China’s crackdown on tech giants is ‘essentially’ over, top official says | CNN affairs

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CNN

China’s crackdown on tech giants is coming to an end and the country’s economic growth is expected to get back on track soon, a top central bank official said.

The crackdown on fintech operations of more than a dozen internet companies is “essentially” over, Guo Shuqing, the Communist Party chief at the People’s Bank of China, said in an interview with the state-run Xinhua news agency on Saturday.

“Next, we will promote healthy development of Internet platforms,” ​​said Guo, who is also chairman of China’s Banking and Insurance Regulatory Commission. “We will encourage them to come out strong by leading economic growth, creating more jobs and competing globally.”

His comments came on the same day Chinese billionaire Jack Ma relinquished control of Ant Group after the fintech giant’s shareholders agreed to a restructuring of the company.

China’s crackdown on its biggest tech companies began in 2020 with new fintech regulations forcing Ma’s Ant Group to suspend its $37 billion IPO just days early its launch.

Regulators then targeted the online financial services units of 13 other technology giants, including Tencent, Baidu, JD.com, Bytedance, Meituan and Didi.

These technical regulations were part of a wider government campaign to curb the country’s private enterprise, which had become too powerful in the eyes of the ruling Communist Party.

However, Chinese policymakers are expected to shift their focus to boosting growth in 2023, and tech companies will play a key role in that. The country recently lifted its zero-Covid policy, which had battered the world’s second largest economy.

Guo expects China’s economy to return to “normal” soon, he said.

“The key to rapid economic recovery and high-quality development is to convert current total income into consumption and investment as much as possible,” Guo said in the Xinhua interview.

Most economists expect the Chinese economy to remain sluggish in the first quarter of 2023 as domestic demand remains weak amid rising Covid cases. But they expect growth to pick up in the second quarter.

Guo also promised to provide more financial support to private companies, most of which are small and micro enterprises.

“[We’ll also] increase their access to funding and support IPOs and bond issuance,” he added.

On stopping the slump in the real estate market – a major drag on growth – Guo said the government will give “priority” to improving the balance sheets of top developers.

Developers have been facing a liquidity crisis since the government cracked down on excessive lending in the sector in 2020. The measure has halted construction of pre-sold homes across the country and sparked a rare outcry last year from homebuyers, who refused to pay. mortgages on unfinished homes.

Major tech companies in China have been grappling with drastic regulatory measures for months. The campaign has wiped out more than $1 trillion from the market value of some leading companies.

Ma relinquished control of Ant Group on Saturday after the company issued over the past two years, businesses, from consumer loans to insurance products, have been revamped to satisfy regulators.

Last week, the company received capital-raising approval from its main consumer finance division, a critical step in its restructuring.

But Ma’s relinquishment of control could also add more uncertainty to the list’s timeline.

Companies cannot list on China’s domestic stock market if they have had a change of control in the last two or three years – depending on which board they want to list on. They have to wait a year on the Hong Kong stock exchange.

Ant Group told CNN on Monday that it currently has no plans for an IPO.

“Ant Group has focused on its business rectification and optimization and has no plan for an IPO,” a company spokesperson said.



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