China’s government is buying ‘golden shares’ in Alibaba and Tencent: Here’s what that means

Xi Jinping’s government is set to acquire so-called golden shares in Chinese internet giants Alibaba and Tencent, opening the door for the Chinese Communist Party (CCP) to establish leverage inside two major players in the global internet arena. 

According to reporting from the Financial Times, an investment fund connected to China’s internet regulator took a stake in one of Alibaba’s subsidiaries, Guangzhou Lujiao Information Technology, in a deal finalized on January 4. A similar deal is currently in the works at Tencent, the parent company of WeChat—the country’s biggest social media platform. 

These deals are a sign that Xi might soon relax the iron crackdown that has seriously constrained China’s private companies over the past few years, in an effort to resuscitate a stifled economy. The “golden-share” tactic would allow the state to stay close to the levers of power within these companies as their businesses roar back to life. 

So what exactly is a “golden share”? The term was coined to describe the practice of state investment funds taking small but powerful stakes (usually around 1%) in private internet companies like ByteDance and Weibo, which then allows the CCP to appoint board directors and exert influence over their business decisions. 

For instance, when state groups took a golden share in ByteDance in April 2021, they won the right to nominate one of the company’s three board directors; the position went to Wu Shugang, a hawkish CCP official. Within the board, Wu holds unilateral control over the content that goes out on ByteDance’s two major platforms: Douyin, TikTok’s sister app, and Jinni Toutiao, a news app. He is sometimes referred to as ByteDance’s “editor-in-chief.”

The extent of the privileges that the CCP will hold with the purchase of these new shares is yet to be determined. Douyin and Weibo—both of which will soon have some kind of arrangement with the CCP—are vital nodes in China’s information ecosystem, and both platforms were key in facilitating the widespread protests that flared across the country last fall.

Fast Company reached out to Tencent and Alibaba for comment, and will update this post if we hear back.