The Chinese People’s Political Consultative Conference (CPPCC), the country’s top advisory body, held a comprehensive symposium on the local digital sector on May 17. This is the latest demonstration of an easing of regulatory pressure on China’s big tech companies.
It’s time to blow for Chinese digital
For 18 months, almost two years, Beijing has decided to bring its digital giants back into line. This crackdown has resulted in numerous regulations ranging from antitrust to data security and even more investigations into industry players.
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Since then, the situation seems to have gradually changed. At a Politburo in April, President Xi Jinping promised to support healthy development of the platform economy. A message taken up by his right-hand man and Deputy Prime Minister Liu He on May 17.
The latter also announced that he would support the listing of technology companies on the Chinese and foreign markets. A change of course compared to previous measures, but already noticeable recently. Wang Yang, the fourth figure in the Communist Party of China (CCP), also said the government will enhance digital confidence and boost its development.
No precise measurement was mentioned during the symposium, which does not detract from the strength of the symbol. the South China Morning Post, owned by Alibaba, says wide coverage of the event by state media is cause for optimism. The official journal of the CPPCC headlined at the end of the meeting ” Firmly grasp the spring of the development of the digital economy “.
Linghao Bao, technology analyst at Trivium China, told CNBC“ I think big tech companies will get a grace period for maybe the next six months “.
The same day, before the end of the meeting, the investment bank JPMorgan raised the ratings of the main players in the digital economy in China, Tencent, Alibaba, Meituan, NetEase and Pinduoduo. In March, the same bank deemed Chinese stocks non-investing for the next 6 to 12 months.
This flip-flop is justified by a bet on reducing regulatory uncertainty. A bet justified by Beijing’s recent positions. This change of attitude of the Chinese power is due to the situation of its economy.
Beware, Beijing only grants a temporary status quo
Xi Jinping’s zero-Covid policy, Shanghai has been confined since the end of March, Beijing is doing everything to avoid it, martyring the country’s economy. By releasing the pressure on the digital sector, the objective is to let it support the situation. It also allows them to adapt more effectively to US economic sanctions.
Linghao Bao warns, however, that on the crackdown, ” the long-term outlook has not yet changed » . He explains ” that Beijing has already come to the conclusion that it’s a bad idea to let big tech companies run amok because it creates unfair competition in the marketplace… “. The regulatory break, if confirmed, would therefore only be temporary.