On July 10, the Chinese Communist Party (CCP) news outlet Global Times published an article warning Chinese internet companies that they must “defend our national system of government of socialism with Chinese characteristics.”
The piece was published on the same day the Chinese government announced new rules that require “all internet product and services providers that collect data on more than a million users to file for a cyber-security review and approval before seeking an overseas IPO.”
In recent months the CCP has tightened its grip on the country’s tech firms. In November last year, it suspended Ant Group’s US$35 billion IPO on the Hong Kong and Shanghai stock exchanges. Ant Group’s controller, billionaire Jack Ma, was reportedly summoned and interviewed by regulators.
In March, major tech giants such as Tencent Holdings, ByteDance and Baidu were fined for not seeking prior government approval for acquisitions and investments.
In April, Jack Ma’s Alibaba was hit with a record US$2.81 billion fine over alleged monopolistic practices.
Beijing’s crackdown on big tech continued this month, when the Cyberspace Administration of China (CAC) announced it had launched an investigation into ride-hailing company Didi for allegedly violating data privacy and national security laws. It ordered the company to stop registering new users and requested that all Chinese app stores remove Didi’s app. Didi had gone public on the New York Stock Exchange on June 30.
Some have compared the Chinese government’s handling of big tech regulation to similar initiatives in the US. On July 9, Zachary Karabell wrote on Time Magazine: “It’s been tempting for American and foreign commentators to cast these moves as proof that the Chinese government and its ruling Communist Party are determined to take control of the widely successful but mostly private tech sector as part of the overall strategy to centralize power and remove any possible competitors, and, ultimately, to force its domestic companies to detach from American markets … Yet, as tempting as it is to see these steps as part of a concerted effort by the Chinese government to wage a tech cold war against the U.S., that may be the wrong lens.”
The author argues that the Chinese government’s actions are basically the same as the US’ and EU’s big tech regulation drive, adding that the “difference is largely one of speed.”
But the political influence of the Communist Party on the Chinese economy cannot be underestimated. As the Global Times made clear, the crackdown on big tech is about politics as much as it is about the economy.
Chinese tech companies “must remember that they are important private businesses within socialism,” the paper argued. “They must always uphold and promote fairness and justice, and advance the development of core social values. They must defend the national system of government of socialism with Chinese characteristics, be loyal and organic parts of the system” (铭记自己是社会主义民营企业至关重要，任何时候都要坚持推动社会公平正义，推动社会核心价值观发扬光大。要积极维护我们国家中国特色社会主义的治理体制，做这个体制忠实、有机的一部分).
“The United States ceaselessly escalates its strategy of pressuring China, and the state of China’s national security faces unprecedented challenges. Chinese internet firms must draw the bowstring of national security tighter than ever before. Creating national security loopholes because of some companies’ shares being controlled by foreign capital and being listed abroad and other such reasons cannot be allowed” (美国不断升级对华战略打压，中国国家安全形势面临一些前所未有的挑战。中国互联网高科技公司需要比以往任何时候都更加绷紧国家安全这根弦，不能因为有的公司股权由境外资本掌握和去境外上市等原因导致国家安全漏洞), Global Times wrote.
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