China's regulatory crackdown on startups is good news. But central planning will make it difficult to invest in certain areas.It has been fascinating to watch the Chinese technology sector in the past week. In a broad effort for a change in the country's technology landscape, the Chinese government has taken on whole industries such as edtech and also brought down individual companies (Tencent, Meituan).It is simple to see the extent of the financial loss. For example, the NASDAQ Golden Dragon China Index, which tracks U.S. companies doing business in China, dropped from a 52 week high of 20,893.02 earlier this year to 10,672.37 yesterday. If you are interested in a more detailed picture of the financial chaos, you can track the declines in value of different Chinese technology companies on-shore as well as foreign exchanges.Analysts and commentators often draw a line between the Ant Group IPO that was blocked last year, Jack Ma's subsequent fall from grace, and the most recent news out of Chinese Communist Partys (CCP). It's all quite reasonable. These are all changes in China. The regulatory landscape for tech work will change.The Exchange explores markets, startups, and money.It's available every morning at Extra Crunch. You can also subscribe to The Exchange newsletter every Saturday.We've looked at the situation a bit, and noted last week that edtech investments could slow in the country if the government continues with its plan for tutoring companies being forced to become nonprofit. This was done by the government, which also blocked tutoring companies' formation, public disclosure, foreign capital raising, and other activities. It was extensive. Natasha Mascarenhas provides a detailed read on the subject.This is bad news for startups. After all, if edtech investment could slow in the face of regulatory changes, what about other technology-influenced areas of business?It is not difficult to find a negative case. The positive case is much more intriguing. Market watchers argue that by taking down the largest tech companies in China, there is more space for smaller companies to grab a piece.
