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Years of a laissez-faire approach on the part of Chinese authorities has enabled homegrown tech companies like the Alibaba Group and Tencent Holdings to grow into the successful conglomerates they are today. But as the poster children of China’s innovation economy become too big for Beijing’s comfort, the Communist Party leadership has stepped up an unprecedented crackdown to rein in their clout. This regulatory curb has wiped out billions of dollars from the market value of Chinese firms and rattled global investors—and it shows no sign of abating.
The latest sector in Beijing’s crosshairs is the gaming industry, whose shares tumbled after a state-affiliated newspaper on Tuesday labeled online gaming as “spiritual opium” and singled out Tencent’s flagship video game, Honor of Kings, as a cause of gaming addiction. Reports also suggest the health care and real estate industries could be next.