China’s tech regulator says scrutiny of internet industry to deepen as targeted six-month campaign continues

  • The head of China’s Ministry of Industry and Information Technology said scrutiny of the internet sector will deepen and pledged support for small businesses
  • The agency is three months into a six-month campaign to fix perceived problems with the digital economy, such as poor data security practices

China’s industry regulator plans to deepen scrutiny of the internet industry as it moves into the second half of a six-month campaign launched in July, the agency’s minister told Chinese media, prolonging a crackdown on the technology sector that has lasted for nearly a year.

The Ministry of Industry and Information Technology (MIIT) will take “targeted measures” to foster a fair and orderly market environment, Minister Xiao Yaqing told state-run media outlet Economic Daily in an interview published on Sunday.

Xiao’s comments come three months into a targeted campaign to purge what it considers problems in the internet sector. It has become another element of Beijing’s intensifying scrutiny of numerous parts of the digital sector over the last year, hitting everything from social media to financial services. The MIIT is one of China’s most important tech regulators.

In its current campaign, the MIIT has pledged to address issues that include poor data security practices, forcing users to accept personalised services, and blocking or restricting access to competing services, a common practice among China’s internet giants that keeps users locked into specific app ecosystems.

Since the campaign started, multiple Big Tech companies have been opening up their platforms to comply with new regulatory requirements. The results could eventually be wide-ranging, affecting how these companies compete with each other.

Last month, Tencent Holdings’ WeChat, China’s largest social media platform, started allowing users to open links shared from rival platforms in one-to-one chats.

Alibaba Group Holding, the owner of the South China Morning Post, also started allowing consumers to use WeChat Pay on a number of its platforms, including food delivery service, video-streaming platform Youku, online ticketing platform Damai and cross-border e-commerce platform Kaola. Alibaba platforms primarily rely on Alipay, WeChat Pay’s main competitor, which is operated by the company’s fintech affiliate Ant Group.

In the months since Beijing started cracking down on the tech sector, US$1 trillion in value has been wiped from related stocks listed in Hong Kong and the US. Still, the crackdown shows no signs of abating.

The MIIT’s Xiao said his agency will continue to hold internet companies accountable, strengthen supervision and work with other government bodies to manage the industry.

In his interview with Economic Daily, Xiao also pledged support for small and medium-sized enterprises (SMEs) by curbing anticompetitive behaviour, cutting fees and boosting loans, echoing commitments previously made by Beijing’s top leadership.

In July, Chinese Vice-Premier Liu He said at an SME forum in Changsha, the capital of central Hunan province, that the government would create a sound business environment to nurture growth among smaller firms, and he urged business owners to be active in the nation’s economic development.

Liu’s comments followed previous pledges of support for the sector from President Xi Jinping. Premier Li Keqiang similarly pledged support for SMEs two weeks ago at a State Council symposium, stressing the importance of reducing monopolistic practices among big firms to allow smaller ones to flourish.

Author: Xinmei Shen, SCMP

You might also like