China leadership gives tech companies more leeway again

The state has greatly increased its control over corporations in recent years through extensive interventions that have brought them under the Communist Party's control. They are made to support party objectives and advance the sector's modernization.

The fact that the Chinese economy has been deteriorating recently is also likely to be related to the official signals of relaxation. The tech companies have painfully felt the effects of the interventions because they are accustomed to being successful.

In recent years, they have grown much more slowly while experiencing declining profit margins. China's tech sector is in flux. The example of Ant, a subsidiary of Alibaba that offers financial services, demonstrates how extensive some of the state interventions were: The financial group, which is the owner of the well-known payment app Alipay, was forced to separate its extremely successful consumer credit operation.

According to the business magazine "Caixin," the connections to the parent company Alibaba were largely severed, as was the exchange of data between the organizations. Recently, Jack Ma, the founder of Alibaba, declared that he would give Ant control of the company.

The financial regulators did not declare that the regulatory efforts at a number of financial subsidiaries of tech companies, including Ant, were "almost complete" until that point. During company visits last year, the Handelsblatt was able to clearly observe the uncertainty in the formerly self-assured industry.

They are making a concerted effort to improve their image. Particularly mentioning their significant contribution to the growth of the real economy are tech companies like Baidu and JD.com.

For instance, in a presentation, the online retailer and logistics company JD . com refers to itself as a "digital company with characteristics of the real economy.". The "industrial partners along the supply chain" are being strengthened, a company representative emphasizes.

According to the party's guidelines, this aid is given particularly to small and medium-sized businesses. Development in China will benefit from this.

Golden shares: State's control over tech firms has increased, according to Antonia Hmaidi of the German China think tank Merics. This has completely changed the way that the Chinese tech industry operates. According to her comments to Handelsblatt, "the state now has more control over businesses.".

A consortium for the development of chips, in which the government has a keen interest, will be formed by Alibaba and Tencent. Because Chinese IT platforms are reliant on the party state, Hmaidi cautions that Western governments now face new difficulties in dealing with them.

China experts also discuss in this context how the use of so-called "golden shares" has allowed the state to exert a greater degree of control over tech firms. Despite the fact that the state typically owns only 1% of the share capital, these grant the owner special rights, including a large say in board member appointments and other company decisions.

Currently, it appears that the state's leadership is primarily focused on tightening control over the content that is distributed through tech platforms. The state already owns a significant number of shares, including those in the short video service Kuaishou and the surveillance specialist Sensetime, through the "China Internet Investment Fund," which is associated with the CAC internet regulator.

On the fund's website, there is a list that leads to this. He reportedly also owns stock in the parent company of Tiktok, Bytedance, as well as the Chinese Twitter competitor Weibo, which is owned by Tencent.

According to a recent report from the "Financial Times" ("FT"), the government is said to have recently acquired a stake in an Alibaba media subsidiary. Entry is therefore about to occur in the case of a Tencent subsidiary.

It appears that the businesses are attempting to entice local governments to become shareholders. While in the Beijing central administration, evidence of fidelity to the line is more crucial, these are likely to act less strictly and have a greater interest in the continued growth of their region.

andgt;. Beijing would thus continue to adhere to its original goal of only regulating platform content.

The Trivium experts would "start to worry" if gold shares were also made compulsory outside of the media industry. China's corporations are severing ties with the global economy, and particularly Chinese technology companies appear to be concerned that state involvement will harm their reputation abroad.

According to internal documents from Bytedance, which were cited by the "FT," the company is attempting to further decouple its global units from one another in order to ostensibly free them from management's state supervisors' oversight. As part of the rectification campaign, the state leadership has greatly increased its control over the tech companies since the year 2020, which had previously grown to be de facto unregulated.

According to official statements, the objectives are to safeguard consumers, preserve competition, and stop "uncontrolled capital growth.". However, the party also wants to increase its level of control and influence, as is so frequently the case in China.

For instance, the government demoted Alibaba, the world's largest online retailer, and Jack Ma, its founder, in November 2020. Ma had previously criticized the regulators' "pawn shop mentality" in public.

Financial regulators then halted the $2.8 billion Ant IPO. According to insiders, the order was given by state and party leader Xi Jinping personally, the Wall Street Journal reported at the time.

Because it is believed that they abused their market power, Internet platforms like Alibaba and Meituan were subject to severe penalties. In July 2021, the taxi service provider Didi was targeted by the Chinese internet regulator CAC.

She accused him of endangering China's national security by going public in the United States. Following those blows, numerous fintechs, the internet tutoring sector, and online gaming giants like Tencent took additional hits.

More: No one can predict what will happen in China State and party leader Xi Jinping himself gave the order, the Wall Street Journal reported at the time, citing insiders. High penalties followed for Internet platforms such as Alibaba or Meituan because they are said to have abused their market power.

The Chinese Internet Regulatory Commission (CAC) specifically targeted the Didi taxi service provider in July 2021. She accused him of endangering China's national security by going public in the United States.

Further blows against online gaming companies such as Tencent, the internet tutoring industry and numerous fintechs followed. More: No one can predict what will happen in China State and party leader Xi Jinping himself gave the order, the Wall Street Journal reported at the time, citing insiders.

High penalties followed for Internet platforms such as Alibaba or Meituan because they are said to have abused their market power. In July 2021, the taxi service provider Didi was targeted by the Chinese internet regulator CAC.

She accused him of endangering China's national security by going public in the United States. Further blows against online gaming companies such as Tencent, the internet tutoring industry and numerous fintechs followed.

More: No one can predict what will happen in China because they are said to have abused their market power. In July 2021, the taxi service provider Didi was targeted by the Chinese internet regulator CAC.

She accused him of endangering China's national security by going public in the United States. Further blows against online gaming companies such as Tencent, the internet tutoring industry and numerous fintechs followed.

More: No one can predict what will happen in China because they are said to have abused their market power. In July 2021, the taxi service provider Didi was targeted by the Chinese internet regulator CAC.

She accused him of endangering China's national security by going public in the United States. Further blows against online gaming companies such as Tencent, the internet tutoring industry and numerous fintechs followed.

More: No one can predict what will happen in China.

While in the Beijing central administration, evidence of fidelity to the line is more crucial, these are likely to act less strictly and have a greater interest in the continued growth of their region.