Regulation and Deregulation of Industry

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    China’s Biggest ‘Bad Bank’ Will Get a Rescue

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    After months of silence about its future, the corporate giant Huarong Asset Management announced that it would receive financial assistance from a group of state-backed companies.China has promised to teach its most indebted companies a lesson. Just not yet.Huarong Asset Management, the financial conglomerate that was once a poster child for China’s corporate excess, said Wednesday night that it would get financial assistance from a group of state-backed companies after months of silence about its future. The company also said it had made a $16 billion loss in 2020.Citic Group and China Cinda Asset Management were among the five state-owned firms that will make a strategic investment, Huarong said without providing more details on how much money would be invested or when the deal would be finalized.Huarong also said that it had no plans to restructure its debt but left unanswered the question of whether foreign and Chinese bondholders would have to accept significant losses on their investments.Investors took the news to be a strong indication that the Chinese government was not yet ready to see the failure of a company so closely tied to its financial system. For months, investors waited for any news of Huarong and its financial future after the company delayed its annual results in March and suspended the trading of its shares in April.“It’s hugely positive,” said Michel Löwy, chief executive of SC Lowy, an investment firm that has a small position in Huarong’s U.S. dollar bonds. “It’s certainly a partial bailout because I don’t believe that totally independent investors would be subscribing to a capital raise without assurances or a tap on the shoulder,” Mr. Löwy said of the group of state-backed companies mentioned in Huarong’s statement.For years Beijing looked the other way as companies like Huarong borrowed heavily to expand. The companies grew into huge conglomerates built largely on cheap state bank loans and money borrowed from foreign and domestic investors who believed they could count on the Chinese government to bail them out if push came to shove.Lai Xiaomin, the former chairman of Huarong, weeks before he was executed in January for corruption and abuse of power.CCTV, via Associated Press Video, via Associated PressOver the past few years, however, officials have indicated a willingness to let some of these companies fail as they try to rein in the ballooning debt threatening China’s economy.Even as Beijing cracked down on risky binge borrowing, Huarong tested the limits of China’s commitment to reform. Known as a “bad bank,” Huarong was created in the late 1990s to take the ugliest loans from state-owned banks before they turned to the global markets to raise money as China opened up. It later expanded into a sprawling empire by lending to high-risk companies, using its access to cheap loans from state-owned banks.Over the years, Huarong became more and more intertwined with China’s financial system, leading some experts to say it was “too big to fail” and putting regulators in a difficult position. Under its former chairman, Lai Xiaomin, it engaged in suspicious deals that regulators said led to corruption so widespread that it might be impossible to assess the full extent of the losses.Mr. Lai confessed to using his position to accept $277 million in bribes and was sentenced to death and executed in January for corruption and abuse of power.In its statement on Wednesday night, Huarong blamed the company’s “aggressive operation and disorderly expansion” under Mr. Lai in part for its $16 billion loss.A fresh injection of cash will give Huarong more time to sell off parts of its vast financial empire, analysts noted, though it was unclear whether the investment would be enough to stem the company’s towering losses. More

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    Evergrande Went From China’s Biggest Developer to One of Its Worst Debtors

