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Saturday, Feb 24, 2024

China wraps up two-year tech crackdown, top official says

China wraps up two-year tech crackdown, top official says

Alibaba, Tencent, Didi and Meituan can expect normalized supervision
China's more than two-year clampdown on its sprawling internet sector is coming to an end, according to a top central bank official.

The special campaign to rectify 14 internet platform companies' financial businesses is basically complete with few remaining issues to resolve, said Guo Shuqing, Chinese Communist Party secretary of the People's Bank of China (PBOC).

Further supervision of the sector will be normalized, and support will be given to help platform companies play a bigger role in job creation and global competition, said Guo, who is also chairman of the China Banking and Insurance Regulatory Commission (CBIRC).

The statement was the first signal from a top regulatory official that the government is winding down a massive clampdown that affected the country's biggest internet companies including Alibaba Group and Tencent Holdings.

Beijing took aim at the country's most valuable companies starting in October 2020, warning that platform operators might abuse their power and undermine competition. The crackdown later engulfed everything from e-commerce to ride-hailing and online education. It led to the suspension of Ant Group's blockbuster initial public offering and the delisting of ride-hailing giant Didi Global from New York only five months after its debut.

Over the two years, regulators summoned top tech companies for several meetings. They forced e-commerce leader Alibaba to pay a record fine and food-delivery giant Meituan to lower the fees it charges restaurants for delivery and improve the treatment of its drivers. The tough regulatory posture along with rising economic headwinds spurred rounds of sell-offs of China tech stocks, wiping out as much as 70% of their market value in Hong Kong and the U.S.

Softening signs first emerged in the spring of 2022 when Vice Premier Liu He said in a March meeting that efforts to "rectify" internet platform companies should be completed "as soon as possible" to promote their stable and healthy growth.

In May, the PBOC backed up Liu's remark, saying it would adopt normalized supervision of internet platform companies' financial activities and would support the sector's healthy development.

At the Central Economic Work Conference in December, which set out China's 2023 economic policy agenda, top leaders offered a clearer pledge to support internet platform enterprises, with an explicit call for the rapid development of the digital economy, normalization of sector regulation, and support for the role of platform enterprises in economic growth, job creation and global competition.

Caixin learned from multiple sources that the last regulatory meeting convened by the central bank with 14 leading platform companies was held Sept. 20, during which officials indicated that no more restrictive policies would be issued for the sector.

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