Beijing signals two-year internet crackdown may be coming to an end

Top Chinese regulator says authorities concluded investigations into the financial platforms of Chinese internet companies

Weilun Soon
First Published9 Jan 2023, 07:48 PM IST
Financial-technology giant Ant Group said Chinese billionaire Jack Ma would cede control of the company
Financial-technology giant Ant Group said Chinese billionaire Jack Ma would cede control of the company(Photo: Reuters)

A top Chinese official said authorities have wrapped up investigations into the financial businesses of several internet companies, another strong signal that a two-year regulatory crackdown on China’s homegrown technology giants may be winding down.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, told state media that the government had concluded a campaign to “rectify the financial businesses of 14 platform companies,” with only minor problems left to be resolved. Mr. Guo, also the party secretary of the People’s Bank of China, added in the interview published Saturday that officials would look to provide more support to tech companies and work toward making supervision of the tech sector more predictable going forward.

Over the weekend, financial-technology giant Ant Group Co. said Chinese billionaire Jack Ma would cede control of the company. Ant, which is one-third owned by Alibaba Group Holding Ltd. and operates the popular mobile-payments platform Alipay, has been overhauling its operations since Chinese regulators forced it to scrap a blockbuster initial public offering in November 2020.

China’s sweeping clampdown on its previously fast-growing and freewheeling internet sector has ensnared companies such as Alibaba, Meituan and Didi Global Inc. since it began in late 2020. The regulatory crackdown has led to hefty fines on Chinese technology titans and erased more than $1 trillion in market value from China’s largest publicly listed tech firms.

The Hang Seng Tech index, a sector-focused benchmark comprising Chinese internet giants such as Alibaba, Tencent Holdings Ltd., and Baidu Inc., rose 3.2% in Hong Kong on Monday.

Alibaba’s stock jumped 8.7% on Monday. Shares of China’s biggest e-commerce provider have surged 80% from a multiyear low in October 2022. Still, they remain only about a third of their record high attained just before Ant’s canceled IPO, when Alibaba’s market capitalization had neared $900 billion.

Mr. Guo, whose commission supervises China’s banking and insurance activities, said the aim is for regulators to “encourage platform enterprises to operate in compliance with regulations and play a major role in leading development, creating employment, and international competition.” He is the highest-ranking Chinese official of late to make public comments that the government might be ending its crackdown on the tech sector.

Regulators began to soften their tone starting in early 2022, as Beijing-led policies including its zero tolerance for Covid-19 and its efforts to rein in its internet firms weighed on China’s economic growth and worsened a selloff in Chinese stocks. In March, China’s economic czar, Liu He, said during a meeting with other policy makers that regulations should be enforced in a transparent and predictable manner, specifying that any policy that could affect the market should be coordinated with financial regulators first.

Last month, in an internal meeting shortly after the Communist Party Congress, the head of China’s top economic-planning body, the National Development and Reform Commission, also called for government policies to focus on boosting growth, including instilling private-sector confidence in the real-estate sector.

In recent weeks, government officials have begun to review policies for the technology and education sectors, and are preparing to wrap up long-running investigations against its internet companies, people familiar with the matter said.

Mr. Guo’s comments come after authorities relaxed rules in late December to allow domestic gaming companies to bring in imported videogame titles. That follows earlier changes from last April when China’s videogame regulator resumed granting publishing licenses for domestic gaming titles after a monthslong freeze.

On Dec. 30, China’s securities regulator said two Nasdaq-listed online brokers had run afoul of domestic laws by allowing mainland-based customers to trade in stocks listed on foreign exchanges. That sparked a selloff in the American depositary receipts of the companies, Up Fintech Holding Ltd. and Futu Holdings Ltd. Still, some market participants said the regulator’s statement indicated its investigation into the two firms was wrapping up, and Chinese stocks have broadly risen so far this year in part due to optimism that the worst is over for the tech sector.

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First Published:9 Jan 2023, 07:48 PM IST
HomePoliticsNewsBeijing signals two-year internet crackdown may be coming to an end

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