The Hangzhou Municipal Government will deploy its officials to at least 100 large companies located in the city -- including Alibaba Group Holdings and internet firm NetEase -- in a bid to exert more control over China's massive private sector.
State-owned media on Saturday reported these "100 representatives" will be assigned to "key enterprises such as Alibaba, Geely Holdings and Wahaha," among others. Most of the targeted companies belong to the tech industry. The municipal government did not identify the target companies.
State-owned media said the target companies have not yet been determined. It is also unclear if these firms will include foreign companies.
Hangzhou claims this surprising move is no more than an "innovative" economic strategy. Local analysts, however, point out inserting government officials in private firms raises concerns about the extent of national and local government influence at Chinese companies.
Chinese laws also mandate that all companies operating in China can be forced to hand over data to the state if requested to do so.
The move by the Hangzhou Municipal Government to insert government officials in these target firms supports the central government's overarching Made in China 2025 strategy. This national strategy aims to accelerate the development of China's tech industry so this catches-up with those in more advanced first-world countries.
Alibaba told media the municipal government directives won't disrupt its operations.
"We understand this initiative... aims to foster a better business environment in support of Hangzhou-based enterprises," said Alibaba in a statement Monday. "The government representative will function as a bridge to the private sector and will not interfere with the company's operations."
The move towards a more robust government presence in Chinese firms seems to support the growing idea China's future growth will rely on the double engine of the digital economy and manufacturing. It also comes amid a weakening Chinese economy badly battered by Trump's trade war.
The capital city of the eastern coastal Zhejiang province, Hangzhou is widely regarded as China's "Silicon Valley." It was also selected by many Chinese university graduates as the city they want to live and work in. Hangzhou is one hour away from Shanghai by train.
