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After Wiping Out Billions Of Dollars From Firms, China’s Tech Crackdown Shows Signs Of Ease

Previously we reported how China’s tech crackdown is not going anywhere soon but now, in a recent turnaround of events, we’re seeing possible ease in policies.

The technology sector in the country has suffered losses worth billions due to the introduction of stringent policies and protocols in the leading sector, and while experts don’t expect there to be a major u-turn decision soon, there have been noticeable changes.

Chinese analysts have shed light on how its positive rhetoric must be celebrated for the time being but it shouldn’t be mistaken for Beijing’s policy reversal.

One tech analyst from China by the name of Linghao Bao mentioned how he feels giant tech firms will now be allowed to rest during a grace period that could potentially last for around six months.

He made the announcement recently while speaking to CNBC and also reminded viewers that it’s not a U-turn and shouldn’t be assumed to be one. Additionally, he says that when looking at it from another perspective, the government’s long-term plans haven’t seen any major changes as of yet.

The news comes as Beijing as boldly declared how it doesn’t plan on letting large-scale tech firms run in a wild direction because that would not be fair to other competitors in the market. After all, in scenarios like that, wealth remains stagnated towards the top tiers and could even be to impact the country’s politics too.

For those who aren’t aware, China first made headlines in the year 2020 when it chose to implement some stringent regulation policies across its local tech sector. The move was done for the Government to intervene in the administration of some of the leading names in the tech industry.

Additionally, we saw more and more rules come into play including data protection laws being passed and regulations relating to antitrust issues too. Shockingly, these rules were put into immediate effect and that really caught so many people off guard including global investors.

As you can probably expect, the matter really had a dramatic theme attached to it, and that set shares going off in all directions including those belonging to leading domestic market leaders like Alibaba.

Now, Beijing is showing positive signals that hint toward a relaxation into the ongoing scrutiny of the country’s tech industry. And in case you haven’t guessed by now, it’s related to China’s economy feeling the pressure due to the resurgence of the pandemic amid new lockdowns.

We’re also seeing more meetings take place between leading government officials and tech execs- another clear sign of easing tensions.

The Chinese Vice Premier even asked for support to help boost the tech sector while unveiling new plans relating to making internet firms public.

In the same way, we saw the Chinese President chair a high-profile meeting last month where he took on board Politburo- a regulator body known to lead the country’s decision-making. This is where it was pledged for the healthy working of the nation’s economy with due emphasis upon e-commerce, social media firms, and internet corporations.

But no matter how promising all of these reports sound, tech experts have major doubts about seeing any major shift in the current policy. In the same way, others feel that it’s too late to consider a major change because the damage has already been done.

One scholar from Stanford University stated how ministries are going to continue to follow the mandate provided to them and that’s why we won’t be seeing major changes anytime soon.

In case we do see a few reversals, well, it just might be classified as being too late. Remember, the trust and confidence seen by investors have been lost thanks to the hostile scrutiny they’ve been forced to face so abruptly.

Another factor worth a mention is China’s ‘Zero Covid’ policy which is their initiative at ridding the coronavirus by placing strict lockdown rules in different cities while conducting testing on a mass scale.

Look at Shanghai, it’s been in a lockdown since March of this year and the drastic effects that have had on the economy are hard to accept.

Analysts also believe the government’s real motive for crackdown has always been increasing its hold on the digital industry in regards to more state control. And that won’t change.


H/T: CNBC.

Read next: How Much Growth Have Big Tech Stocks Seen Since Their IPO?

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