Beijing is wrapping up intense scrutiny of Chinese tech-sector giants like Alibaba and Tencent. But while easing punitive measures after more than a year, it is establishing continuous control over internet companies. The party state seems to have succeeded in taming its digital giants, forcing them into ideological alignment with a new regulatory regime and national goals.
A high-level official from the People’s Bank of China on January 9 said publicly that investigations into the financial subsidiaries of 14 internet platforms were coming to an end. Even if the main tech regulator, the Cyberspace Administration of China (CAC), has so far remained quiet, another signal to this effect came on Monday. Didi Global announced that it had been allowed to register new users for its ride-hailing services, a business effectively put on hold for 18 months in the course of an official cybersecurity review.
Internet companies back in business as Beijing looks for high-quality growth
In a move that suggested the Chinese Communist Party (CCP) had won allegiance in return for its blessing to resume operations, Didi stressed making comprehensive rectifications in accordance with the state review and vowed to continue safeguarding national cybersecurity. In another highly visible move, Alibaba’s beleaguered founder Jack Ma gave up control of fintech subsidiary Ant Group. With the state also taking a 1% golden-share stake (with a board seat and some content review privileges) in an Alibaba subsidiary, the company Ma founded also seems to have made its peace with Beijing.
China’s internet companies have suffered massive damages to their businesses and share prices since the beginning of the regulatory crackdown. The easing of sanctions and fines looks set to encourage them to again seek to grow their businesses – at a time when the Chinese government is re-prioritizing growth through informatization and industrial upgrading. But there will be no going back to the previous “Wild West.” The state has clearly brought the tech companies into line and has in addition been corralling them to contribute to state projects that serve the national interest. Alibaba and Tencent, for example, were enlisted to join a consortium for RISC-V chips, a key technology for the state.
MERICS analysis: “It seems that China’s internet companies are allowed to thrive again – albeit under firmer state oversight,” says MERICS Analyst Antonia Hmaidi. “This is meant to ensure they serve the national interest by generating ‘high-quality’ growth and amplifying state narratives. Western governments face new problems in dealing with Chinese platforms that cannot be assumed to be independent of China’s party state.”
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