China’s crackdown on Ant and other tech giants is “basically” over, the top official says

Hong Kong
CNN
—

China’s heavy-handed crackdown on tech giants is coming to an end and the country’s economic growth is expected to be back on track soon, according to a central bank official.

The crackdown on fintech operations of more than a dozen internet companies is “basically” over, Guo Shuqing, the Communist Party chief of the People’s Bank of China, said in an interview with state news agency Xinhua on Saturday.

“After that, we will promote the healthy development of internet platforms,” ​​said Guo, who is also chairman of China’s Banking and Insurance Regulatory Commission. “We will encourage them to come out strong in leading economic growth, creating more jobs and competing globally.”

His comments came on the same day that Chinese billionaire Jack Ma relinquished control of Ant Group after the fintech giant’s shareholders agreed to restructure the business.

China’s crackdown on its biggest tech companies began in 2020 with new rules on fintech, which forced Ma’s Ant Group to suspend its $37 billion IPO days before the launch.

Regulators then targeted the electronic financial services units of 13 other tech giants, including Tencent, Baidu, JD.com, Bytedance, Meituan and Didi.

These technical regulations were part of a wider government campaign to curb the country’s private sector, which had become too powerful in the eyes of the ruling Communist Party.

However, Chinese policymakers are expected to shift their focus to boosting growth in 2023, and technology companies will play a key role in that. The country recently lifted its zero-Covid policy, which had hit the world’s second largest economy.

Guo expects the Chinese economy to return to “normal” soon, he said.

“The key to rapid economic recovery and high-quality development is to convert current total income into consumption and investment as much as possible,” Guo said in the Xinhua interview.

Most economists expect China’s economy to remain sluggish in the first quarter of 2023, as domestic demand remains weak amid rising Covid cases. But they expect growth to pick up again in the second quarter.

Guo also promised to provide more financial support to private enterprises, most of which are small and micro enterprises.

“[We’ll also] expanding access to finance and supporting IPOs and bond issues, he added.

As for how to stop the decline in the property market – a major drag on growth – Guo said the government will “prioritize” improving the balance sheets of top developers.

Developers have been struggling with a liquidity crisis since the government cracked down on excessive borrowing in the sector in 2020. The crackdown has halted the construction of pre-sold homes across the country and sparked a rare protest last year by home buyers who refused to pay mortgages on unfinished homes.

Major tech companies in China have been struggling under a sweeping regulatory crackdown for months now. The campaign has wiped more than $1 trillion off the market value of some prominent companies.

Ma relinquished control of Ant Group on Saturday, after the company spent in the past two years, it revamped its business, from consumer loans to insurance products, to appease regulators.

Last week, the company received approval for a capital increase for its central consumer finance unit, marking a crucial step in its restructuring.

But Ma’s relinquishment of control could also create more uncertainty for the listing timeline.

Companies cannot list on China’s domestic stock market if they have had a change in control in the past two or three years – depending on which board they want to list on. In Hong Kong’s stock market, they have to wait a year.

Ant Group told CNN on Monday that it currently has no plans for an IPO.

“Ant Group has focused on its business creation and optimization and does not have a plan for an IPO,” a company spokesperson said.