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    Regulators want to fix the property sector’s bad habit of borrowing too much. Evergrande, with its billions of dollars in debt, may stand in the way.The company owes hundreds of billions of dollars. Its creditors are circling. Its shares have taken a beating. But if anything forces a reckoning for Evergrande, a vast real estate empire in China, it might be the nervousness of ordinary home buyers like Chen Cheng.Ms. Chen, 30, and her husband thought they had found the perfect apartment. It was part of an 18-building complex in the southern city of Guangzhou, near a good school for their daughter and a new subway station.Evergrande was asking for a deposit worth nearly one-third of the price before the property was completed. After reading headlines about the company’s financial difficulties and complaints about construction delays from recent buyers, Ms. Chen walked away.“We don’t have a lot of money,” she said. “We were really afraid this money would evaporate.”China has a special term for companies like Evergrande: “gray rhinos,” so large and so entangled in the country’s financial system that the government has an interest in their survival. A failure on the scale of Evergrande would ripple across the economy, and spell financial ruin for ordinary households.During the boom years, Evergrande was China’s biggest developer, creating economic activity that officials came to depend on while the country opened up. As more people were lifted out of poverty, home buyers put their money into property. Feeling flush and eager to expand, Evergrande borrowed money to dabble in new businesses like a soccer club, bottled water and, most recently, electric vehicles.Now Evergrande epitomizes the vulnerability of the world’s No. 2 economy. It owes more money than it can pay off, and officials in Beijing want it to slow down. Its stock price has lost three-quarters of its value in the past year, and creditors are panicking. The company has started selling off parts of its corporate empire, but to survive Evergrande needs to keep selling its apartments.The problem is that some Chinese home buyers, once attracted to Evergrande’s developments, have grown increasingly anxious about the company.On China’s internet, buyers describe waiting months or even years for their Evergrande apartments. Some have accused the company of using the pandemic as an excuse for further construction delays.Evergrande declined to comment, citing a “quiet period” ahead of a company earnings announcement.Xu Jiayin founded Evergrande in 1996, as urbanization in China was rising steeply.Paul Yeung/BloombergThe company’s problems have been building for years, but lenders, big investors and home buyers alike are treating it as though it is about to fail. By one estimate, Evergrande owes more than $300 billion. Creditors are not sure it can pay the bills. Business partners have filed lawsuits.Property in China is prone to big swings. Speculative buying propels prices to soar. Local governments then step in to cool things down, sometimes with a heavy hand. Despite the ups and downs, the residential real estate market is still the largest store of Chinese household wealth.For Xu Jiayin, Evergrande’s billionaire founder, the wild ride has mostly followed one trajectory: up.A former steel factory technician, he founded Evergrande in 1996 just as China was embarking on the gargantuan task of moving hundreds of millions of people from the countryside to cities. As property prices climbed with this urbanization, so did Mr. Xu’s wealth.After publicly listing his company in 2009, he began to expand the business into new areas. Evergrande took control of Guangzhou’s soccer club in 2010 and spent billions of dollars on foreign players. It then moved into the dairy, grain and oil businesses. At one point, it even tried pig farming.As the business grew, Mr. Xu was able to