Instead, domestic consumption needs to take over, Tsai said at CNBC’s Converge Live conference on Wednesday. 

China’s economy grew by 5% last year, as exports helped support a flagging domestic economy. Chinese consumers have held back on spending amid a broader economic slowdown, driven in part by an extended property market slowdown, persistent youth unemployment, and a supply glut driving down prices.

Yet Chinese consumers are still “very healthy,” Tsai explained. 

“[The] household balance sheet is very strong. You’re looking at over $20 trillion of bank deposits by households; so they’re standing on the sidelines waiting to spend,” he continued. 

Alibaba’s chair said that “confidence and sentiment” will get China’s consumers spending again, and added that he’s looking for more concrete details from the Two Sessions, China’s annual political gathering, on how Beijing plans to support consumption.

Tsai suggested that Beijing is already trying to improve private sector sentiment, pointing to President Xi Jinping’s meeting with major private sector entrepreneurs, including Alibaba founder Jack Ma, as an example.

“People underestimate the importance of that meeting,” Tsai said. “Businesspeople need confidence to make investments in their business.”

Economists see Xi Jinping’s meeting, which also included Huawei founder Ren Zhengfei and DeepSeek founder Liang Wenfeng, as evidence that Beijing needed the private sector’s help to withstand a new trade war from the U.S. as President Donald Trump puts tariffs on Chinese imports. 

Alibaba turnaround

Alibaba, after a difficult few years, has found itself back at the forefront of China’s tech sector. The e-commerce giant is now one of China’s AI leaders, thanks to its open-source Qwen model. 

The company’s shares are up more than 65% this year, putting it at the forefront of a broader rally in Chinese tech shares. CEO Eddie Wu, on a recent call with analysts, called AI an opportunity that “only comes about once every several decades.”

Alibaba recently promised to invest over $50 billion in computing infrastructure and AI over the next few years. 

Tsai returned to lead Alibaba as chair in 2023 and embarked on a turnaround effort to focus the company on e-commerce, cloud computing, and AI, while trimming some of its noncore assets. 

“Large companies move very slowly, and it’s because the decision-making structure is too complicated,” Tsai explained on Wednesday. 

“How can you compete if … it takes 10 days to make a small decision against a startup that’ll make that decision in 10 minutes?”