Incredible, but true: Beijing would be ready to relax, or at least slow down, the arrival of new regulations against its digital giants. This decision is linked to China’s economic stability, which has been undermined by the health situation there.
Each will have to take a step towards the other
The Politburo, the supreme decision-making body of the Chinese Communist Party (CCP) met under the aegis of Xi Jinping on Friday, April 29. This summit meeting aimed to take measures to achieve a growth rate of 5%, despite the total or partial confinement of 19 provinces, of 180 million people, including the 26 million inhabitants of Shanghai.
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Among these decisions, that of easing the regulatory harassment suffered by the digital giants for 18 months. Beijing has announced that it wants to encourage the ” healthy development of internet platforms.
Alongside the Politburo, the South China Morning Post revealed the forthcoming organization of a symposium bringing together around the same table the Chinese Cyberspace Administration, potentially Xi Jinping in person and Alibaba, Tencent, Meituan, ByteDance…
This meeting should take place at the end of the holidays accompanying Labor Day in China, after May 4. For the authorities, the current framework could no longer evolve, at least for a while. Recent measures, such as limiting the exposure time of young Chinese to apps could be suspended. Fines could follow, good news for Tencent, directly threatened.
In return, Beijing expects several things from its digital giants. In the short term, support for the economy. For example, in direct connection with the pandemic, they will be invited to distribute consumption vouchers for confined populations. Shenzhen local government has started collaborating with Meituan and JD.com.
the wall street journal understands, too, that Beijing wants to receive 1% of the shares of its major Web companies and a role in decision-making. ByteDance and Weibo, the Chinese equivalent of Twitter, have already done so, Tencent and Meituan are expected to imitate them.
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For the power, the interest is obvious: it is a question of ensuring that its guidelines are well respected. For companies, the agreement also has an advantage, that of having a sharper vision of changes in the political and therefore regulatory orientations of the government.
An argument that can reassure investors, who have become cautious since China took over the Tech sector. Billions of dollars in value were lost in 2021 on the New York and Hong Kong stock exchange for the latter.
According to a report by the Chinese Academy of Information and Communications Technology, Chinese digital companies raised $3.51 billion in the first quarter of 2022, a year earlier the figure was $15 billion, or 76 .7% less. On Friday, April 29, after these various revelations, Alibaba’s share price rose by 15.7%, Tencent’s by 11.1% and Meituan’s by 15.5%.
On March 16, in a statement by the State Council, Vice Premier Liu He called for tech regulation ” transparent and predictable “. Beyond the considerations related to Covid-19, Xi Jinping, could want to ensure a certain economic stability in order to run for a potential 3rd term at the 20th Congress of the CPC, in November 2022.