attract tens of billions of dollars in funding from foreign and domestic investors and cheap loans from Chinese banks. The success came with strong political connections. A member of China’s People’s Political Consultative Conference, an advisory body to the central government, Mr. Xu is a presence at the most important political gatherings in Beijing every year.His proximity to power also gave investors and banks the confidence they needed to keep lending to the company. Over the years when regulators have stepped in to try to curtail Evergrande’s business, they have usually eased off soon after. By 2019, Mr. Xu was one of the richest property developers in the world.Today his wealth is a little more modest, much of it tied to the company’s stock price, around $18 billion, according China’s Hurun wealth report.“In my opinion, Xi Jiayin is someone who can walk the tightrope really well,” said Rupert Hoogewerf, the founder of the Hurun Report. “He has been able to balance his debt with his growth.”The question for many observers is whether Mr. Xu can continue his careful balancing act as regulators try to shrink the sector’s spiraling debt. When China’s economy began to slow more drastically several years ago, developers like Evergrande found themselves overextended and strapped. To gin up business, they discounted apartments, undercutting the value of properties that earlier buyers paid, prompting street protests.The model of selling apartments before they were completed gave companies the cash they needed to keep operating. That was, until regulators took note of the property sector’s unruly debt, making it harder for developers like Evergrande to finish the apartments they have already sold to buyers.Evergrande took over the soccer club in Guangzhou, China, in 2010 and invested heavily in it —  including a 100,000-seat stadium that opened last year. Evergrande Group, via ReutersFearing a housing bust that would ricochet through China’s financial system, the central bank created “three red lines,” rules forcing property companies to get their debt levels down before they could borrow more money. The aim was to limit the banking sector’s exposure to the property market. But it also took away funds they could use to finish projects.To comply, Evergrande has started to sell off some of its businesses. Last week it sold stakes in its internet business. In public comments, Mr. Xu has pointed to the company’s success in paying off some foreign and domestic investors, reducing debt that incurs interest to $88 billion from $130 billion late last year.But it still has unpaid bills from acquisitions, land-use rights and contract liabilities that add up to hundreds of billions of dollars. Some lenders and business partners have taken it to court to try to freeze assets to get their money back.“On paper it doesn’t make any sense for a company like this to have so much debt. This is not normal,” said Jennifer James, an investment manager at Janus Henderson Investors who estimates that Evergrande has more than $300 billion in debt. Then there are the properties that it took payment for and still has not completed.Wesley Zhang has been waiting four years for an apartment he bought for his parents. Mr. Zhang, 33, paid a $93,000 deposit and has made 41 monthly mortgage payments of nearly $1,100. Local officials suspended the development project in 2018 but later reversed the decision, giving Evergrande the green light to start building.There are no signs of any progress or communication from Evergrande on the apartment he bought. The company is now trying to sell apartments in the complex that promise to be ready to move into by 2023.“It has a huge impact on my life,” Mr. Zhang said. To get his money back, he would have to file a lawsuit against the company to break his contract. “We also need to consider buying another apartment, but the property prices are much higher now.” More

