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China signals easing of tech crackdown but don’t expect policy U-turn


China appears to be easing its restrictions on the tech sector, which has seen its largest companies lose billions of dollars in value.

However, analysts cautioned that Beijing’s latest positive rhetoric shouldn’t be confused for an inverse of current policy.

Linghao Bao from Trivium China’s tech analyst said that the “big tech companies” will be granted a “grace period for perhaps the next six month.”

However, while this is not an end to the crackdown on tech, the long-term outlook remains unchanged. Because Beijing has already come to the conclusion that it is a bad idea to let big tech companies to run wild because it creates unfair market competition … wealth will be concentrated at the top and it will start to influence politics,” he said.

The tech crackdown is here to stay for the long-term.”

Since the end of 2020 Beijing has introduced stricter regulationIn an effort to limit the power of some of the country’s largest corporations, it will focus on its technology sector domestically.

China increased its scrutiny of the technology sector in late 2020 and has introduced new regulations to try to restrain the country’s power. Analysts believe that there is no sign of a policy shift, but there are signs that there may be some crackdown.

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The following rules apply to certain areas antitrustYou can find more information here data protectionIn the last 16 months, they were quickly implemented. International investors were caught off guard by these moves. sparked a dramatic sell-off in the stocksFrom the domestic titans TencentYou can find more information here Alibaba.

Beijing indicated that some of the criticisms of its tech sector might ease, as it faces increased pressure from Covid and other lockdowns.

In further indications of ease, Chinese officials met Tuesday with top tech executives of China.

Follow-up to the meeting China’s Vice-Premier Liu He pledged supportfor the technology industry and for plans for Internet companies to become public.

After the Chinese President Xi JinpingIn April, the Politburo was chaired by him. This is a high-ranking decision making body. Politburo pledged support for the “healthy” development of so-called platform economics, which include internet companies operating in areas ranging from social media to electronic commerce.

Even though there may be some temporary reversals of the situation, it is unlikely that they will reverse the damage.

Charles Mok

Charles Mok is a visiting scholar in the Global Digital Policy Incubator of Stanford University

Experts doubt that there will be any significant shift in policy despite these soothing tones emanating from Beijing.

“I doubt that regulatory actions will cease,” says Charles Mok. Charles Mok of Stanford University’s Global Digital Policy Incubator said, “Various Ministries still have a mandate for enforcement all regulations that were amended or strengthened.”

Even if some steps are taken to reverse this trend, it might be too late for the damages to be repaired. Even if more foreign listings are allowed, investor confidence has already been lost and there is no way to reverse the hostility and scrutiny from the foreign markets.

Mok claimed that it would be hard to reverse the direction of China’s top political hierarchy because regulatory scrutiny is driven by them.

This seems to be very close to what they are facing with zero-Covid. You know it’s wrong but you can’t admit it, can’t reverse course, and you can only pay some lip service and hope for the best,” Mok said.

Zero Covid refers to China’s strategy of eliminating coronavirus on the mainland by using tough measures such as mass testing and lockdowns throughout the city. City of power and economic strength. Shanghai has been in a lockdown since late March. China’s zero Covid policies have had an adverse effect on its economy.

Mok said that China’s motivations for tightening regulations haven’t changed.

“Much of the ‘tech crackdown’ campaign was genuinely rooted in the motivation to increase state control of the digital economy and all the data in the trade, and there is no way that under the current crisis that the party would think these controls are now less important,” he said.