China's internet powerhouses stand at the forefront of the nation's galloping high-tech progress — a surge that has been brought into sharp focus by the Trump administration's efforts to counter it. On one hand, the standoff over the Chinese telecom equipment-maker ZTE has exposed, to many in China, the degree to which the country still lags in core technologies such as microchips.

But in the internet realm, China still offers a spooky potential vision of the future, one in which online behemoths like Tencent and Alibaba become the gatekeepers to the entire economy, wielding immense power over traditional industries and becoming very, very rich in the process.

At a conference in December in the Chinese city of Guangzhou, Tencent's chief executive Pony Ma said he felt the two companies were competing in "too many" areas.

"Sometimes I think, 'Ah, we're competing in this now, too? All right then,'" Ma said, chuckling. "It's a little frustrating."

A duopoly this broad could not be easily replicated in other countries,  for example the United States. Entrenched competitors and the threat of government intervention generally keep the likes of Apple, Amazon, Google and Facebook from expanding pell-mell into adjacent businesses. All of them have sprawled and overlapped mightily, but Amazon, with its forays into groceries, pharmacies, health care and more, might be the furthest along towards creating an inescapable commercial universe.

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Still, with the European Union enacting tough new privacy laws, and some in the United States eager to follow, Google and Facebook could soon be forced to find ways to make money beyond selling users' personal information to advertisers, said Raj Rajgopal, president of digital business strategy at Virtusa Corp, a consulting firm.

"As profitability reduces, they'll say, 'Now I need to monetise my customer base,'" Rajgopal said. "The innovation we're seeing in China could be seen in the US in the next three to five years," he added. "Customers are demanding that."

China's internet titans have a powerful ally found nowhere else, though: the Chinese government. Tencent and Alibaba have avoided anti-monopoly clampdowns by staying in Beijing's good graces, said Hu Wenyou, a partner at the Beijing law firm Yingke. Their sheer size also makes them easier for authorities to control. They simply have too much to lose.

"If you can become so big, and so successful in so many areas, this in itself shows that you must have maintained very good, very friendly relations with the government," Hu said.

Neither giant is done getting bigger.

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Each has a market capitalisation of close to $US500 billion ($663 billion), making them among the most highly valued technology firms on the planet. Google and Facebook still claim more users, but the Chinese heavyweights arguably do more — and more, and more — for theirs.

The latest battleground? Brick-and-mortar stores. Alibaba has spent great sums — $US2.9 billion on a supermarket chain, $US2.6 billion on a department store and mall operator — to conquer the real world. Tencent has followed suit with its own retail partnerships and investments.

Once the companies have locked people into their payment systems, they can become the enablers of commerce and financial services of even more kinds. In a sign of investors' excitement about the possibilities, Ant Financial is making plans to go public, in a blockbuster stock offering that could give the company a market value larger than Goldman Sachs.

China has become a model for tech's world-swallowing tendencies partly out of circumstance.

With the country's high-speed churn of well-funded startups, planting flags on new turf is often the only way for large players not to be constantly losing ground.

Also, both Alibaba and Tencent have struggled to make much money outside their home market. That means their surest way to keep growing is to get more deeply involved in more areas of their Chinese users' lives.

Those lives are riper for tech disruption than lives in the West. In China, small stores dominate retail. Hospitals are crowded and doctors overworked. Most people do not have credit cards. These are easier business opportunities for Alibaba and Tencent than they would be for Amazon or Facebook.

In a report this week, Morgan Stanley predicted that by 2027, the total market in China in which Alibaba could be making money will be worth $US19 trillion — more than Amazon's potential market worldwide.

New York Times