China has been trying to avoid the middle-income trap, where its labor costs become uncompetitive compared to low-income countries, but they haven’t seen enough growth to compete with high-income countries in industries like finance and technology. Only South Korea, Japan, Singapore, and Taiwan have escaped this trap and achieved high-income status. China’s income growth has been driven by its private sector and mega-corporations, similar to South Korea and Japan. However, most of China’s largest corporations are still state-owned and focused on serving the domestic population. Some Chinese mega-corporations like Jingdong, Alibaba, Tencent, and Baidu have gained international recognition and challenged American tech giants with their products and services. These companies benefited from government protection and cooperation. However, the Chinese government has recently cracked down on tech giants and their founders, raising concerns about their international growth. There is also a lack of trust in Chinese companies abroad due to the government’s control and concerns about data security. This has made it difficult for Chinese companies like Huawei and TikTok to expand into high-income countries. The political and regulatory landscape in China is now casting shadows on the international ambitions of Chinese tech giants.
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