Business Maverick

Business Maverick

Xi Jinping Warns Against Tech Excess in Sign Crackdown Will Widen

BEIJING, CHINA - APRIL 27: Chinese President Xi Jinping arrives for a press conference after the Belt and Road Forum at the China National Convention Center at the Yanqi Lake venue on April 27, 2019 in Beijing, China. (Photo by Wang Zhao - Pool/Getty Images)

China’s top leader warned that Beijing will go after so-called “platform” companies that have amassed data and market power, a sign that the months-long crackdown on the country’s internet sector is only just beginning.

President Xi Jinping on Monday chaired a meeting of the communist party’s top financial advisory and coordination committee, ordering regulators to step up oversight of internet companies, crack down on monopolies, promote fair competition and prevent the disorderly expansion of capital, according to state broadcaster CCTV. Internet companies need to enhance data security and financial activities need to come under regulatory supervision, CCTV also reported.

The unusually strongly worded comments from Xi and his lieutenants suggest Beijing is preparing to amplify a campaign to curb the influence of its largest and most powerful private corporations, which has so far centered mainly on Jack Ma’s Alibaba Group Holding Ltd. and its affiliate Ant Group Co. The term platform economies could apply to a plethora of mobile and internet giants that offer services to hundreds of millions, from ride-hailing behemoth Didi Chuxing to food delivery giant Meituan and e-commerce leaders like JD.com Inc. and Pinduoduo Inc.

“Some platform companies are developing in non-standardized ways and that presents risks,” CCTV said, citing minutes of the meeting. “It is necessary to accelerate the improvement of laws governing platform economies in order to fill in gaps and loopholes in a timely fashion.”

Read more: China Presses Alibaba to Sell Media Assets, Including SCMP

The report came days after Bloomberg News reported that governments watchdogs were now setting their sights on Tencent Holdings Ltd.’s $100 billion-plus finance empire after ordering an overhaul of Ant. Top financial regulators see Tencent as the next target for increased supervision, according to people with knowledge of their thinking. Like Ant, Tencent will probably be required to establish a financial holding company to include its banking, insurance and payments services, said one of the people, seeking anonymity as the discussions are private.

The two firms will set a precedent for other fintech players on complying with tougher regulations, the people added. Such a move would mark a significant escalation in China’s campaign to curb the influence of its technology moguls, which began last year with the scuttling of Ant’s $35 billion initial public offering and the publication of new antitrust regulations governing technology firms.

Read more: China’s Politburo Vows to Strengthen Anti-Monopoly Efforts

Tencent lost more than $65 billion of value in the two days following the report, though its shares were up more than 1% on Tuesday.

The development of China’s platform economy is currently at a crucial stage, Xi said at Monday’s meeting. It is necessary to focus on the long term, strengthen weaknesses and create an innovative environment to promote the healthy and sustainable development of the platform economy, he added.

The semi-regular meeting of the Party’s top financial supervisory group typically helps to set the tone and direction of national policy. During their last gathering in September, Xi focused on the so-called “dual circulation” approach of relying on both international and domestic consumption and production to lift the economy.

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider

Every seed of hope will one day sprout.

South African citizens throughout the country are standing up for our human rights. Stay informed, connected and inspired by our weekly FREE Maverick Citizen newsletter.