BEIJING (BLOOMBERG) – China’s top economic official gave an unusual public show of support for digital platform companies on Tuesday (May 17), suggesting Beijing may be ready to let up on its year-long clampdown on its technology giants.
The government will back the development and public listings of digital economy and private enterprises, Vice-Premier Liu He, Xi Jinping’s top economic aide, said after a symposium with some of the nation’s largest private firms on Tuesday.
The remarks signal further easing of the regulatory risk for China’s technology behemoths including Baidu Inc and Tencent Holdings Ltd, as investors await clues on whether a rout in their shares is near an end.
The Hang Seng Tech Index rallied as much as 6 per cent on Tuesday on optimism the meeting would affirm Beijing’s intention to dial back some of its restrictions.
Beijing has made stability its core priority in a year plagued by global geopolitical and economic uncertainty – particularly as its top officials prepare to effect a key leadership transition towards the end of 2022.
Mr Xi is enlisting the technology industry – the biggest growth driver of the past decade – to revitalise an economy struggling with rolling urban lockdowns, supply chain bottlenecks and evaporating consumption.
China’s economic activity collapsed last month, with industrial output and consumer spending sliding to the worst levels since the pandemic began and analysts warning of no quick recovery.
The latest comments may inject much-needed confidence in the capital markets where more than US$1 trillion (S$1.4 trillion) of combined value of Tencent and Alibaba Group Holding Ltd has been wiped out at one point.
Investor sentiment had swung wildly in recent weeks amid debates over the possible easing of the crackdown. Mr Liu vowed in March to stabilise battered financial markets, promising to ease a regulatory onslaught that started with the dramatic cancellation of Ant Group Co’s record IPO before snowballing into an assault on every corner of China’s technosphere.
But investors remain wary as they weigh a mixed bag of developments, including a restart of gaming approvals and a campaign to rein in the little-understood algorithms that Internet companies employ to serve content and gather data. The Hang Seng Tech Index rallied as much as 37 per cent this year since a mid-March low, before giving back much of those gains in past few weeks.