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China Says Crackdowns Essential to Protect Markets, Tame ‘Barbaric’ Tech Growth

State mouthpiece articulates government intention to keep markets operating smoothly and stymie the power of private companies

Image: Reuters.

 

(AF) China has defended its recent regulatory crackdowns as essential to creating a fair market and preventing the problems associated with “barbaric growth” among private tech companies.

Hard-line measures against firms including Didi Global and Ant Group are “pragmatic actions to promote the formation of a fair competition market environment and better protect the rights and interests of consumers”, an opinion piece the government mouthpiece The People’s Daily declared.

“Accelerating the construction of a new development pattern is a strategic measure for us to seize the initiative of future development,” the article, signed by editors Yue Hongbin and Hao Jiangzhen, stated. “It is to enhance our viability, competitiveness, development and sustainability in all kinds of predictable and unforeseen storms.”

Authorities have stepped up pressure on private tech companies, citing infractions such as anti-competitive activities, illegal data usage and cybersecurity threats. Critics have said the measures were taken to stifle the rising power of private companies on fears they could undermine the government’s authority.

Markets have reacted with similar concern, sending the Golden Dragon Index of dollar-denominated Chinese stocks down by a fifth this year.

Platform Enterprises

Without naming any specific companies, the article said the moves were also designed to head off threats to the smooth running of the economy from “platform enterprises”, shorthand for social media and other privately-owned consumer tech firms.

“In view of the prominent problems of barbaric growth and disorderly expansion of some platform enterprises (the government will strengthen) anti-monopoly supervision, investigate and deal with monopolies and unfair competition behaviours of platform enterprises … prevent the disorderly expansion of capital… and ensure the order of fair competition in the market is steadily improving.”

The commentary also reflects President Xi Jinping’s recent call for a strengthening of socialist principles in the economy to prevent social instability. In a speech to economic planners he urged a clampdown on high incomes and better redistribution of income to narrow the country’s yawning wealth gap.

The government’s measures have claimed many prominent scalps. Didi was forced to remove its ride-hailing app from users’ devices after authorities swooped, claiming cyber security threats, just days after the company had listed in the US. Ant was fined heavily for breaches of antitrust laws after it was forced to pull what would have been the world’s biggest IPO. At the same time Jack Ma, the high-profile founder of Ant parent Alibaba, disappeared from public view.

Dozens of online education companies were also snared when the government decided to prevent them from offering national curriculum courses. Most recently, the ire of gaming companies was raised by a decree that teenagers should limit their time playing online games to three hours a week.

Other social measures, in particular the demonisation of anything considered decadent or Western-influenced, has been likened to the communist leader Mao Zedong’s Cultural Revolution of the 1960s and 70s.

 

  • By Mark McCord

 

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Mark McCord

Mark McCord is a financial journalist with more than three decades experience writing and editing at global news wires including Bloomberg and AFP, as well as daily newspapers in Hong Kong, Sydney and Melbourne. He has covered some of the biggest breaking news events in recent years including the Enron scandal, the New York terrorist attacks and the Iraq War. He is based in the UK. You can tweet to Mark at @MarkMcC64371550.

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