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    China's Parents Say For-Profit Tutoring Ban Helps Only the Rich

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    Many families and experts say Beijing’s education overhaul will help the rich and make the system even more competitive for those who can barely afford it.Zhang Hongchun worries that his 10-year-old daughter isn’t getting enough sleep. Between school, homework and after-school guitar, clarinet and calligraphy practice, most nights she doesn’t get to bed before 11. Some of her classmates keep going until midnight.“Everyone wants to follow suit,” Mr. Zhang said. “No one wants to lose at the starting line.”In China, the competitive pursuit of education — and the better life it promises — is relentless. So are the financial pressures it adds to families already dealing with climbing house prices, caring for aging parents and costly health care.The burden of this pursuit has caught the attention of officials who want couples to have more children. China’s ruling Communist Party has tried to slow the education treadmill. It has banned homework, curbed livestreaming hours of online tutors and created more coveted slots at top universities.Last week, it tried something bigger: barring private companies that offer after-school tutoring and targeting China’s $100 billion for-profit test-prep industry. The first limits are set to take place during the coming year, to be carried out by local governments.The move, which will require companies that offer curriculum tutoring to register as nonprofits, is aimed at making life easier for parents who are overwhelmed by the financial pressures of educating their children. Yet parents and experts are skeptical it will work. The wealthy, they point out, will simply hire expensive private tutors, making education even more competitive and ultimately widening China’s yawning wealth gap.For Mr. Zhang, who sells chemistry lab equipment in the southern Chinese city of Kunming, banning after-school tutoring does little to address his broader concerns. “As long as there is competition, parents will still have their anxiety,” he said.Children in Beijing’s Chaoyang Park. In May, China changed its two-child policy to allow married couples to have three children.Gilles Sabrié for The New York TimesBeijing’s crackdown on private education is a new facet of its campaign to toughen regulation on corporate China, an effort driven in part by the party’s desire to show its most powerful technology giants who is boss.Regulators have slammed the industry for being “hijacked by capital.” China’s top leader, Xi Jinping, has attacked it as a “malady,” and said parents faced a dilemma in balancing the health and happiness of their children with the demands of a competitive system, which is too focused on testing and scores.The education overhaul is also part of the country’s effort to encourage an overwhelmingly reluctant population to have bigger families and address a looming demographic crisis. In May, China changed its two-child policy to allow married couples to have three children. It promised to increase maternity leave and ease workplace pressures.Tackling soaring education costs is seen as the latest sweetener. But Mr. Zhang said having a second child was out of the question for him and his wife because of the time, energy and financial resources that China’s test-score-obsessed culture has placed on them.Parental focus on education in China can sometimes make American helicopter parenting seem quaint. Exam preparation courses begin in kindergarten. Young children are enrolled in “early M.B.A.” courses. No expense is spared, whether the family is rich or poor.“Everyone is pushed into this vicious cycle. You spend what you can on education,” said Siqi Tu, a postdoctoral research fellow at the Max Planck Institute for the Study of Religious and Ethnic Diversity in Göttingen, Germany. For Chinese students hoping to get a spot at a prestigious university, everything hinges on the gaokao, a single exam that many children are primed for before they even learn how to write.A boy with a school backpack in Haidian during summer break. Parental focus on education in China can sometimes make American helicopter parenting seem quaint.Gilles Sabrié for The New York Times“If this criteria for selecting students doesn’t change, it’s hard to change specific practices,” said Ms. Tu, whose research is focused on wealth and education in China. Parents often describe being pressured into finding tutors who will teach their children next year’s curriculum well before the semester begins, she said.Much of the competition comes from a culture of parenting known colloquially in China as “chicken parenting,” which refers to the obsessive involvement of parents in their children’s lives and education. The term “jiwa” or “chicken baby” has trended on Chinese social media in recent days.Officials have blamed private educators for preying on parents’ fears associated with the jiwa culture. While banning tutoring services is meant to eliminate some of the anxiety, parents said the new rule would simply create new pressures, especially for families that depended on the after-school programs for child care.“After-school tutoring was expensive, but at least it was a solution. Now China has taken away an easy solution for parents without changing the problem,” said Lenora Chu, the author of “Little Soldiers: An American Boy, a Chinese School, and the Global Race to Achieve.” In her book, Ms. Chu wrote about her experience putting her toddler son through China’s education system and recounted how her son’s friend was enrolled in “early M.B.A.” classes..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“If you don’t have the money or the means or the know-how, what are you left with?” she said. “Why would this compel you to have another child? No way.”The new regulation has created some confusion for many small after-school businesses that are unsure if it will affect them. Others wondered how the rules would be enforced.Jasmine Zhang, the school master at an English training school in southern China, said she hadn’t heard from local officials about the new rules. She said she hoped that rather than shutting institutions down, the government would provide more guidance on how to run programs like hers, which provide educators with jobs.“We pay our teachers social insurance,” Ms. Zhang said. “If we are ordered to close suddenly, we still have to pay rent and salaries.”While she waits to learn more about the new rules, some for-profit educators outside China see an opportunity.“Now students will come to people like us,” said Kevin Ferrone, an academic dean at Crimson Global Academy, an online school. “The industry is going to shift to online, and payments will be made through foreign payment systems” to evade the new rules, he said.For now, the industry is facing an existential crisis. Companies like Koolearn Technology, which provides online classes and test-preparation courses, have said the rules will have a direct and devastating impact on their business models. Analysts have questioned whether they can survive.Global investors who once flooded publicly listed Chinese education companies ran for the exits last week, knocking tens of billions off the industry in recent days.Scott Yang, who lives in the eastern city of Wenzhou, wondered if his 8-year-old son’s after-school program would continue next semester. He has already paid the tuition, and he and his wife depend on the program for child care. Each day, someone picks up his son from school and takes him to a facility for courses in table tennis, recreational mathematics, calligraphy and building with Legos.Banning after-school classes will allow only families that can afford private tutors to give their children an edge, Mr. Yang said. Instead of alleviating any burden, the ban will add to it.“It makes it harder,” he said, “for kids of poor families to succeed.” More

