China has shown signs of easing repression against the technology sector, which has taken billions of dollars worth of its most famous companies.

But analysts believe that Beijing’s recent positive rhetoric should not be taken as a policy turn.

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

“However, this is not really a turn against technological repression, the long-term prospects have not changed. Since Beijing has already concluded that letting major technology companies run wild is a bad idea because it creates unfair market competition … wealth will be concentrated at the top, and it will start to affect politics, ”he said.

“So technological repression is really here to stay in the long run.”

Since the end of 2020, Beijing has introduced tighter regulation of its domestic technology sector to curb the power of some of the largest companies.

Since the end of 2020, China has tightened control over the technology sector and introduced many new regulations that have tried to restrain the power of its domestic giants. Analysts say that although there are signs of easing repression, there will be no complete coup in politics.

Kevin Freyer | News Getty Images | Getty Images

Over the past 16 months, rules in areas ranging from antitrust to data protection have quickly come into force. These steps caught international investors by surprise and caused a dramatic sell-off of shares of domestic titans from Tencent to Alibaba.

But Beijing has signaled that control of the technology sector could weaken as its economy faces pressure due to the Covid revival and subsequent blockades.

On Tuesday, Chinese officials met with some of the country’s top technology leaders to further weaken.

Following the meeting, Chinese Deputy Prime Minister Liu He promised support for the technology sector and plans to list Internet companies.

This came after Chinese President Xi Jinping chaired a meeting of the Politburo in April, the highest decision-making body. The Politburo has promised to support the “healthy” development of the so-called platform economy, which includes Internet companies in areas from social networks to e-commerce.

Even if there are some cancellations, it may be too late to undo the damage.

Charles Mock

Charles Mock, Visiting Scholar from the Global Digital Policy Incubator at Stanford University

Despite these more reassuring tones from Beijing, experts doubt that there will be a huge shift in politics.

“I do not believe that regulatory action will really stop. Various ministries still have a mandate to implement all regulations that have been amended and strengthened,” said Charles Mock, a visiting scholar with Stanford University’s Global Digital Policy Incubator.

“Even if there are some reversals, it may be too late to undo the damage. For example, even if they allow more listings abroad, investor confidence is already lost, and control and hostility from the foreign market also cannot be undone.”

Mock said that since regulatory legal control was governed by the top of China’s political hierarchy, it would be difficult to make a U-turn.

“It seems very similar to the defeats they face with zero Covid. You know it’s wrong, but you can’t admit it, you can’t change course, and you can only verbally and hope for the best,” Mock said. .

Zero Covid is China’s policy to eradicate the coronavirus from the mainland through austerity measures, including citywide blockades and mass testing. The economic and financial city of Shanghai has been closed since the end of March. China’s zero policy Covid has responded to its economy.

Mock added that the motivation for tightening regulation by China has also not changed.

“Much of the technology boost campaign has indeed been based on motivating government control over the digital economy and all trade data, and there is no way the party could think that this control is less important now in the current crisis,” he said.

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