Beijing (AP) —The ruling Communist Party is using their wealth to pay for its ambitions to strengthen political control over China’s Internet giants and reduce its reliance on technology in the United States and Europe.
Antitrust and data security crackdowns, which began in late 2020, have rocked a thriving 20-year industry with little regulation. Investor anxiety has pushed the total market value of e-commerce platform Alibaba, games and social media operators Tencent and other major tech companies by more than $ 1.3 trillion.
The party has stated that antitrust enforcement will be prioritized until 2025. Competition helps create jobs and improve living standards, he said.
President Xi Jinping’s government is likely to stay on track even if economic growth slows, says businessmen, lawyers and economists. Mark Williams, Chief Asian Economist at Capital Economics, said:
Steve Tsang, a Chinese political expert at SOAS University of London, said the West’s public emphasis on reviving the party’s “original mission” that the crackdown would lead economic and social development. Said that it reflects. He also said that, as expected, it could help Xi politically if he pursued a third five-year term as leader.
Chinese leaders do not want direct control of the economy, but want private companies to be in line with the ruling party’s plans, Lester, head of the Beijing office of law firm Wilmer Hale.・ Ross said.
“They’re worried that businesses are getting too big and independent of the party,” Ross said.
The founders of Chinese internet companies and their millionaires, including Alibaba Group’s Jackma and Tencent Holdings’ Ponima, are one of the biggest global success stories in the last two decades. Alibaba is the largest e-commerce company and Tencent operates the popular WeChat messaging service.
However, as party planning focuses on robots, chips, and other hardware, these companies are rushing to show loyalty by shifting billions of dollars to them.
The ruling party’s campaign warns that the world may be separated by incompatible technologies or divided into separate markets. Chinese products do not work in the United States or Europe, and vice versa. Innovation and efficiency are reduced.
US regulations on China’s access to telecom and other technologies have been useless.
Alibaba announced that it will invest $ 28 billion in the development of operating system software, processor chips and network technologies. The company has pledged $ 1 billion to train 100,000 developers and tech startups over the next three years.
Last year, Tencent promised to invest $ 70 billion in digital infrastructure. Meituan, an e-commerce, delivery and services platform, has raised $ 10 billion to develop self-driving cars and robots.
Chinese officials have allowed the campaign to impose economic costs, but do not want to speak, Tsang said. “Who will stand up and tell Xi Jinping, will your policy harm China?”
Investors, many of whom have been burned by the decline in tech stocks, are on the sidelines of their money. Tencent’s market capitalization of $ 575 billion is down $ 350 billion from its February peak, Nike Inc. Or Pfizer Inc. It exceeds the total value of.
Alibaba’s early investor Masayoshi Son, CEO of Japan’s SoftBank Group, announced on August 11 that it will postpone new deals with China. SoftBank has invested $ 11 billion in Didi for Ride Hailing Services. Didi’s stock price has fallen one-third since its debut on the US stock market on July 30.
The crackdown began in November when Beijing ordered Ant Group, which evolved from Alibaba’s Alipay online payment service, to postpone its stock market debut in Hong Kong and Shanghai. The company, which provides online savings and investment services, was told to shrink plans, scrutinize borrowers and install bank-style systems to manage lending risk. Industry analysts have reduced Ant’s forecast stock market value forecast.
Meanwhile, Xi’s government is tightening control over civilian data collected by private companies, especially in Alibaba and Tencent, which have hundreds of millions of users. Chinese leaders see information about 1.4 billion people as a tool for gaining public and economic insights, and a potential security risk at the hands of individuals.
The law, which comes into force on November 1, establishes security standards, prohibits businesses from disclosing information without the permission of their customers, and requires them to limit the amount they collect. Unlike data protection laws in Western countries, Chinese rules say nothing about restricting access to personal information of governments and ruling parties.
Beijing has also been accused of using its stockpile of data on its people in a crackdown campaign against Uighurs and other predominantly Muslim minorities in the Xinjiang Uighur Autonomous Region of northwestern China.
Angela Chan, an antitrust expert at the Faculty of Law, University of Hong Kong, was “very loose” until a few months ago, and China became “one of the most aggressive and powerful jurisdictions in the regulation of the digital economy.” The paper states that it is. this month.
In April, Alibaba was fined RMB18.3 billion ($ 2.8 billion) for violations, including banning vendors wishing to use its platform from trading with Alibaba’s competitors.
Alibaba, Tencent, Kuaishou on live streaming sites, Sina Weibo on microblogging platform, and Xiaohongshu unit on social media sites have also been fined for distributing stickers and short videos of children that imply sexuality. It has been. Tencent’s music service has been ordered to terminate its exclusive contract with the provider.
Beijing is also closing the politically sensitive wealth gap in China by using crackdowns to encourage tech giants to share their wealth with employees and consumers.
Didi, Meituan and other delivery and ride-hailing services businesses were ordered in May to reduce the fees charged to drivers and improve their interests and security. Wang Xing, CEO of Meituan, has promised to donate $ 2.3 billion to environmental and social initiatives. Tencent’s Ma has promised a charity $ 2 billion.
Alibaba has pledged to spend RMB 100 billion ($ 15.5 billion) on job creation, rural development and other initiatives to support Xi’s “Common Prosperity” campaign.
Such an income redistribution plan is “reminiscent of mass mobilization and populist strategies” in the 1950s and 1960s under Mao Zedong, who was the leader at the time, Zhang wrote.
Soo reported from Singapore.
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