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    A Planned Biden Order Aims to Tilt the Job Market Toward Workers

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    Noncompete clauses, licensing requirements and corporate mergers have tended to strengthen the hand of business.Hair salon employees can have onerous licensing requirements that vary from state to state. Some barbers have also encountered noncompete agreements.Annie Tritt for The New York TimesAccording to an increasingly influential school of thought in left-of-center economic circles, corporate mergers and some other common business practices have made American workers worse off. The government, this theory holds, should address it.It appears that school has a particularly powerful student: President Biden.This week, the White House is planning to release an executive order focused on competition policy. People familiar with the order say one section has several provisions aimed at increasing competition in the labor market.The order will encourage the Federal Trade Commission to ban or limit noncompete agreements, which employers have increasingly used in recent years to try to hamper workers’ ability to quit for a better job. It encourages the F.T.C. to ban “unnecessary” occupational licensing restrictions, which can make finding new work harder, especially across state lines. And it encourages the F.T.C. and Justice Department to further restrict the ability of employers to share information on worker pay in ways that might amount to collusion.More broadly, the executive order encourages antitrust regulators to consider how mergers might contribute to so-called monopsony — conditions in which workers have few choices of where to work and therefore lack leverage to negotiate higher wages or better benefits.The order will depend on the ability of regulators to carry out the rules the White House seeks and to write them in ways that survive legal challenges. And many of the policies that labor economists see as problematic, including licensing requirements, are set at the state level, leaving a limited federal role.Still, the planned order is the most concerted effort in recent times to use the power of the federal government to tilt the playing field toward workers. It builds on years of research that has made its way from the intellectual fringes to the mainstream.“It’s increasingly appreciated that lack of competition has held down wages and that there’s a lot of scope for government to improve that,” said Jason Furman, who was chairman of the White House Council of Economic Advisers in the Obama administration’s second term. “I don’t think addressing competition issues will miraculously transform inequality in this country, but it will help. The government should be on your side when it comes to wages.”The council published research on these themes toward the end of the Obama presidency, but concrete policy steps were more limited than those the Biden administration is planning to seek. As vice president, Mr. Furman recalled, Mr. Biden was particularly energized by issues around wage collusion and noncompete agreements.Even with backing from the White House, a meaningful gap remains between what academics who study the labor market are finding and the laws governing the relationship between companies and their workers.Ioana Marinescu, an economist at the University of Pennsylvania, analyzed data on 8,000 specific labor markets with two co-authors and found that when a job market was heavily concentrated among a few employers, it resulted in a 5 percent to 17 percent decline in wages.But she said regulators tend to be wary of trying to block a merger on the grounds of its potential labor market impact because of a lack of legal precedent.“Legally we’re on firm ground, but it may or may not be seen that way by some particular judge who has this on their desk,” Professor Marinescu said. “That creates a risk for the agency that doesn’t like the idea they might lose a case.”She said that having pressure from the White House to pursue those legal theories would help, but that congressional legislation explicitly charging antitrust regulators with focusing on labor market conditions would help more.There has been some bipartisan discussion on Capitol Hill about reining in noncompete agreements, particularly after the emergence of some outrage-stoking stories. (Sandwich shops and hair salons contractually barred workers from going to a competitor, for example.) These disputes tend to pit incumbent businesses — who don’t want their workers to be able to quit with potentially valuable information — against start-ups who want more ability to hire people at will.Occupational licensing is also an area with potential for bipartisan agreement, uniting those who want more widespread labor market opportunity with those opposed to excessive regulation. Many more jobs require occupational licenses than in decades past, and typically a license in one state is not easily transferable to another, potentially limiting workers’ ability to move to places where they can earn more. This is particularly problematic for military families, who typically have no choice but to move regularly.Still, there are potential negative effects with the Biden approach. By creating a barrier to entry for workers entering a field, licensing may also keep wages higher for existing workers in those jobs, meaning some people may stand to lose if requirements are revoked. Moreover, research by Peter Q. Blair of Harvard and Bobby Chung of the University of Illinois suggests that women and racial minorities experience less of a pay gap in fields that involve occupational licenses.Put it all together, and the Biden administration’s push for a more competitive, less corporation-friendly labor market is decidedly not a set of magic-bullet policies that will suddenly give workers more market power overnight.Rather, it’s part of a set of policies — other aspects of the president’s agenda very much among them — that over time would nudge the balance of power away from the prevailing order of most of the last 40 years. More

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    Uber and Lyft Ramp Up Efforts to Shield Business Model

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    Gig economy companies are backing state laws in New York and elsewhere that would cement drivers’ status as contractors in exchange for a union.After California passed a law in 2019 that effectively gave gig workers the legal standing of employees, companies like Uber and Lyft spent some $200 million on a ballot initiative exempting their drivers. More

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    China’s Biggest ‘Bad Bank’ Tests Beijing’s Resolve on Financial Reform

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    Chinese regulators say they want to clean up the country’s financial system, but a state-owned conglomerate may ultimately get in the way.HONG KONG — BlackRock gave it money. So did Goldman Sachs.Foreign investors had good reason to trust Huarong, the sprawling Chinese financial conglomerate. Even as its executives showed a perilous appetite for risky borrowing and lending, the investors believed they could depend on Beijing to bail out the state-owned company if things ever got too dicey. That’s what China had always done. More

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    ‘A Perfect Positive Storm’: Bonkers Dollars for Big Tech

