Beijing’s campaign to “prevent the irrational expansion of capital” and address “barbarous growth” in China’s technology sector is beginning to bear fruit in the wake of an accelerated antitrust campaign targeting internet platforms, Chinese President Xi Jinping said at a central leadership meeting on Monday afternoon.
Fair competition is necessary to improve the social market economy and promote “common prosperity”, Xi said in comments reported by state-owned Xinhua News Agency, using a government buzzword that represents China’s push for more wealth creation, as Beijing’s recent moves to rein in Big Tech continue.
Xi also warned that the Communist Party must do more to “guide and supervise” the country’s businesses with clear rules, effective regulations and greater policy transparency.
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Chinese regulators have been involved in near-continuous campaigns targeting the country’s tech giants since last winter, when Xi first tasked government bodies with curbing the “disorderly expansion of capital” at a central economic planning meeting. It was listed as one of the government’s eight most important economic tasks for 2021, along with strengthening technological innovation, boosting domestic demand and pursuing carbon neutrality.
According to the meeting notes released last December, “preventing the disorderly expansion of capital” involves better regulations and standards for identifying monopolistic companies, governing the collection and use of data, and protecting consumer rights.
A wide range of government bodies have since taken to drafting new regulations and initiating campaigns designed to clip the wings of Big Tech. These include revoking approval for fintech giant Ant Group to go public, an antitrust fine against e-commerce giant Alibaba Group Holding – the owner of the South China Morning Post – forcing Tencent Holdings’ music arm to relinquish exclusive licensing deals, a cybersecurity probe into ride-hailing giant Didi Chuxing, and effectively signing a death warrant for the entire private tutoring industry.
The barrage of bad news for tech companies this year has wiped more than US$1 trillion off Chinese tech stocks, leaving rattled investors trying to guess what regulators might do next.
Beijing has repeatedly attempted to soothe investors’ nerves with talk of commitment to healthy, long-term economic growth, but the crackdown still has no end in sight.
The latest efforts in tightening control over the digital economy include the world’s first draft regulation curbing the use of recommendation algorithms, an engine of growth for many online content platforms, and new video gaming rules that limit playing time for people under 18 years old to just three hours per week – between 8pm and 9pm, Friday to Sunday, with an extra hour on public holidays.
With myriad new rules and enforcement mechanisms, the Communist Party has brought to heel a once freewheeling tech sector. At the meeting, Xi said the government should “guide companies to obey the Party’s leadership” and serve the “big picture” development of China’s economy and society.
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