Is Chinese President Xi seeking to reassure Big Tech after a year-long crackdown?
Chinese President Xi Jinping had party leaders focus on the digital economy during their monthly study session on Monday, telling them that China’s Big Tech companies will play a key role in the nation’s efforts to modernize and become self-sufficient.
“The healthy development of the digital economy is important for the construction of a modern economic system,” he told the gathering, according to the official Xinhua News Service.
“We must seize the opportunities, and seize the commanding heights of future development,” he was quoted as saying, “and we must use new Internet technologies to carry out all-round and full-chain transformations of traditional industries.”
Xi said he wanted to see digital companies integrate themselves into parts of the so-called real economy — to modernize sectors like manufacturing and agriculture.
His assurance that there was a place in the economy for BIg Tech comes on the heels of a brutal year for digital platforms in China. The government halted high-visibility IPOs, launched massive security sweeps, and has even limited the time children are allowed to play video games during the week.
“What he is trying to say is that there is a balance, we have been cracking down, but actually we still find this industry important.”Scott Kennedy, senior advisor and Trustee Chair in Chinese Business and Economics at CSIS
The onslaught sent Big Tech running for cover. But in his speech before the study group this week, Xi suggested that if Big Tech could learn to subordinate growth and profitability it could play an important role in a higher calling — narrowing the wealth gap and contributing to China’s “common prosperity.”
“My take is that he was trying to provide some reassurance to companies who are in the digital economy,” said Scott Kennedy, a senior adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies. “What he is trying to say is that there is a balance, we have been cracking down, but actually we still find this industry important.”
Still, Xi was careful not to completely abandon his hard line. He also said the rapid growth in the digital economy demands better supervision to “correct” practices that harm the public interest. He made clear that while Internet firms are important, it is only to the degree they can support and digitize the “real” economy.
As if to underscore the point, Guo Shuqing, the chairman of the China Banking and Regulation Commission told CCTV, the state broadcaster, on Tuesday that he intended to implement strict regulation and break up monopolies in the financial tech sector. China will have “zero tolerance” for illegal financial activities, he said.