Desmond Shum (@DesmondShum)

Bo Xilai and the Red Aristocracy’s Illusion of Power 薄熙来与红色贵族的权力幻觉 Recently, a post by Bo Guagua, son of the disgraced red aristocrat Bo Xilai, trying to resurrect his father’s reputation made waves on X. Here is my take on Bo Xilai, based on my own understanding and experience — and, by extension, on China’s red aristocracy. I wrote in Chinese in this piece. 薄瓜瓜最近重新开口，让我又想起了他的父亲薄熙来。 关于薄熙来的政治生涯，外界已经写得很多。但我对这个人的判断，并不是2012年倒台以后才形成的。从大连、辽宁、商务部到重庆，我自己看到的、朋友分享的几件事，串起来，反而很能说明薄熙来这个人，也很能说明中国一种特殊的政治阶层——红色贵族。

China is not only pricing technology. It is pricing political freshness. I recently came across the terms “old tech” and “new tech” in Chinese investment circles. I found that interesting and looked into it. “Old tech” refers to the internet giants of the last cycle: Alibaba, Tencent, Meituan, JD, Baidu, NetEase, Xiaomi and their peers. These companies make up bulk of investable indexes. They have users, cash flow, engineers, cloud infrastructure, payment systems, data and distribution. In most markets, that would make them strategic assets. But in China, they also carry political baggage. They are associated with platform monopolies, regulatory crackdowns, gaming restrictions, weak consumption, brutal e-commerce competition, and Xi’s campaign against private platform power. They dominate market capitalization, but no longer dominate the national imagination. “New tech” refers to sectors now favoured by Beijing: AI, large language models, semiconductors, robotics, advanced manufacturing, domestic chips, embodied intelligence and other technologies tied to “new productive forces.” Many of these companies are smaller, less proven, and barely commercial. Yet they command extraordinary valuations because investors are pricing scarcity, policy support, import substitution and national-security relevance. The valuation gap shows the point. Tencent and Alibaba remain huge — roughly HK$4 trillion(USD 600B) and HK$2 trillion in market value — but trade like mature businesses, generally around 10–20x earnings and low-single-digit sales multiples. By contrast, Cambricon, a chip designer, has traded around RMB1 trillion, at more than 100x sales and over 300x earnings. MiniMax, an AI company, was valued at roughly 80x sales at IPO and now trades at more than 600x sales. Zhipu, another AI company, reportedly moved from roughly 66x sales at IPO to over 1,000x sales. For reference, OpenAI is valued at roughly 36x run-rate sales. Anthropic is valued at roughly 20x run-rate sales. This is not a normal growth premium. It is scarcity, policy blessing, import substitution and national-champion imagination being capitalized into market value. That is the real dichotomy in China today: not old versus new, but commercially proven versus politically favoured. China is not the capital market most outsiders think they are investing in. It operates by a different set of rules. Many international investors understand the numbers, but only half-understand the game.