China to end regulatory storm over Big Tech and give sector bigger role in boosting slowing economy, sources say

On Apr 29, 2022 36

Pedestrians and cyclists travel past buildings in the central business district in Beijing. China is expected to end its regulatory clampdown on Big Tech as the economy slows. Photo: Bloomberg

A symposium involving Chinese Big Tech has been scheduled after the Labour Day holiday to assure business leaders on the new direction
A joint regulatory meeting is set to take place as soon as this weekend to put all regulators on the same page regarding Beijing’s decision

China is scheduled to have a symposium with the country’s Big Tech firms on the heels of the Politburo meeting on Friday, raising hopes that Beijing will stop its sweeping regulatory clampdown on the tech sector and give internet platforms larger roles to help prop up the ailing economy, according to two sources briefed on the situation.

The symposium has been set for after the Labour Day holiday, which lasts from Saturday to Wednesday this year, to assure business executives that regulators will no longer demand rectifications or impose surprise fines, two people, who declined to be named as the briefings were private, told the South China Morning Post.

The country’s major Big Tech players, including e-commerce platform Alibaba Group Holding, social media and video gaming giant Tencent Holdings, online delivery and on-demand service platform Meituan, and TikTok owner ByteDance, are all invited. Alibaba is the owner of the Post.

A joint regulatory meeting is also set to take place as soon as this weekend to put all regulators on the same page regarding Beijing’s new decision to ease aggressive actions, one of the sources said.

The key message to tech companies is that the state wants them to grow and play a role in Beijing’s efforts to bolster an economy battered by Covid-19 controls, such as through the distribution of consumption vouchers, according to one source.

Some local governments have already started to give away coupons to citizens through internet platforms. Shenzhen, for instance, is giving away 500 million yuan (US$75 million) worth of coupons to residents through Meituan and e-commerce service provider JD.com.

Meanwhile, online ordering and delivery services provided by tech platforms have proved essential for many residents under Covid lockdowns.

The Politburo meeting hosted by President Xi Jinping on Friday agreed that China will promote the “healthy development” of the internet platform economy. The central government also said it will normalise control over the tech sector and design specific measures to support the industry.

The move is the strongest policy signal to come from the Politburo, the supreme 25-member decision-making body of the Chinese Communist Party, regarding Beijing’s forceful campaign to curb the “irrational expansion of capital” since it kicked off towards the end of 2020.

Regulatory hostility in the last 18 months or so has been one of the biggest investment risks in China’s tech stocks, wiping out trillions of dollars in market value across New York and Hong Kong, while deterring venture funding for Chinese tech start-ups.

The Politburo statement on Friday was issued in the early afternoon, breaking with Beijing’s tradition of releasing statements outside market hours. Investors in Hong Kong and Shanghai rushed to buy shares when the afternoon trading session opened, leading to a surge in Chinese tech stocks.

Alibaba rose 15.7 per cent, Tencent gained 11.1 per cent, while Meituan advanced 15.5 per cent at the close of Friday trading.

The statement largely endorsed a State Council meeting on March 16, when Vice-Premier Liu He demanded “transparent and predictable” regulation over China’s tech industry.

Authors: Tracy Qu, Zhou Xin, SCMP