Where are the unicorns? China seeks to revive animal spirit of its economy

Growth of unicorns has declined amid push to develop strategic high-tech industries

- Joyce ZK Lim

Chinese President Xi Jinping wants to know why the number of new unicorn companies in his country is on the decline.

His question, posed at a closed-door symposium with business leaders and economists, was made public in late May via an article in party newspaper People's Daily.

China is home to a quarter of the world's most valuable unicorns, or start-ups with a value of at least US$1 billion (S$1.35 billion) that are not listed on a stock exchange. They include TikTok's parent company Byte Dance, fintech giant Ant Group and drone maker DJI.

Although the size of China's unicorn herd has been on the rise, its rate of growth has slowed since 2021.

Mr Xi's question comes as China strives to reinvigorate its private sector, which was hit hard by pandemic-era regulatory crackdowns, and as it seeks to develop strategic high-tech industries amid intensifying rivalry with the US.

His interest in unicorns could also signal one of the leadership's priorities ahead of a much-anticipated party conclave in July, known as its third plenum, held once every five years to set out reforms for the country. As People's Daily noted in its article, "the list of problems is the list for reforms".

China has the world's second-largest cluster of unicorns. It had 340 of these companies as at Jan 1, behind the US' 703, according to figures published by research firm Hurun.

The top five sectors that account for China's unicorns are artificial intelligence, semiconductors, new energy, biotech and e-commerce, noted Hurun in its Global Unicorn Index released in April.

Some of the more highly valued companies in these fields include autonomous driving tech firm Zongmu Technology, cloud computing chip developer NebulaMatrix, electric vehicle manufacturer GAC Aion, online healthcare provider Medlinker and fast fashion retailer Shein.