China to tighten the screws more on digital giants

Photo of author

By admin

Beijing | China will tighten regulations governing tech companies to fight more effectively against monopoly practices and financial flows that pose a risk to the financial system, the premier said on Friday.

At the end of 2020, the Communist authorities had already put an abrupt halt to the IPO of the online payment giant Ant Group, founded by Jack Ma, a pioneer of e-commerce in China with his Alibaba group. The failed deal should have been the biggest IPO ever.

Alibaba and its competitor Tencent (with the WeChat Pay service) are the two private behemoths that share the huge electronic payment market in China, a sector that was little regulated until then in a country where cash has almost disappeared.

Beijing is particularly concerned about the growing weight of private giants, which have become essential to the detriment of traditional banks, and whose loans pose a risk to the country’s financial system.

While advocating innovation, Chinese Premier Li Keqiang announced “stronger regulation” in the digital economy to “prevent systemic risk”.

“The efforts will be stepped up [pour lutter] against monopoly situations and unregulated capital flows ”in order to ensure healthy competition, argued Mr. Li without giving further details.

The prime minister was speaking at the opening of the annual plenary session of the Chinese parliament, during which the country’s broad economic guidelines were announced.

In recent months, Beijing had already started to tighten its control over the digital giants by attacking monopoly practices. And in December, e-commerce champion Alibaba was under investigation.

Regulators have also toughened the rules on online microcredit, popular with Chinese and small businesses who struggle to get loans from traditional banks.

The digital economy has experienced strong development in recent years in China, thanks to the generalization of electronic payments and the proliferation of online services within reach of smartphones (commerce, finance, medical consultations and delivery of medicines, etc.)