According to Nikkei Asia, the Central Political Bureau of the Chinese Communist Party on Friday, April 29, confirmed a policy change for the country’s tech sector.
Nikkie Asia cited a close government source saying that the regime wants to shift its policies to controlling tech giants such as Alibaba Group or Tencent Holdings.
The move is said to revitalize the internet sector and push up China’s economy, which is now hurt by its strict Zero-Covid policy and the Russia-Ukraine war.
The source told Nikkei that China’s government would finish its draft on strengthening regulations for tech companies.
China started its regulatory crackdown on big Techs in late 2020. According to an estimate from Goldman Sachs Group Inc, China’s tech firms have lost as much as 2 trillion dollars in market value over the last year, about 11% of China’s GDP.
Hong Kong media said that the Politburo’s latest decision shows that its crackdown on tech firms has produced results. It focuses on policies that promote its domestic economy by strengthening Internet firms.
Stock prices of Alibaba and Tencent increased up to more than 10% on Friday following the reports.
Since 2020, Chinese authorities have launched crackdowns against tech sectors, education, and entertainment to prevent the “disorderly expansion of capital.”
The regime canceled Ant Group’s 35 billion dollars initial public offering (IPO) in 2020, which would have been the world’s largest IPO.
The South China Morning Post reported that after last year’s crackdown by Beijing on the country’s off-campus tutoring services sector, New Oriental, the country’s top tutoring firm, has lost more than 90% of its market value since February 2021.
Authorities also focus on anti-monopolies in the tech sector and regulate celebrities’ activities.
According to the New York Times, Alibaba was hit with a record 2.8 billion dollars antitrust penalty in September 2021. A month later, Meituan, the food-delivery behemoth, was hit with a 530 million dollars penalty.
Weibo, China’s Twitter-like platform, was fined 44 times between January and November. Douban, a famous movie and book review site, was fined 20 times.
Huang Wei, a top Chinese live-streamer known as Viya, was fined 210 million dollars for tax evasion last December. After deactivating all her social media profiles, she lost more than 100 million followers.