?’

• ‘We’re in a new era led by President Xi Jinping, and politics are in command.’

‘ “China’s leadership has embarked on a new and risky path in economic policy making,” writes Dexter Tiff Roberts, the author of “The Myth of Chinese Capitalism: The Worker, the Factory, and the Future of the World.” ’

• ‘Beijing, Roberts writes, “is intent on strengthening control over private companies and foreign investment, reserving set shares of its market for indigenously produced technologies like semiconductor chips and electric vehicle batteries, and boosting the role of state-owned firms.” ’

‘Chinese entrepreneurs are expected to get with the program or get out of the way.

• ‘That means focusing on the next wave of growth—to be led by industrial automation, smart cities and the “Internet of Things—rather than extracting oversized profits from consumers.’

‘Nothing is safe anymore.’

• ‘China is in the throes of a “rectification” campaign, a throwback to the kind of political struggle that periodically convulsed the country in Mao Zedong’s day.

‘Like Mao, Xi is appealing directly to the public.’

• ‘The humbling of China’s Internet moguls plays well with those on the lower rungs of society who welcome Xi’s call for “common prosperity.” ’
• ‘Meituan, the food delivery app, stands accused of underpaying its gig-worker drivers.’
• ‘Didi Chuxing, the ride-hailing giant, is charged with abusing customer data.

‘When politics are in command, the markets-based models Western financiers use to calculate China risk aren’t much use.’

• ‘This both explains why the U.S. Securities and Exchange Commission just stopped accepting initial public offerings from China, and why some of China’s savviest investors spend their time studying Xi’s speeches on the economy.’

‘Eric X. Li, a Shanghai-based venture capitalist, says he adopted his entire investment thesis from recent copies of Qiu Shi—literally “Seeking Truth”—the Chinese Communist Party’s leading theoretical journal.’

• Li’s advice: “We should read ‘Qiu Shi’ seriously, roll up our sleeves and work hard.” ’