China’s private sector should rest easy after crackdown on big tech
- Regulators moved on internet giants to tighten oversight, not for the sake of political intervention, and companies should be reassured their legal rights and legitimate businesses are fully respected and protected
Ever since Chinese regulators began cracking the whip on the dominant big tech players, people have been trying to decipher whether what is going on is a power play or long-delayed antitrust action.
Rumours about political crackdowns and even, absurdly, nationalisation, have been circulating in the private business sector. That is why top policymakers from President Xi Jinping down have gone out of their way to explain that the changes are necessary in tightening regulatory oversight, not political intervention.
During a recent visit to the southern Guangxi Zhuang autonomous region, Xi pressed home the message. The party and state continue to support private businesses and enhance a friendly environment for growth and expansion, he said, so they “can develop boldly and with confidence”.
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Whether his words will reassure private businesses still recovering from the Covid-19 pandemic-induced downturn remains to be seen. But there is no question that the development of big tech and fintech giants at breakneck speed in recent years has far outstripped the ability of Chinese regulators to monitor and supervise healthy market development.
For a long time, there has been little enforced regulation in the kind of deal making and mergers that turned the likes of Tencent, Baidu and Alibaba – the parent company of this newspaper – into giant internet platforms that dominate online transactions.
In an attempt to clear up grey areas and potential loopholes, the State Administration for Market Regulation has produced new guidelines for the operations, acquisitions and investments of the online “platform economy” under its supervision. As part of a sweeping crackdown on anticompetitive behaviour by big tech, regulators have imposed record fines on 13 companies since December, including the big trio.
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Major amendments are being made to the Anti-Monopoly Law, for the first time in 13 years, to give it teeth following criticism that current legislation has been too lax and outdated.
Big tech companies around the world have been facing similar regulatory scrutiny from the United States to the European Union, for the same reason that they have become too dominant in the markets in which they operate. Even so, China’s regulators have to walk a tightrope. China’s private sector accounts for half of the nation’s tax revenue, 60 per cent of gross domestic product and 80 per cent of urban employment. Beijing has to counter a growing perception that it favours the state sector over the private.
While ensuring smooth and fair market operations, authorities must reassure those in the private sector that their legal rights and legitimate businesses – at the centre of the country’s job creation, innovation and growth in mass consumption – are fully respected and protected.
