Musings on Markets: China's Tech Crackdown and Chinese Tech Company Valuations

This article analyzes how China's regulatory crackdown on tech companies (Tencent, Alibaba, JD.com, Didi) has fundamentally altered investor valuation assumptions by shifting the government from perceived ally to constraint on growth and profitability. The author constructs three-scenario valuations (government as benefactor, net negative, and adversary) to model the impact of government control over data and markets, concluding that Alibaba and Tencent remain undervalued despite recent markdowns. The piece argues that the crackdown is primarily about state control rather than consumer protection or competition concerns, and presents an investment framework that weighs government policy risk as a primary value driver.