Is China preparing to loosen its grip on big tech?
Regulators in China announce the beginning of the end of the crackdown on technology companies, after two difficult years for the sector. All the details
Tech breakthrough in China.
According to Guo Shuqing, Communist Party secretary for the People's Bank of China (the official name of China's central bank), the grip of the Beijing authorities on the digital sector is nearing an end.
WHAT GUO SAID ABOUT BIG TECH'S "RECTIFIER" CAMPAIGN
In fact, Guo said that the so-called "special rectification campaign", which started more than two years ago and which involved the financial assets of fourteen Chinese technology companies, is almost over: some issues would remain to be resolved, but the supervision of the sector will be normalized and aid will also be offered to the most important platforms in terms of employment levels and international presence.
WILL CHINA RELEASE THE STRENGTH ON THE TECH SECTOR?
Guo is also the chairman of the China Banking and Insurance Regulatory Commission (CBIRC), the government agency that oversees the Chinese banking and insurance market.
His statements are the "first signal from a senior regulator that the government is wrapping up a massive crackdown on the country's biggest internet companies," Chinese newspaper Caixin wrote. focused on e-commerce, and Tencent Holdings, focused on entertainment.
China's regulatory tightening of the national technology industry began in October 2020, prompted by the desire to bring this sector back under state control. Authorities said digital platform operators could abuse their power and limit competition in the sector.
THE COMPANIES AFFECTED
The crackdown has encompassed many different businesses, from online training to private transportation ( ride-hailing ) to e-commerce. And it led, among other things, to the suspension of the initial public offering of Ant Group , the financial services company founded by Jack Ma, and to the delisting of the ride-hailing giant Didi Global , from the stock exchange of New York just five months after its debut.
Beijing also forced Alibaba to pay record fines. And it forced Meituan , a food delivery platform, to lower the rates applied to restaurants and improve the treatment of its drivers.
The government's harshness towards tech companies has obviously had an impact on the shares of Chinese tech companies: Caixin writes that it has wiped out up to 70 percent of their market value in Hong Kong and the United States.
THE FIRST SIGNS OF SOFTENING
The first signs of a softening of the government's posture towards the tech industry – though not from a senior regulator official – came in March 2022, when Deputy Premier Liu He said efforts to "rectify" the Internet platforms had to be completed "as soon as possible" in order to allow stable growth of these companies.
Two months later, China's central bank said it would adopt normalized supervision of the financial activities of tech companies and support the "healthy development" of the sector, Caixin reported.
In December, during the Central Economic Work Conference, during which the economic policy agenda for China in 2023 was defined, the authorities spoke of rapid development of the digital economy, normalization of regulation for the sector, support the contribution of platforms to overall economic growth and global digital competition.
As early as September 20, Chinese regulators had met with fourteen major technology companies and told them that restrictive policies would no longer be issued for the sector, according to Caixin sources.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/cina-fine-stretta-settore-digitale/ on Tue, 10 Jan 2023 12:05:10 +0000.