China suggests easing tech-related strictures, but don’t expect a shift in policy

China has shown signs of easing its crackdown on the technology sector that has wiped out billions of dollars from the value of its flagship companies.

But analysts said Beijing’s recent positive rhetoric should not be confused with policy reversal.

“I think the big tech companies will have a grace period maybe for the next six months,” Linghao Bao, a technology analyst at Trivium China, told CNBC’s “Squawk Box Europe” on Tuesday.

“However, this is not really a detour on tech-related crackdowns, the long-term prospects have not changed yet. Because Beijing has already come to the conclusion that allowing the big tech companies to operate because it creates unfair competition in the market … wealth will be concentrated in The summit will begin to influence policy.”

“So the crackdown on technology is really there to stay in the long run.”

Since the end of 2020, Beijing introduced more stringent legislation on the domestic technology sector in an attempt to rein in the influence of some of its largest companies.

Since late 2020, China has increased scrutiny of the tech sector and introduced a slew of new regulations that have tried to rein in the influence of domestic giants. Analysts say that while there appear to be signs of easing the strict measures, there will not be a complete shift in policy.

Kevin Fryer | Getty Images News | Getty Images

Rules in areas of Antitrust to data protection It came into effect in a rapid fashion in the past 16 months. These moves surprised international investors and triggered a dramatic sell-off in stocks From the local titans of Tencent to Ali Baba.

But Beijing has indicated that some scrutiny in the tech sector may ease as its economy faces pressure from the resurgence of Covid and the subsequent shutdown.

On Tuesday, Chinese officials met with some of the country’s top tech executives in more signs of easing.

after the meeting, Chinese Vice Premier Liu He pledged support For the technology sector and plans to put Internet companies for public subscription.

Comes after the Chinese president Xi Jinping In April, he chaired a meeting of the Politburo, the highest decision-making body. The Politburo has pledged to support the “healthy” development of the so-called platform economy, which includes internet companies in areas from social media to e-commerce.

Even if there are some reversals, it may be too late to reverse the damage.

Charles Mock

Charles Mok is a visiting scholar at Stanford University’s Global Digital Policy Incubator

Despite these soothing tones from Beijing, experts doubt there will be a major policy shift.

“I don’t think regulatory action is really going to stop. Many ministries still have a mandate to enforce all of the regulations that have been amended and strengthened,” said Charles Mok, a visiting scholar at Stanford University’s Global Digital Policy Incubator.

“Even if there are some reversals, it may be too late to reverse the damage. For example, even if you allow more overseas listings, investor confidence has already been lost, and scrutiny and hostility from the foreign market also cannot be reversed.”

Mok said that since regulatory scrutiny was driven by the top of the political hierarchy in China, it would be difficult to make a detour.

“It sounds very similar to the disasters they have with Zero-Covid. You know it’s wrong but you can’t admit it, you can’t reverse it, and you can’t help but pay some rants and hope for the best,” Mock said.

Zero Covid is China’s policy to eliminate the coronavirus from the mainland through strict measures including citywide lockdowns and mass testing. The city of economic and financial power Shanghai has been closed since late March. China’s policy of not spreading Covid has taken its toll on its economy.

Mok added that the motivations behind China’s regulatory tightening have not changed either.

“A large part of the ‘technological crackdown’ was really rooted in the drive to increase state control over the digital economy and all the data in commerce, and there is no way that in the current crisis the party thinks these controls are now less important.”

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