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China's Top Leaders Pledge Support for Big Tech Sector Amid Regulatory Reversal

In a recent Politburo meeting chaired by President Xi Jinping, China's top leaders reaffirmed their commitment to supporting the country's Big Tech sector.

China's Top Leaders Pledge Support for Big Tech Sector Amid Regulatory Reversal

This move comes as part of an effort to reverse the government's previous regulatory crackdown, which had a significant impact on the nation's influential and best-performing technology companies. The crackdown aimed to curtail what authorities perceived as "the irrational expansion of capital."


During the meeting, the 24-member Politburo Standing Committee, China's highest policymaking body, pledged to "promote the standardised, healthy and sustainable development of platform enterprises." These platform enterprises refer to internet firms such as Alibaba Group Holding, the owner of South China Morning Post, and Tencent Holdings. However, specific details about the support were not disclosed in the official readout released after the meeting.


The announcement of the Politburo's pro-growth stance has had a positive effect on investor sentiment. Following Beijing's recent unveiling of a 31-point action plan to support the country's private sector, the Hang Seng Tech Index, which represents the 30 largest technology companies listed in Hong Kong, experienced a significant surge of 6%. Notably, Alibaba saw a 6.3% increase, Tencent's value rose by 6.2%, and Meituan gained an impressive 7.8%.

The strong endorsement from China's top leadership underscores Beijing's determination to enable Big Tech companies to regain their growth trajectory and contribute to the country's post-pandemic economic recovery, which has been somewhat uneven.


This support for the technology sector is further reinforced by recent moves from other governmental bodies. For instance, the National Development and Reform Commission, China's top economic planner, gave its approval to the investment projects of ten leading internet platform companies. Beijing recognizes the importance of these companies in driving economic growth and job creation.


Prominent Chinese venture capitalist, Allen Zhu Xiaohu, a managing director at GSR Ventures, one of the world's most successful early-stage venture firms with over US$3.7 billion under management, emphasized the need for China to set specific objectives to promote the development of its private sector, including Big Tech firms. Zhu suggested encouraging leading private tech groups to achieve a market value of US$1 trillion. He highlighted the growing market value gap between US and Chinese tech companies and the lack of interest shown by US investors in Chinese tech firms.


Currently, there are no Chinese tech companies in the exclusive trillion-dollar club, which includes giants like Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Tesla, and Facebook owner Meta Platforms.


In addition to the political support, state-owned Chinese publications are also backing the country's Big Tech companies. The Economic Daily, for example, published an opinion piece asserting that the internet platform economy has a bright future and can play a crucial role in local government development initiatives.


Tech executives are also receiving reassurances from Beijing officials. The mayor of Beijing, Yin Yong, met with outgoing Alibaba chairman and CEO, Daniel Zhang Yong, and Xiaomi Corp founder and CEO, Lei Jun, expressing hope that Big Tech firms would contribute significantly to making Beijing a "global technology center" by 2025.


China's renewed commitment to supporting its Big Tech sector signals a strategic move to strengthen the private sector and boost the country's technology industry. As regulatory pressures ease, investors and industry players are optimistic about potential growth opportunities in China's technology landscape.

By fLEXI tEAM



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