Since the Ant Group IPO was canceled by central authorities, China’s government has been on a regulatory tear.

You know the broad outlines: After a lengthy period of growth, capital investment and aggressive business practices, China’s central government spent much of 2021 reining in its technology sector. While some of the actions were reasonable from an antitrust perspective, many of the changes to the country’s tech sector appeared more punitive toward entities viewed as too powerful.

The for-profit edtech sector got hit. Didi was effectively executed after it had the audacity to go public in the United States. Video game time for kids was cut, gaming titles left unapproved, algorithms put under the microscope, and more. The business climate for building tech companies under the new “Common Prosperity” push in the country appeared to take a dramatic turn for the worse.

As a result of the changes, the value of many well-known Chinese technology companies suffered.

Although the exit window for China-built tech companies is seemingly constricting to only domestic exchanges, and the space made available in the economy for tech companies to build and innovate apparently shrinking, venture capital activity was strong last year in the country.

We were surprised to see it as 2021 entered its final months, just as we were surprised when we got the full-year numbers.

But there was more. ByteDance recently “dissolved its strategic investment team, sending worrying messages to other internet giants that have expanded aggressively by investing in other companies,” TechCrunch reported. Why did TikTok’s parent company do so? We explained:

At the beginning of this year, ByteDance reviewed its “businesses’ needs” and decided to “reduce investments in areas that are not key business focuses,” a company spokesperson said in a statement. …

The “restructuring” still stirred up a wave of panic in the industry. China’s cyberspace regulator has drafted new guidelines that will require its “internet behemoths” to get its approval before undertaking any investments or fundraisings, Reuters reported. Some Chinese media outlets reported similar drafted rules.

Hot damn.

Obviously, we’re still sorting out precisely what is going on, but it appears that the ability of large Chinese tech companies to deploy capital at will into smaller companies is rapidly coming to a close.

From this juncture, our question is simple: Will government regulations slowing Big Tech investments into smaller companies in China shake up its larger venture capital market? Let’s talk about it.

Tracking corporate venture capital investment in China

The answer to our question is yes, but perhaps not lethally.

Tracking just how important corporate venture capital is to the Chinese VC scene is an interesting problem to crack. One way to view the data is to look at the list of most active investors in private Chinese tech companies in the last year.