Xi Jinping is between a rock and a hard place. Alibaba Group Holding (NYSE:BABA) stock is there with him.

China’s president wants its middle class to get more of the wealth being created by major cloud companies like Alibaba. He also wants those companies to play fair. He wants new companies to come through without their interference.

But China’s tech economy still needs western capital. That capital spigot is being cut off. You can see it in the performance of Alibaba stock over the last year. It is down by nearly half. Shares that traded at $317 a year ago now go for $160. China’s small investors have been hammered.

Alibaba is still growing, by 34% in its latest quarterly report. But distrust of Chinese government policy means you can get that growth for 20x earnings, and a little over 4x revenue.

The Crackdown

Western media is filled with stories about China’s crackdown. Alibaba has sought to reassure investors, even increasing stock buybacks.

China passed strict new rules, on antitrust policy and use of data. It has applied many of the new rules retroactively. Alibaba, being the largest and most diversified of the major Chinese cloud companies, has been a frequent target. Alibaba’s Ant Financial unit was forced to take on loan risk, as a financial holding company. Alibaba’s exclusivity policies against sellers were thrown out, and a $2.8 billion fine was imposed.

China is especially concerned over Alibaba’s collection of user data, and what’s done with it. It recently a version of Europe’s General Data Protection Regulation (GDPR). But notice how the Associated Press reported the story. “Earlier drafts of the Chinese legislation say nothing about limiting ruling party or government access to personal information.”

Western analysts like Oxford don George Magnus seem anxious to get their Cold War on. The new policy is all about the government’s “lust for control,” he writes.

Where’s Ma?

Analysts seem especially concerned about Alibaba co-founder Jack Ma. He has disappeared from public view since the crackdown began but is still worth $41.4 billion.

Ma said nothing against the crackdown. He’s a member of the Chinese Communist Party. He also left Alibaba management three years ago. He’s still using Alibaba shares as collateral on loans.

Ma, a fan of the movie Forrest Gump, is being treated as a martyr by the Western press. But have any reporters seen the movie? Gump is a mentally-challenged naif stumbling through life and only accidentally becoming rich and famous.

That’s not stopping the political pundits. Socialism before shareholders is the new mantra. It’s “a new era that prioritizes fairness over efficiency” as though that’s a bad thing.

Other than sharing data with the government, China’s policies seem in line with emerging American and European standards. The economy must run consistently with the rule of law. Big companies shouldn’t be allowed to crush smaller competitors.

The Bottom Line on BABA Stock

If Ma suddenly defected to Vancouver, or co-founder Joseph Tsai suddenly sold his Brooklyn Nets, I would be worried about my Alibaba investment.

What I see instead is a political overreaction to the same antitrust trends now rising in the U.S. China isn’t trying to break up Alibaba, as FTC head Lina Khan wants to break up Amazon (NASDAQ:AMZN).

If China’s policies are true communism, then Theodore Roosevelt was Mao Zedong’s uncle. China’s attention will turn, in time, to the needs of its middle class investors, and to their desire for a return.

Fundamentals say BABA stock should be selling for at least $240 per share. That’s about where I got out last time. That’s fair value.

On the date of publication, Dana Blankenhorn held long positions in AMZN and BABA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.