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China loosens grip on tech industry… by maybe tightening it

China's internet regulations

China loosens grip on tech industry… by maybe tightening it


Future. China is potentially reversing course on a year of endless tech regulations — controlling the success of companies, how long people can be on platforms, and the outlawing of whole markets. But the emergency move would come at a price: giving the government a more direct say in corporate decision-making. It may go to show that Beijing’s social and economic goals inherently work against each other.

Let success reign
China seems to be backtracking on its crackdown on Big Tech success.

  • China’s top internet regulator, the Cyberspace Administration of China, is set to meet with tech giant leaders (Tencent, Meituan, etc.) to discuss a relaxation of regulations that have stopped growth in the sector.
  • According to WSJ, the government may also offer to take 1% stakes in these companies and ask officials to be given a chance to take a direct role in corporate decisions.
    • Beijing has already taken stakes in ByteDance and Weibo.
  • The hope is that by taking a bigger role at the corporate level, the government can make sure that companies are “aligned with its broader policies” while still being allowed to grow in power.

But Chinese leader Xi Jinping and the Politburo, the top decision-making body of the Communist Party, stress that they will resume their “campaign against internet companies” at some point… soon… definitely.

Why is Beijing changing course after such an aggressive campaign to curtail corporate power? The government recognizes that its strict policies (mixed with lockdowns after another wave of COVID and the war in Ukraine) have really hurt the economy.

Beijing mandates that economic growth must be at a higher rate than that of the U.S. (a target of 5.5% this year for China). That just isn’t possible when the economic environment has led to a sudden increase in stock sell-offs and job layoffs. Social control is very important to Beijing… but so is maintaining economic power.

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