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    The dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies, raising uncomfortable questions for their C.E.O.s.In the Great Recession more than a decade ago, big tech companies hit a rough patch just like everyone else. Now they have become unquestioned winners of the pandemic economy.The combined yearly revenue of Amazon, Apple, Alphabet, Microsoft and Facebook is about $1.2 trillion, according to earnings reported this week, more than 25 percent higher than the figure just as the pandemic started to bite in 2020. In less than a week, those five giants make more in sales than McDonald’s does in a year.The U.S. economy is cranking back from 2020, when it contracted for the first time since the financial crisis. But for the tech giants, the pandemic hit was barely a blip. It’s a fantastic time to be a titan of U.S. technology — as long as you ignore the screaming politicians, the daily headlines about killing free speech or dodging taxes, the gripes from competitors and workers, and the too-many-to-count legal investigations and lawsuits.America’s technology superpowers aren’t making bonkers dollars in spite of the deadly coronavirus and its ripple effects through the global economy. They have grown even stronger because of the pandemic. It’s both logical and slightly nuts.The wildly successful last year also raises uncomfortable questions for tech company bosses, the public and elected officials already peeved about the industry: Is what’s good for Big Tech good for America? Or are the tech superstars winning while the rest of us are losing?Americans have more money in their pockets thanks to government stimulus checks and pandemic savings, and the tech giants are getting a significant share. Their combined revenue is equivalent to roughly 5 percent of the gross domestic product of the United States.Big Tech’s pandemic big bucks have an understandable root cause: We needed its services.People gravitated to Facebook’s apps to stay in touch and entertained, and businesses wanted to pay Facebook and Google, which Alphabet owns, to help them find customers who were stuck at home. People preferred to buy diapers and deck chairs from Amazon rather than risk their health shopping in stores. Companies loaded up on software from Microsoft as their businesses and work forces went virtual. Apple’s laptops and iPads become lifelines for office workers and schoolchildren.Before the pandemic, America’s technology superpowers were already influential in how we communicated, worked, stayed entertained and shopped. Now they are practically unavoidable. Investors have scooped up Big Tech shares in a bet that these companies are nearly invincible.“They were already on the way up and had been for the best part of a decade, and the pandemic was unique,” said Thomas Philippon, a professor of finance at New York University. “For them it was a perfect positive storm.”Times weren’t so good for these companies in the last economic rough patch. In the downturn from 2007 to 2009, Microsoft’s sales dropped slightly, and its stock price fell 60 percent from the fall of 2008 to March 2009, a low point for U.S. stocks. Google and Amazon each lost as much as two-thirds of their market value.One sign of how this time is different: Amazon’s revenue is growing much faster in 2021 than it did in 2009, when the company was one-fifteenth its current size. Sales in the first quarter rose 44 percent from a year earlier, and Amazon’s profits before taxes — which have never been exactly robust — more than doubled to $8.9 billion. Businesses are addicted to Amazon’s cloud computer services, where sales rose 32 percent, and shoppers can’t live without Amazon’s delivery. Investors love Amazon, too. The company’s stock market value has nearly doubled since the beginning of 2020 to $1.8 trillion.For the other tech giants, it’s as if their brief pandemic nosedive never happened. Advertising sales typically rise and fall with the economy. But as other types of ad spending shrank when the U.S. economy contracted last year, ad sales rose for Google and Facebook. The growth was even better for them in the first three months of this year.A year ago, analysts worried that Apple would be crippled as the pandemic gripped China, which is the hub of the company’s manufacturing operations and its most important consumer market. The fears didn’t last long. In the first three months of 2021, Apple’s revenue from selling iPhones increased at the fastest rate since 2012. Sales in mainland China, Taiwan and Hong Kong nearly doubled from a year earlier.Apple’s revenue from iPhone sales in the first three months of the year rose at the fastest pace since 2012.Agence France-Presse — Getty ImagesThe tech giants are not the only companies rallying in dark times. America’s big banks have also been on a tear. So have some younger technology companies, such as Snap and Zoom, the maker of the pandemic-favorite videoconferencing app. The crisis forced all sorts of businesses to go digital fast in ways that could help them thrive. Restaurants invested in online sales and delivery, and doctors went full bore into telemedicine.But the dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies. It’s all a bit awkward, really. It’s rocket fuel for critics, including some regulators and lawmakers in Europe and the United States, who say the tech giants crowd out newcomers and leave everyone worse off.Big Tech companies say they face stiff competition that leads to better products and lower prices, but their bank statements might suggest otherwise. Facebook’s profit margins are higher now than they were before the pandemic.Some of their success is explained by the peculiarities of the pandemic economy. Some people and sectors are doing awesome, while other families are lining up at food banks and while companies like airlines are begging for cash. Unlike the stock market clobbering in the Great Recession, stock indexes in the United States have reached new highs.The tech superstars have also capitalized on this moment. Alphabet and Facebook have used the pandemic to cut back in places that matter less, such as promotional costs and travel and entertainment budgets. And the tech giants have generally increased spending in areas that extend their advantages.Alphabet is now spending more on big-ticket projects, like building computer complexes, than Exxon Mobil spends to dig oil and gas out of the ground. Amazon’s work force has expanded by more than 470,000 people since the end of 2019. That deepens the moat separating the tech superstars from everyone else.Big Tech is emerging from the pandemic lean, mean and ready for a U.S. economy expected to roar back to life in 2021. Meanwhile, there are still long lines at food banks. Some American workers who lost their jobs last year may never get them back. Housing advocates are worried that millions of people will be evicted from their homes. And being Big Tech is an invitation for everyone to hate you — but you do have towering piles of money. More