China has shown signs of easing its crackdown on the tech sector, which has taken billions of dollars in value away from its most prominent companies.
But analysts say Beijing’s recent positive rhetoric should not be confused with a policy reversal.
“I think the big tech companies will have a grace period maybe in the next six months,” Linghao Bao, technology analyst at Trivium China, told CNBC on “Squawk Box Europe” on Tuesday.
“However, this is not really a turning point for the technology crackdown, the long-term outlook has not changed. Because Beijing has come to the conclusion that it is okay to let big tech companies operate. rambling is a bad idea, because it creates unfair market competition … wealth will be concentrated at the top and it will start to influence politics,” he said.
“So the tech crackdown is really here to sustain.”
As of the end of 2020, Beijing has made stricter regulations on its domestic technology sector in an attempt to rein in the power of some of its biggest companies.
Since the end of 2020, China has stepped up scrutiny of the technology sector and introduced a series of new regulations aimed at curbing the power of domestic giants. Analysts say that while there seem to be signs of this easing of repression, there will not be a policy of outright turning away.
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Rules in areas from Antitrust arrive data protection has come into force rapidly for the past 16 months. These moves caught international investors off guard and caused a significant sell-off in stocks of domestic giants from Tencent arrive Alibaba.
But Beijing has signaled some scrutiny of the tech sector could ease as its economy faces pressure from a Covid resurgence and subsequent shutdowns.
On Tuesday, Chinese officials met with some of the country’s top tech executives with signs of further easing.
After the meeting, Chinese Vice Premier Liu He pledges support for the technology sector and plans for internet companies to go public.
It comes after the President of China Xi Jinping in April chaired a meeting of the Politburo, the top decision-making body. The Politburo is committed to supporting the “healthy” development of the so-called platform economy, which includes internet companies in areas ranging from social media to e-commerce.
Even if there is some reversal, it may be too late to reverse the damage.
Charles Mok
Charles Mok, visiting scholar at the Global Digital Policy Incubator at Stanford University
Despite softer words from Beijing, experts remain skeptical that there will be a major shift in policy.
“I don’t believe the regulatory actions will really stop,” said Charles Mok, a visiting scholar at the Global Digital Policy Incubator at Stanford University. both regulations have been revised and enhanced”.
“Even if there is some reversal, it may be too late to reverse the damage. For example, even if they allow more listings abroad, investor confidence has been lost, and the surveillance and hostility from overseas markets is also irreversible.”
Mok said that since regulatory oversight is promoted by the highest levels of China’s political system, it would be difficult to make a turn.
“This seems very similar to the hardships they face with zero-Covid. You know it’s wrong but you can’t admit it, you can’t reverse course and you can only pay some translation. lip service and hope for the best,” said Mok.
Zero Covid is China’s policy to eliminate coronavirus from the mainland through tough measures including citywide closures and mass testing. The city of economic and financial powerhouse of Shanghai has been locked down since the end of March. China’s zero Covid policy has weighed on the country’s economy.
Mok added that the motivation behind China’s tightening of regulations has also not changed.
“Much of the ‘tech repression’ campaign really stems from an incentive to increase state control over the digital economy and all data in commerce, and there is no way that under the In the current crisis, the party thinks these controls are now so less important,” he said.
