China’s top leadership said on Thursday it would give “the green light” to a number of pending technology investment deals, sending a policy signal that Beijing is ready to encourage certain financing pacts involving Big Tech firms.
During the Politburo meeting chaired by President Xi Jinping, leaders concluded that the government would “normalise” its regulatory efforts over the tech sector and complete the rectifications of tech platforms, according to a report by state news agency Xinhua. China would also approve several investment deals, the report said.
While the wordings of the report were vague, the use of the term “green light” echoed previous statements from Beijing, which mentioned the use of “red light” and “green light” to control the power of Big Tech companies.
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The statement further confirms that the regulatory storm over China’s internet sector is over, said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economics Cooperation, a think tank under the Ministry of Commerce.
“The current stage of the crackdown on the platform economy has come to an end, and now [the government] is giving the green light, which means the sector might soon see some new projects and enter a rapid development period,” Mei said. “Policymakers want to regulate the platform economy, hoping it can grow in a healthy way. They don’t want to kill it.”
The industry-friendly policies come as Beijing tries to find a balance between Covid-19 restrictions and economic growth.
It points to a major policy shift away from the forceful regulatory crackdown that kicked off in late 2020, ostensibly to curb the “irrational expansion of capital” in the tech sector.
This April, however, Beijing began to indicate that it wanted China’s internet firms to play a more important role in helping to bolster the faltering national economy, battered by massive lockdowns and other stringent Covid-19-related measures.
Earlier this week, the Chinese government established an interministerial meeting mechanism focused on the country’s digital economy, a small step towards aligning different regulators in supervising Chinese Big Tech companies.
The arrangement, which would see all members gather at least once a year, brings together top officials from 20 government bodies, according to a statement published by the State Council, China’s cabinet, on Monday.
Regulatory hostility has been one of the biggest investment risks associated with Chinese tech stocks in recent years, having wiped out trillions of dollars in market value across New York and Hong Kong, while deterring venture funding for Chinese tech start-ups.
For example, ride-hailing giant Didi Global was recently fined US$1.2 billion by the Cyberspace Administration of China for data violations, following a year-long investigation.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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